Yoma

Yoma: Booked 1Q14 results with net profit at $0.42 (-81%) and top-line revenue at $15.2m (+12%), which was driven mainly by the group’s real estate division. Gross margins remained healthy, rising 2.2 ppt to 39.3%. The moderated growth in revenue was due to the slower-than-expected pace of construction for Buildings 3 and 4 in Zone A of Star City, which Yoma expects it to improve and see more of sales recognized in the remaining periods of FY14. Revenue generated by the sales of residences and Land Development Rights (LDR) contributed about 94% of Yoma’s total revenue for 1Q14. Operationally, take-up rate remained strong for the Star City residential project, with 513 out of a total of 528 units in Buildings 3 and 4 in Zone A. Based on a percentage-of-completion revenue recognition, Yoma has recognized revenue of $7.2m for its Star City Project with a remaining balance of approximately $53.8m to be recognized within the next 24 months, in tandem with construction progress. The Group has also entered into a conditional agreement with a third party investor for the sale of LDRs for 5 buildings comprising 1,043 units in Zone B of Star City, and will also earn additional incentive fees when certain sales targets to end buyers are met. Pertaining to the sale of LDRs in Building 1 in Zone B, Yoma recognized revenue amounting to $5.9m in 1Q14. Bottom-line was also weighed by administrative and other operating expenses which increased 86% to S$4.1m due to an increase in the group’s headcount and staff cost, as Yoma attempts to build up a competent management team to support future expansion. Going forward, Yoma note that as Myanmar’s economic activities increase, demand for high quality housing is likely to outstrip supply and support residential prices, and seeks to enter the commercial real estate market through the acquisition and development of the Landmark Development, a prime 10-acre site at downtown Yangon. Once acquired, along with its existing landbank, Yoma will cement its position as a leading real estate developer in Myanmar. Overall, we note that the group’s fundamentals remain fairy strong, with a net cash position of $58.1m and at current price of $0.88 trades at 2.8x P/B. Latest broker ratings as follows: OCBC maintains Hold with $0.87 TP under review