Yoma

Yoma: ($0.66) Star City lights up 2QFY15 results Yoma 2QFY15 net profit more than tripled to $10.8m (+222% y/y), shored by fair value and FX gains of ~$10m. During the quarter, Yoma recognised a further fair value gain of $8.1m on completed units for its Star City Zone A Building A5, which is held as investment property. The group also booked an unrealised currency translation gain of $2m on its monetary assets denominated in USD, following the strengthening of the USD against SGD. Revenue surged 53% to $41.2m, driven by the solid performance of the real estate division, particularly Star City which accounted for ~80% of sales. In particular, Yoma sold the LDRs of Zone C to a third party investor for an upfront payment of $25.2m but will manage the construction and sale of the 950 apartment units there with project management fees and share of profit from the sale of units to be recognised in the coming quarters. During the quarter, the group received booking deposits for an additional 106 units out of the 1,043 units available at Star City Zone B, bringing total sales to 856. Meanwhile, the group has balance unrecognised revenue of $22.7m relating to its Star City Zone A Buildings A3 and A4 (528 units) that have been fully sold, which is expected to be booked over the next 3-9 months as construction progresses. Management notes that the economic and political developments generally bode well for Yoma’s outlook. With the growing number of foreign MNCs coming into Myanmar, more mid-level and senior executives are coming into the country. As such, Yoma intends to hold more residential stock at its developments - Pun Hlaing Golf Estate and Star City - on its balance sheet for leasing. Following the Jul share placement (issue price: $0.70), Yoma’s NAV per share has risen to $0.37 from $0.32 at FY14, and the group now has improved balance sheet flexibility (cash of $61.5m) to pursue growth. Despite today’s 4.8% jump in share price to $0.66, the counter trades at a lower 1.8x P/B from 2.2x a quarter ago. Yoma remains the key proxy for investors keen on acquiring exposure to the rapidly growing Myanmar economy.