Yoma

Yoma's 2QFY17 net profit surged to $8.5m from $0.3m last year, boosted by unrealised fair value gain of $14.7m on its telecoms towers investment. Otherwise, the group would have ended in the red.

This brought 1HFY17 earnings to $10m (+244%), meeting 38% of full year consensus estimates.

Revenue rose 25.2% to $24.9m across all segments with growth mainly coming from its property development segment, which generated $9.9m (+26%) from sale of residences and land development rights at at Pun Hlaing Estate.

Rental revenue of $5.4m (+24.4%) was underpinned by high occupancy rates at Star Residences and The Residence at Pun Hlaing. Automotive sales of $7m (+9.1%) was driven by increased vehicle hires at Yoma Fleet, while expansion of its KFC stores nearly doubled its consumer sales to $2.7m (+96%).

While gross profit grew at a slower clip to $10.3m (+15.7%) due to margin contraction from the sales shift, it was nonetheless eclipsed by admin charges of $13m (+4.8%) and $1.9m share of associates/JV losses (2QFY16: $0.5m gain), arising from beverage distributor Access Myanmar, as well as start-up losses at a cold chain provider and a Mitsubishi vehicle trader.

Bottom line was shored by $14.7m unrealised fair value gain from its 25% stake in telecom infrastructure company edotco.

Despite the red ink at the core level, management is sanguine on the outlook for Myanmar as the US decision to lift remaining sanctions could spur investments in the medium term. Regulations are also in the midst of being revised to be pro-investors.

Nevertheless, the real estate market remains slow even as urbanisation should buoy long term prospects, while continued agriculture development should help tractor sales.

Yoma opened its seventh KFC store in Oct, and is on track to reach its 12th store by March '17.

Meanwhile, the group is divesting half of its stake in edotco for US$35m. The transaction will result in an additional US$4.8m gain in upcoming 3QFY17 results. It is also spinning off its tourism-related businesses into SHC Capital Asia in a proposed $43.9m RTO deal, which will give it a 53.5% shareholding.

Yoma is currently trading at 40x FY3/17e consensus P/E and 1.6x P/B.