Yoma Strategic Holdings, Buy (maintained) Dec 27 close: S$0.33 Target price: S$0.57 RHB Research, Dec 26

Yoma's share price has recovered by about 40 per cent, after touching an all-time low in October. We believe the weakness stemmed from a combination of factors such as a real estate slowdown, emerging market fund outflow and political tensions, which are now largely priced in. With the overhaul in its real estate business and rapid scale up in its F&B, motors and financial services businesses, Yoma is now in a dominant position to reap the benefits. While near-term market uncertainty remains, we see good long-term potential for investors at current levels.

Owing to a slowdown in the mid-range to high-end residential segment, Yoma recently expanded its offerings with City Loft - affordable houses targeting the middle income segment. Yoma also tied up with domestic banks to offer longer, 25-year mortgage repayment terms for the new product launch. The move proved to be highly successful, with nearly half the 250 units sold at the first week of launch. We are positive on the latest move as it addresses the key issue of affordability and helps broaden its target audience. While the margins for City Loft units are likely to be lower at about 25 per cent vs 35-45 per cent for high-end homes, we believe the move provides much-needed earnings visibility.