Broker's take: Phillip Capital lowers Yoma TP to 34 S cents amid Myanmar unrest

PHILLIP Capital on Friday lowered its target price for Yoma Strategic Holdings to S$0.34 from the previous S$0.46, following Myanmar's recent political unrest.

The brokerage maintained a "buy" call on the stock, but revised its FY21/22 growth forecast from between 5 and 7 per cent to 0 and 2 per cent, taking into account the impact of Covid-19 on the country.

Noting that state telecommunication services were disabled and construction work was halted during the coup, analyst Tan Jie Hui expects Yoma Central's completion to be delayed.

Additionally, the food and beverage sector is likely to be lacklustre due to weak consumer sentiment, said the analyst, who foresees a 19 per cent dip in the investment company's FY22 topline.

Further, she predicts weaker investment sentiment and medium-term growth due to the political unrest.

"Although China may continue its investments given that Myanmar is a vital piece of Beijing's Belt and Road infrastructure initiative, foreign domestic investments as a whole may drop due to political instability," said Ms Tan.

Coupled with the impact of Covid-19 lockdowns implemented from October to December 2020, she has further cut her forecast on Yoma's FY21/22 earnings by 27 per cent and 35 per cent.

However, she is optimistic about Yoma's outlook on observations of strong investor support.

"While the coup came as a shock, international lenders and partners have not pulled out their funds. We believe Ayala will proceed with its second-tranche equity investment in the company by May 11, 2021," said Ms Tan, who advised investors to look out for sanctions from foreign nations, investments from Ayala and Ant Financial, and the kyat's currency movements.

Yoma shares closed at S$0.194 on Friday, down 0.6 Singapore cents or 3.0 per cent.