Brokers' take: Phillip Securities downgrades Yoma to 'neutral' amid Myanmar crisis

Michelle Zhu
Published Wed, Mar 10, 2021 · 03:42 PM

PHILLIP Securities has downgraded its call on Yoma Strategic Holdings to "neutral" from "buy" with a lower target price of 15.6 Singapore cents, down by more than half from the earlier 34 cent price target, after changing its valuation method.

In a Wednesday report, analyst Tan Jie Hui said she expects Myanmar's political regression and ongoing violence to thwart Yoma's growth prospects.

She anticipates major business disruptions since the Feb 1 coup to affect at least a quarter of the group's FY2021 revenue, particularly Q2 of FY2021 - which she thinks could be "washed out by political instability and Covid-19".

In her view, fewer Wave Money transactions could take place as consumers conserve cash, while F&B (food and beverage) and motors sales are likely to be lacklustre in the current political environment.

Ms Tan also highlighted that Yoma may not be able to recognise revenue from the completion of its property development projects over the next three to six months, as all major construction work has been paused.

The group's real estate arm Yoma Land currently has US$45 million worth of revenue yet to be recognised from City Loft @ Star City, the Peninsula Residences and Star Villas, she noted.

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As a result, the brokerage now values the stock at 0.45 times price-to-book (P/B) compared with the previous sum-of-the-parts valuation. Ms Tan highlighted that this is slightly above the counter's 2007-2010 low of 0.41 times P/B, given that Yoma is now a larger conglomerate with more resilient businesses compared to before.

"Before the 2010 general election, Myanmar was under military rule. Given that the current state of emergency in Myanmar is expected to last a year and violent protests are not likely to cease in the near term, we believe a P/B discount of the similar magnitude as in 2007-2010 is warranted," said the analyst.

"Rerating catalysts could come from significant improvements in the political situation, a sanctions uplift and a return to normalcy," she added.

Shares of Yoma closed flat at 15.7 Singapore cents on Wednesday. 


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