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Yoma Q4 profit soars to US$25.7m on fair value gains from investment properties

MYANMAR-FOCUSED Yoma Strategic Holdings on Wednesday posted a fourth-quarter net profit of US$25.7 million, from US$432,000 a year ago, mainly due to net fair value gains from investment properties.

This was partially offset by a rise in financing costs from higher borrowings and the rising interest rate environment, the group said in a regulatory filing.

Earnings per share stood at 1.36 US cents, up from 0.02 cent a year ago. No dividend has been recommended for the quarter, unchanged from the previous year. Shares of the company last traded flat at S$0.34 on Tuesday.

Revenue for the fourth quarter ended March 31 jumped 77.9 per cent to US$31.8 million, from US$17.9 million a year ago. According to Yoma, this was driven by a "modest recovery" in its development activities and the increase in its portfolio of investment properties.

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This was also supported by continued growth at Yoma F&B and Yoma Financial Services, which partially offset a slower performance by Yoma Motors.

The group’s Yoma Land business saw its real estate development revenue drop 21.8 per cent to US$3.2 million, from US$4.1 million a year ago, primarily from progressive revenue recognition from sold units at StarCity Galaxy Tower 2 and Tower 4 and Yoma Central.

For real estate services, revenue rose to US$17.1 million, from US$2.4 million a year ago, due to a reclassification of Pun Hlaing Golf and Country Club as an investment property. It was also due to the recognition of certain fair value gains which lifted the revenue of Yoma Land in the quarter.

Yoma food and beverage (F&B) business revenue rose 51.9 per cent to US$4.5 million, from US$3.0 million a year ago, from higher KFC sales and additional revenue from Myanmar restaurant chain YKKO after concluding its March acquisition.

Its Yoma motor business revenue fell 27.9 per cent to US$4.9 million, from US$6.8 million a year ago, largely due to a lower number of tractor and implements sold in the New Holland tractor business.

As for Yoma’s financial services segment, revenue grew 47.2 per cent to US$1.8 million from US$1.2 million a year ago, which came exclusively from Yoma Fleet, the group’s vehicle leasing business.

For the full year ended March 31, the company’s net profit nearly tripled to US$34.1 million from US$11.9 million a year ago. Revenue, meanwhile, rose 33.4 per cent to US$100.7 million from US$75.5 million a year ago.

Revenue from the group’s Yoma Land real estate development business rose 88.8 per cent to US$31.8 million, from US$16.9 million a year ago, while its real estate services revenue more than doubled to US$24.4 million, from US$9.6 million a year ago.

Yoma F&B’s full year revenue rose 39.4 per cent to US$14.6 million, from US$10.5 million a year ago, while its Yoma Motors business fell 30.3 per cent to US$22.7 million, from US$32.6 million a year ago. Yoma’s financial services segment revenue climbed 25.1 per cent to US$6.3 million, from US$5.0 million a year ago.

The group added that the higher share of losses from associated companies in fiscal 2019 was from dilutive effects of Memories Group issuing additional shares for new acquisitions. This reduced the value of the group’s effective interest in the latter’s net assets.

Another reason was incurring market entry costs at Access Myanmar Distribution Company, which launched two new whiskeys in the past year under Seagram’s brand umbrella.

Meanwhile, the higher share of losses of joint venture was mainly from start-up costs of Yoma Micro Power.

Yoma Strategic's chief executive officer Melvyn Pun said the group “remains optimistic” about the business outlook and long-term prospects of Yangon’s real estate market.

It anticipates the market will be driven by an increase in foreign direct investment and positive responses to the pro-business reforms being implemented by the government.

The group will also focus on City Loft to drive sales volume and significantly expand its affordable mass market product offering, Mr Pun said, adding that the fast pace of take-up during City Loft's initial launch was encouraging when compared to sales volumes in previous years.

"Meanwhile, the strategic partnerships we have formed with SF Express and Tokyo Century will help us to grow these businesses rapidly. Moving forward we will continue to explore similar partnerships for our other business pillars,” he added.