Yoma Strategic Holdings:
STI : 3,140.44
Price Target : 12-month S$ 1.02
•3QFY14 results in line, driven by sale of more LDR at Star City and tourism income
•Property sales healthy, construction progressing
•Star City, Landmark to underpin future earnings
3QFY14 net profit of S$5.2m in line. Headline net profit grew 42% y-o-y led by a 132% jump in revenue. In 9M FY14, Yoma has met 61% of our FY14F earnings. Gross margin fell by a notch to 44.3% from 49% a year ago because of a smaller share of sales from higher-margin Pun Hlaing Golf Estate. But margin was stable against 44.9% in the previous quarter.
Property sales healthy, construction progressing. In 3QFY14, Yoma booked S$14.6m from the sale of Land Development Rights for the remaining blocks B3 and B4 in Zone B of Star City. We estimate Yoma sold 200 units in Star City last quarter, including bookings for 55 units. This is a notch below an estimated 265 units sold in 2Q FY14 but much stronger than the 117 units moved in the year ago quarter. ASP was stable at US$150 psf. Construction of Star City is progressing as Yoma recognised S$3.2m from the sale of development properties, but momentum has slowed compared to S$4m booked in 2Q FY14.
Star City remains key driver as Landmark faces more delays. Given that Yoma has completed the sale of LDRs for all the blocks in Zone B, there should be incentive fees related to the sale of the respective buildings in the coming quarters. Yoma is hopeful that the official commencement of the Thilawa Special Economic Zone development will spur demand for Star City apartments given the project’s proximity to this SEZ. Meanwhile, Yoma has again extended the longstop date for the Landmark deal to Jun 2014. We remain convinced Landmark will accelerate Yoma’s growth but it remains a wildcard at this juncture. Also, with Myanmar experiencing the high season for tourism, we expect tourism income to remain robust.
Maintain BUY rating and S$1.02 TP. This quarter, Yoma has seen continued momentum in property sales and additional income from tourism. We expect non-property income to grow going forward.
Publish date: 17/01/14