Yoma Strategic Holdings
Overachieved on less tax expense
▊ Yoma’s 9MFY3/14 revenue and operating profit were generally in line with our expectation. However, 9M14 core PATMI achieved 106% of our full-year forecast due to lower-than-expected tax expense. We revise up our FY14 EPS estimate by 14.8% from 0.83 Scts to 0.95 Scts due to lower tax expense, but maintain the FY15-16 earnings forecast. The upward adjustment of FY14 EPS has minimum impact on our FY15 RNAV. Our target price stays at S$0.75 (based on 1x FY15 RNAV). Maintain the Reduce recommendation. The upward adjustment of FY14 EPS has minimum impact on our FY15 RNAV. And given the still unconfirmed Landmark acquisition, our current target price stays at S$0.75. Maintain the Reduce recommendation.
Yoma reported sales of S$30.2m in 3Q14, up 132.5% yoy. Sales of residential properties (S$10.95m) and LDRs (S$16.22m) contributed to 90% of the group’s total sales. In addition, Yoma’s tourism business recorded revenue of S$2.05m for the first time. The 3Q14 sales includes the sales of LDRs related to two buildings in Star City Zone B, amounting to S$14.56m. We expect no more pure LDR sales ahead. In that sense, revenue recognition is likely to slow down in 4Q14. 9M14 core PATMI of S$10.4m exceeded our full-year forecast of S$9.8m due to the lower-than-expected tax expense. Management has explained that a significant portion of its earnings were derived from entities that incurred higher losses previously, and entities that are not subject to income tax. In light of this, we revise up our FY14 core earnings by 14.8% to S$11.2m (core EPS up from 0.83 Scts to 0.95 Scts).
Long stop date for LM acquisition extended to June 2014
On 20 Dec 2013, the company announced the extension of the long stop date for the acquisition of the site of the Landmark Development, for the third time, to Jun 2014. The base case of our sensitivity analysis shows that, if the deal is sealed, the Landmark Development could add 9 Scts to our valuation.
Maintain Reduce with an unchanged target price of S$0.75
The upward adjustment of FY14 EPS has minimum impact on our FY15 RNAV. And given the still unconfirmed Landmark acquisition, our current target price stays at S$0.75. Maintain the Reduce recommendation.
Publish date: 17/01/14