Yoma Strategic reports fiscal 4Q net profit surged by 20 times on fair value gains, KFC expansion

U.S. one-dollar and five-dollar currency notes; taken September 2018.

Yoma Strategic reported Wednesday its fiscal fourth quarter net profit surged by 20 times to US$26.1 million, boosted by fair value gains in real-estate services and more KFC outlets.

Revenue for the quarter ended 31 March jumped 77.9 percent to US$31.8 million, the Myanmar-based company said in a filing to SGX before the market open.

Cost of sales dropped 30.9 percent on-year to US$8.49 million for the quarter, Yoma said.

“In the Yoma Financial Services business, Wave Money saw its revenue triple in FY2019 and turned profitable during the September quarter, whilst Yoma Fleet grew its lease portfolio significantly during the same period,” Melvyn Pun, Yoma’s CEO said in the statement.

“Meanwhile, Yoma F&B has more than doubled its store count during the past year to 72 F&B outlets, and we have created the largest F&B operator in the country,” he added.

Revenue from the sale of residences and land development rights fell to US$3.25 million in the quarter from US$4.15 million in the year-ago quarter, Yoma said. The segment’s revenue was mainly from previous sales of uncompleted properties in Pun Hlaing Estate, StarCity Zone C and Yoma Central, it said.

The gross profit margin improved as the final share of profits for certain developments in Pun Hlaing Estate were recognized with minimal cost of sales, Yoma said.

Real Estate services revenue surged to US$17.11 million from US$2.45 million in the year-ago quarter, Yoma said. That was due to Pun Hlaing Golf and Country Club, which Yoma operates and manages, being reclassified as an investment property, resulting in a fair value gain, the filing said.

Automotive and heavy equipment revenue declined 28 percent on-year to US$4.92 million on a lower number of tractor and implements sold in the New Holland tractor business, Yoma said. But Yoma Motors’ gross profit margin rose to 21.6 percent in the quarter from 13.9 percent in the year-ago period on sales of larger agricultural machinery with higher margins, it said.

Financial services revenue, which is generated by Yoma Fleet, increased to US$1.79 million in the quarter, from US$1.22 million in the year-ago period, Yoma said. That was due to the number of vehicle leases rising to 1,165 in the quarter from 789 in the year-ago quarter, it said.

Consumer revenue rose to US$4.54 million from US$2.99 million in the year-ago period on increased revenue from KFC stores as the outlet count increased, Yoma said. Same-store sales growth was also more than 5 percent, it said, adding the newly acquired YKKO also contributed to revenue.

Net profit attributable to equity holders rose to US$25.7 million in the quarter from US$400,000 in the year-ago period, the filing said.

For the full fiscal year, Yoma reported net profit climbed 140.4 percent on-year to US$42.2 million, on revenue of US$100.7 million, up 33.4 percent on-year.

Serge Pun, Yoma’s executive chairman, issued an optimistic outlook.

“We remain optimistic about the business outlook and long-term prospects of Yangon’s Real Estate market which we anticipate will be driven by an increase in foreign direct investment and positive responses to the pro-business reforms being implemented by the government,” Serge Pun said in the statement.

“Yoma Land’s transformation into both a developer and a landlord will help to build resilent revenue streams and we will focus on City Loft to drive sales volume and significantly expand our affordable mass market product offering,” he said. “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.”

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