Yoma Strategic reports fiscal 2H swung to net profit despite Covid disruptions

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

Yoma Strategic reported Monday its fiscal second half swung to a net profit of US$5.96 million from a year-ago net loss of US$47.95 million despite Covid-related disruption in Myanmar amid fair value gains on investment properties.

“Extended holidays were announced after the Myanmar New Year in April, whilst a severe third wave of Covid-19 occurred during July and August with significant fatalities and most households affected,” Yoma said in a filing to SGX.

“The third wave of Covid-19 severely impacted Myanmar along with continued uncertainty in the operating environment. However, the group’s businesses, in particular Real Estate, F&B and Wave Money have begun to recover,” the company said. “Stringent financial management measures, including the strict controls on fixed overheads, remain in place.”

Yoma posted other gains of US$28.84 million for the six-month period, compared with a year-earlier loss of US$16.46 million, mainly on fair value gains on investment properties of US$41.41 million, compared with year-earlier fair value losses of US$12.11 million.

The fair value gains were largely due to rentals being charged in U.S. dollars and the selling prices of comparable Myanmar properties mostly being set in U.S. dollars, Yoma noted, adding the U.S. dollar appreciated by more than 40 percent against Myanmar’s kyat as of end-September.

The net profit attributable to shareholders was US$216,000, compared with a year-earlier loss of US$44.59 million, the filing said.

Revenue for the six months ended 30 September fell 15.2 percent to US$43.38 million from US$51.80 million, the Myanmar-based company said.

“The decrease in the group’s total revenue was mainly due to declines in the Yoma F&B and Yoma Motors segments that were offset partially by the slight increase in the aggregate revenue generated by the two real estate segments,” the company said.

For the full fiscal year, Yoma reported its net loss narrowed to US$15.68 million from a year-earlier net loss of US$65.74 million, on revenue of US$87.33 million, down from US$103.36 million a year earlier.

Outlook

In its outlook, Yoma was positive, citing a drop in the number of Covid-19 cases in Myanmar and a resumption of business activities.

“With fewer Covid-19 cases, shopping malls and other retail establishments have reopened, and the group’s F&B restaurants business is seeing a strong recovery. With the completion of the rationalisation of the restaurants platform, the group expects a lower revenue contribution with an increased profitability for the restaurants business going forward,” Yoma said.

Wave Money is expected to “grow substantially” due the Central Bank of Myanmar making digitisation of the financial system a key priority, Yoma said.

“Over-the-counter money transfers, digital transaction volumes and digital monthly active users for the e-wallet have all recovered substantially since June, and the trend is expected to continue with month-on-month growth,” the company said.

Yoma said the real estate business was seeing strong performance, in part because the kyat’s depreciation against the U.S. dollar has fuelled demand for hard assets.

Most of the construction at the StarCity project continued over the past three months, meaning most of the residual revenue recognition from the City Loft @ StarCity units and the Star Villas previously sold will be recognised over the next two quarters, Yoma said.

Myanmar-based Yoma Strategic operates in the property development, food and beverage, financial services and agricultural equipment sectors.

Read more details about Yoma’s business segment performance.