Yoma Strategic bullish on Myanmar prospects

Landmark Development is a mixed-use project in downtown Yangon that will include luxury residences, office towers and retail space, among other purposes. Yoma will begin construction on it before the new year.
Landmark Development is a mixed-use project in downtown Yangon that will include luxury residences, office towers and retail space, among other purposes. Yoma will begin construction on it before the new year.PHOTO: YOMA STRATEGIC

Share price dip earlier due more to macroeconomic factors; core business revenue up 25.2% for Q2

Yoma Strategic chief executive Melvyn Pun is confident about the firm's future despite a sharp drop in its stock price earlier this month.

Yoma released stellar second-quarter results on Nov 8 but its shares fell from 59 cents to 51 cents - a drop of more than 13 per cent - between Nov 11 and Nov 16.

The stock has since recovered, closing at 57 cents yesterday.

Mainboard-listed Yoma Strategic Holdings is known for its Myanmar-focused business portfolio in real estate, motor vehicles and equipment, and its KFC restaurants.

Mr Wong Yew Kiang, a senior analyst at brokerage CLSA, said that the fall in the stock price was mainly due to macroeconomic factors and not Yoma's performance.

"We believe the recent pressure weighing on Yoma's share price is largely due to the current uncertainty surrounding the Rohingya issue and how the (Myanmar) government is handling the crisis for now."


Since opening the first KFC outlet in Myanmar 15 months ago, Yoma now has seven in the country. PHOTO: YOMA STRATEGIC

Mr Pun declined to comment on the stock price, choosing to focus on Myanmar's growth prospects.

In a phone interview with The Straits Times last week, he said: "To be honest, I've never been as excited and optimistic for the future".

He cited Myanmar's "clear path of growth in political development", adding that the company's decision to focus on its core businesses in real estate and its consumer, automotive and equipment businesses stand it in good stead for the future.

Last month, the firm announced that it would spin off its tourism-related business as part of a reverse takeover of Catalist-listed SHC Capital Asia.

Yoma's wholly owned unit Yoma Strategic Investments is proposing to sell SHC tourism assets such as its flagship business Balloons over Bagan, which allows tourists to ride hot air balloons in Myanmar.

Mr Pun said that the company sees tourism as a booming industry with much room for growth, given that the number of visitors to Myanmar is a fraction of those who go to neighbouring countries. However, he noted that tourism infrastructure is not yet adequate.

"After having strategic analysis, we wanted to focus on core businesses. These businesses have large potential and scale and can individually be very sizeable. But for tourism, unless we put in significant capital investment, it's very hard to reach a scale that we look for, so the decision was made to spin it off," he said.

Revenue from Yoma's core businesses - real estate, consumer and automotive - grew 25.2 per cent in the three months to Sept 30.

The company has two ongoing Myanmar residential projects. It also announced in July a mixed-use project in downtown Yangon, Landmark Development, on which construction will begin before the new year.

Mr Pun said that when the condominium law - likely to include a policy for mortgages - is finalised, local property buyers will be affected as a substantial amount of property deals are now donewith cash.

But he singled out Myanmar's consumer sector as its most exciting, noting the success the firm is having with its KFC outlets.

"Today we operate seven KFCs, having started only 15 months ago. We are seeing a very fast roll-out of KFC stores in Myanmar - we expect another three this month."

A version of this article appeared in the print edition of The Straits Times on November 29, 2016, with the headline 'Yoma Strategic bullish on Myanmar prospects'. Print Edition | Subscribe