SINGAPORE (May 25): Yoma Strategic Holdings’ non-real estate businesses could drive the group forward amid continued softness in the property segment, according to DBS Group Research.
The segment contributed to 46.6% of Yoma’s total revenue for the year – closing in fast on the group’s target of at least half of its revenue coming from non-real estate businesses by 2020.
“We are seeing a strong rebound in operating performance as most of its underlying businesses are doing well,” says DBS lead analyst Rachel Tan in a flash note on Thursday.
DBS is keeping its “buy” call on Yoma with a price target of 80 cents.
While Yoma saw its FY17 earnings slip 3.2% to $35.9 million due to higher interest expenses and administrative expenses, group revenue grew 11% to $124.2 million on the back of its non-real estate segment.
Revenue from its automotive and heavy equipment business grew 27.2% to $38.1 million, driven by New Holland tractors.
“Yoma will also launch a new heavy equipment arm – JCB equipment – and should see positive contribution in the medium term,” says Tan.
Meanwhile, revenue generated from the group’s consumer business, which comprises its KFC franchise operations, more than doubled to $10.9 million in FY17 with new store openings.
(See: Yoma FY17 earnings dip 3.5% to $35.9 mil on higher expenses)
On the property front, Tan says active marketing at existing real estate projects is expected to drive sales.
“Most importantly, 4Q17 gross profit of $21.6 million covers the group’s overheads of close to $14.3 million, implying that operating performance has achieved a sustainable level,” Tan says.
As at 11.39am, shares of Yoma are trading 2.5 cents higher at 60 cents.
