PhillipCapital analyst Tan Jie Hui has cut his earnings estimates for Yoma Strategic Holdings in anticipation of further fallout from Covid-19 as well as the ongoing political upheaval in Myanmar.

His FY2021 ending September and FY2022 earnings forecast has been cut by 3% and 25% respectively, underpinning a lower target price of 14.7 cents from 15.6 previously.

“[The target price] remains pegged at 0.45 times P/BV, slightly above 2007 - 2010 average P/B during major conflicts, political upheavals and natural disasters," he says in a May 19 research note.

The cut in estimates comes after Yoma reported a 1HFY2021 net loss of $21.6 million, down 21.7% y-o-y.

Despite going deeper in the red, Tan highlights that the company’s topline was propped up by its real estate segment, while Yoma also implemented cost-cutting measures, including job cuts and pay reductions as well as reduced inventory. “As more stringent financial management has been implemented since Feb 1, cost-efficiency gains should be realised in the coming months,” Tan says. 

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However, Tan anticipates further challenges ahead for the company coming off the back of Covid-19 as well as the coup d’etat in Myanmar. 

For its real estate business, Tan notes that the construction of Star City and Pun Hlaing Estate is ongoing, albeit at a slower pace, while should partially support the 2H2021 topline. However, construction for Yoma Central has been suspended, given the “uncertain economic environment”.

Yoma’s restaurant business was hit hardest by both Covid-19 and the coup, and Tan expects weak consumer sentiment to persist, with Yoma potentially closing up to one-third of its restaurants permanently or temporarily.

Motor sales are also anticipated to remain lacklustre, as consumer sentiment remains weak and hire-purchasing financing by local banks is less readily available. “We believe credit tightening may persist in the near term, which would affect sales of Yoma Motors,” Tan adds.

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For its financial services segment, while Tan believes Wave Money may make a slight recovery on the back of the resumption of the app on mobile 4G networks, he also notes that Wave Money’s proposed strategic partnership with the Ant Group and Yoma’s proposed acquisition of a controlling interest in Wave Money from the Telenor Group had not been extended by the parties.

Shares in Yoma close 0.4 cents or 2.76% lower at 14.2 cents on May 19.