All eyes have been on real estate operator Yoma Strategic since Myanmar – where it is headquartered – was declared a state of emergency on Feb 1.

The move which is slated to last for a year, comes as the military has alleged discrepancies in the votes secured by Aung San Suu Kyi’s National League for Democracy party in the recent November 2020 elections.

The political instability and disruptions to businesses are believed to affect the medium-term investment sentiment and economic growth in Myanmar.

Still, PhillipCapital has maintained a ‘buy’ call on Yoma Strategic, but at a revised target price of 34 cents. 

This is down 12 cents from its previous 46 cent call and is believed to give the counter a 70% return from its previous close of 20 cents, analyst Tan Jie Hui says in a Feb 5 note.

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“The change in our target price mainly captures downward adjustments in land bank prices for Yoma Land to the lower end of the range guided by management in 4Q20,” explains Tan.

She believes the management’s guidance reflects slower property development and sales in the near term.

The way Tan sees it, what makes Yoma Strategic a “buy” is that its fundamentals are intact and its lenders and investors have been supportive amid the unrest. 

“While the coup came as a shock, international lenders and partners have not pulled out their funds. We believe that Ayala will proceed with its second-tranche equity investment in the company by 11 May 2021,” adds Tan.

Ayala is a Philippines-based conglomerate which had previously made investments in Yoma Strategic in end 2019.

See: Yoma says business operations have resumed but warns of change in sentiment

However, Tan reckons that Yoma Strategic may not be spared disruptions to its business operations in the near term. This is as state telecommunication services were disabled, the streets were quiet and all construction work ceased during the coup.

While operations have mostly resumed, Tan expects disruptions such as fewer over-the-counter and digital transactions through Wave Money – Yoma’s e-payment platform – as consumers conserve cash.

She adds that the company’s F&B segment may also take a hit from weak consumer sentiments. 

Under its F&B operations, Yoma Strategic has the exclusive franchise rights from international food chain KFC to operate in Myanmar. It also has a 65% stake in popular local eatery YKKO, three Auntie Anne’s kiosks and one Little Sheep Hot Pot restaurant.

Meanwhile, Tan reckons that the company’s development business may also take a hit given the pause in construction at Yoma Central. She estimates that the project completion may be delayed from 3Q22 from 1H22, thereby resulting in a 19% dip in the counter’s FY2022 topline.

Overall, Tan has trimmed her FY2021 – 2022 forecasts to 0% to 2% from 5% to 7% previously. “Wave Money’s contribution to FY2021 income has been lowered by 20%, offset by higher contributions from an additional 10% stake acquired on 13 October 2020,” she explains. 

This translates to a cut in FY2021 and FY2022 earnings by 27% and 35% respectively.

Shares in Yoma Strategic closed down 0.6 cents or 3% at 19.4 cents on 5 Feb.