Yoma Strategic’s positive topline amidst the Covid-19 pandemic has pushed PhillipCapital to reiterate its “buy” call and target price of 46 cents on the counter.

This gives the Myanmar-based company a 58.6% upside from its 29 cent close on August 20, analyst Tan Jie Hui says in an August 21 note. Breaking down his valuation, Tan says: 68% accounts for Yoma’s property business while 19% comes from its financial services arm.

The company’s property segment – Yoma Land – logged a 21.4% year-on-year increase in revenue to US$6.8 million ($9.3 million) in 2Q2020 ended June. 

This follows a 45.5% increase in its real estate development segment to US$4.8 million – in spite of the “minimal sales amidst cautiousness in big-ticket expenditure and delays in paperwork,” Tan observes. 

During 2Q2020, the company sold eight units at its City Loft @ StarCity project and one unit at its Peninsula Residences.

Tan notes that a substantial lift in overall income also came from the over US$20 million in revenue recognised from the completion of the City Loft @ StarCity project.

This helped to mitigate the 13% dip in its Real Estate Services segment revenue to $2.0 million that was hit by lower occupancy levels and rental rates at its Pun Hliang Estate and StarCity premises.

Like its property arm, the Yoma Motors segment help up well, increasing 33.3% to US$5.6 million despite the border closures and falling crop prices. “More tractors and implements were sold due to pent up demand after many quarters of weaknesses arising from the exceptionally heavy monsoon last year,” Tan says.

For instance, there were 124 tractors sold in 2Q20 compared to 61 in 2Q19. Similarly, Mitsubishi – which the company distributes – sold 184 vehicles in 2Q20 against 65 in 2Q19, thanks to the launch of the popular Xpander model.

Similarly, an “enlarged finance lease portfolio in Yoma Fleet” gave Yoma’s financial services arm an 5.6% to US$1.9 million, Tan observes. Vehicle numbers for Yoma Fleet were up 11.1% year-on-year to 1,290 vehicles, while third-party assets under management stood at US$45.6 million as at June 30.

“As finance leases carry higher gross profit margins, we are expecting a larger flow-through from Yoma Fleet to the bottom line in 2H20,” explains Tan.

The other part of Yoma’s finance lease segment – contributions from its e-wallet – continued to record a double digit growth rate month-on-month “as more people opt for cashless transactions,” says Tan. 

He estimates the company is on track to reach its 1.3 million monthly active users target by December.

Unlike its other segments, Yoma F&B was down 31% year-on-year following the prohibitions imposed on dining in at restaurants between April and mid-May and temporary store closures in severely affected trade zones.

“Delivery accounted for 40% of the total sales in April at the peak, which normalised to 15%-20% as restrictions eased and some of these customers return to restaurants,” observes Tan.

“June recorded a smaller decline of around 25% year-on-year since the Myanmar government allowed restaurants to resume operations conditional upon adherence to certain guidelines at the end of May.”

Sales for July was nearing pre-Covid levels with same store sales growth recorded on certain days, Tan points out. As such, he expects the F&B segment to recover in the coming quarter.

Similar, Tan expects demand for Yoma Motors’ products to remain resilient in the coming quarters given the Burmese government’s lower-interest loans to the agricultural sector.

Drawing reference to a World Bank report expecting crop production to grow 0.7% this year, he expects this to induce demand for tractors and other machinery Yoma offers to agriculture providers.

As for its property segment, things are also looking with buying interest recovering and booking rates nearing half of pre-Covid levels in July. 

As at 1.21 pm, shares at Yoma Strategic were flat at 29 cents.