Yoma Strategic Holdings Financial Report Analysis: Net Profit Decline

Business Description

Yoma Strategic Holdings Ltd. (Yoma) operates within multiple business segments including Real Estate, Mobile Financial Services (Wave Money), Leasing, Food & Beverage (F&B), and Motors. The company primarily operates in Myanmar and has a diversified portfolio aimed at driving growth and profitability.

Industry Position and Competitors

Yoma has a strong position in Myanmar’s real estate and mobile financial services sectors. Key competitors include local and regional real estate developers and financial service providers. Yoma’s market share is bolstered by its extensive reach and diversified business operations.

Revenue Streams and Competitive Advantage

Yoma’s revenue streams include property development and sales, mobile financial transactions, leasing of vehicles, and F&B operations. The company’s competitive advantage lies in its diversified business model, extensive market reach, and strong brand presence in Myanmar.

Financial Statements Analysis

Income Statement

For the period ending 30 September 2024, Yoma reported a revenue decline in USD terms to US\$95.2 million from US\$111.6 million due to a 55% depreciation of the Myanmar Kyat (MMK). However, revenue in MMK terms grew by over 35% Y-o-Y. Key segments contributing to revenue growth in MMK terms include Yoma Land Development (+81.2%), Yoma F&B (+44.8%), and Yoma Land Services (+35.2%) [[2]].

Core EBITDA decreased to US\$14.9 million from US\$18.8 million, reflecting the impact of MMK depreciation and a shift in the revenue mix with lower contribution from Wave Money [[2]]. The company reported a loss before tax of US\$10.3 million, primarily due to US\$7.3 million in currency translation losses on THB and USD borrowings [[2]].

Balance Sheet

As of 30 September 2024, Yoma’s total borrowings reduced from US\$197.2 million to US\$164.3 million. However, net debt and net gearing levels increased due to a reduction in cash balances [[3]]. The company’s total capital stood at US\$764 million with a net gearing ratio of 18.6% [[3]].

Cash Flow Statement

Operating cash flow improved to US\$31.4 million from US\$23.3 million, while investing cash flow remained negative at US\$19.9 million. Financing cash flow was also negative at US\$1.4 million [[3]]. The increase in net debt was driven by working capital payments, investments in Wave Money’s infrastructure, and capital expenditures at StarCity [[3]].

Dividend

No dividend was mentioned in the report for the period ending 30 September 2024.

Key Findings

Strengths

• Strong revenue growth in MMK terms across key segments [[2]].
• Diversified business operations providing multiple revenue streams.
• Ongoing investments in Wave Money and real estate projects indicate long-term growth potential [[2]].

Risks

• Significant currency translation losses impacting profitability [[2]].
• Revenue decline in USD terms due to MMK depreciation [[2]].
• Increased net debt and net gearing levels [[3]].

Special Activities

The company is focused on expanding Wave Money’s user base through improved product offerings and reach and is committed to reducing USD-denominated borrowings to align better with its cash inflows [[2]].

Investment Recommendations

For Current Stockholders

Hold the stock. Despite short-term challenges, Yoma’s diversified business model and ongoing investments indicate potential for long-term growth. Monitor the company’s efforts to manage currency risks and reduce USD-denominated borrowings.

For Potential Investors

Consider investing with caution. The company shows strong growth in local currency terms and has a diversified revenue base. However, be mindful of currency risks and the company’s ability to manage its debt levels effectively.

Disclaimer

This analysis is based on the financial report provided and does not constitute financial advice. Investors should perform their own due diligence before making investment decisions.

Report Date

The report is for the period ending 30 September 2024.