Yoma in the red for Q2; Ayala buys 20% stake for US$155m

MYANMAR-FOCUSED Yoma Strategic Holdings has sunk into the red with a net loss of US$44.2 million for its fiscal 2020 second quarter ended Sept 30, compared with a net profit of US$18.8 million a year ago.

This was mainly due to a previously disclosed fair value loss recognition of about US$31.6 million in its plans to dispose of a China investment.

The group also saw a drop in revenue for its real estate development segment, partially offset by its consumer segment which saw revenue more than double, according to a regulatory filing on Thursday.

Loss per share (LPS) for the quarter was 2.33 US cents, from earnings per share (EPS) of 0.99 US cent a year ago.

Revenue, meanwhile, fell 24.6 per cent to US$22.3 million, from US$29.5 million a year ago.

The group's real estate development segment - which accounts for 23.6 per cent of total revenue - fell 68.2 per cent to US$5.3 million, from US$16.6 million a year ago.

For the same period last year, revenue for the segment was mainly from the sale of additional units in StarCity Galaxy Towers. However, for fiscal 2020 second quarter, there are limited units left for sale in the project.

In addition, revenue for the period came mainly from sales of City Loft at StarCity, which the group has focused its real estate development activities on.

There is unrecognised revenue of over US$16 million relating to sales at CityLoft, as the group recognises revenue from the sales of project based on the percentage of completion method.

As at Sept 30, the percentage of completion for four City Loft buildings ranged from around 7 to 24 per cent.

The consumer segment, meanwhile, saw revenue more than double to US$8.2 million, from US$3.34 million a year ago. This was mainly from sales growth at KFC from new store openings, and revenue from additional consumer subsidiaries such as YKKO, which contributed US$3.10 million, and KOSPA.

No dividend was declared for the quarter, unchanged from a year ago. Yoma said its board had reviewed the group's requirements for ongoing operations and plans for growth, including the project timeline for Yoma Central and The Peninsula Yangon.

For the half year ended Sept 30, net loss stood at US$57.5 million, compared with a net profit of US$13.2 million a year ago. LPS was at 3.03 US cents, from an EPS of 0.7 cent the year prior. Meanwhile, revenue was down 19.2 per cent to US$40.8 million, from US$50.5 million the year prior.

The group said Philippine conglomerate Ayala Corporation has invested US$155 million for a maximum 20 per cent stake in the company. This makes Ayala the second-largest shareholder in the group, Yoma said in a separate announcement.

Ayala will pay an issue price of S$0.45 per share, which represents a 37.7 per cent and 36.5 per cent premium over the volume-weighted average price of the shares traded on Nov 12 and Nov 13 respectively.

The buyout for 474.7 million shares will take place in two tranches. Ayala will pay some US$108.57 million for the first tranche comprising 332.5 million shares, and US$46.43 million for the second tranche comprising 142.2 million shares.

The placement proceeds will go into funding the growth and expansion of the group's various businesses, with more than half or 50 to 70 per cent earmarked for its real estate division.

The remainder of 15 to 25 per cent will be used mainly to refinance existing debted and for general corporate purposes.

The move is part of an overall investment into Yoma Group - which includes Yoma Strategic and affiliated company First Myanmar Investment Public Co (FMI), which is Yangon-listed.

Ayala meanwhile, will pay an issue price of 15,000 kyat per share for its stake in FMI. In total, Ayala will invest US$237.5 million into Yoma Group.

Following the placement, Ayala will also nominate its president and chief operating officer Fernando Zobel de Ayala to the boards of Yoma Strategic and FMI.

Yoma said that Ayala's investment is part of its business strategy to diversify into Asia. The Philippine conglomerate was introduced through Yoma Strategic's executive chairman Serge Pun, and no placement agent was appointed for the deal.

Looking ahead, Yoma said the collaboration is significant and expected to "substantially strengthen" the group's foundation for future growth. It will also allow the group to leverage the experience and expertise of Ayala as a strategic partner.

Yoma shares closed flat at S$0.325 on Wednesday, before the announcements were made.