Singapore-based property conglomerate Yoma Strategic Holdings (YSH) has posted a tripling of its year-on-year net profit in the first quarter of 2014-15 fiscal year, thanks to valuation gains on its Myanmar projects.
Revenue for the group rose 13.9 percent in the first quarter (Q1) of 2014-15 (ended June 30) to S$17.3 million ($13.9 million), it said. This was largely attributable to the sales of homes and land development rights in Myanmar.
Earnings rose to S$1.4 million in Q1, up 243 percent from S$0.4 million a year ago, the group said. This was on the back of a S$6.4-million fair value gain on its Star City’s Zone A Building A5 property, which is located about 9 kilometres from downtown Yangon.
Andrew Rickards, CEO of Yoma Strategic, said, “We are pleased to deliver a sound set of results as our Real Estate Division continues to perform strongly despite the seasonality of our business which typically sees a slow first quarter.
“Business sentiment remains positive and we are excited about our upcoming new launches at Pun Hlaing Golf Estate and Star City.”
As at March 31, YSH has sold 528 units in Star City’s Zone A Buildings A3 and A4. Based on the percentage-of-completion revenue recognition, the group recognised S$8.2 million ($6.6 million) in Q1 for Buildings A3 and A4, compared to the $1.69 million recognised in the same period last fiscal year. However, it is lower than the $8.05 million made in Q4 of 2013-14 financial year.
This was mainly due to the commencement of the rainy season from May/June which decelerated the pace of construction, YSH said.
The conglomerate said it expects construction to pick up in the second half of FY2015 with the balance of unrecognised revenue of approximately $22.3 million to be recognised within the next six to 12 months as construction progresses.
Demand for the apartments in Star City Zone B which was developed in collaboration with a third-party investor has been strong, the firm said.
In total, YSH sold 724 units and received booking deposits for an additional 134 units out of 1,043 units at Star City Zone B since its launch in April last year.
The incentive fees relating to the Buildings B3 and B4 are expected to be recognised in the coming quarters as and when the sale targets are met, it said.
With the sales momentum expected to remain healthy, Zone C comprising 914 units with improved product features which are expected to be launched by in FY2015 will likely be well-positioned to capture the positive demand, YSH said.
“The group’s residential developments are expected to continue to benefit from the growing domestic demand for quality homes as well as the increase in the number of overseas Myanmar Nationals returning to Yangon.
“Once the condominium law has been enacted, we believe there could be foreign demand as well,” said Rickards.
YSH will continue to look for opportunities to expand its land bank, ideally in already established communities where demand for real estate has already been proven, he added.
The group is finalising negotiations with Serge Pun & Associates (Myanmar) Ltd to acquire the economic interests of the remaining LDRs in Pun Hlaing Golf Estate (PHGE) including the golf course and country club, and will be seeking shareholders’ approval at an Extraordinary General Meeting.
In addition, the group’s move into commercial real estate will be marked by the anticipated completion of the acquisition of the Landmark Development Project in downtown Yangon, YSH said.
The conglomerate said 2014 is expected to be another “momentous year” for Myanmar as it plays a crucial role in guiding ASEAN’s ten-member economies towards a planned economic integration in 2015.
Business sentiment remains favourable and investment flows are expected to be stronger as the government continues its pace of economic and political reforms, such as the Special Economic Zone (SEZ) Law and the Foreign Investment Law (FIL), both of which were received favourably by the global business community, the group said.
Serge Pun, Yoma Strategic’s executive chairman, said, “While real estate remains our strongest growth driver, the group’s other businesses are expected to continue to benefit from favourable market conditions.
“The recent equity placement will increase the group’s financial capacity to expand its existing businesses. This will provide Yoma Strategic the opportunity to further grow and enhance its portfolio to boost shareholders’ returns.”