Latest / Investor Exchange / Yoma Strategic Holdings: FY2025 Earnings Report

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Yoma Strategic Holdings: FY2025 Earnings Report · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:08
  Welcome to the Deep Dive. Our mission, well, it's pretty simple.
• 0:12
  We take your source materials reports, research, you name it,
• 0:15
  and we boil it all down to the key insights you need.
• 0:19
  Think of it as your shortcut to getting up to speed. And hopefully with a few
• 0:23
  interesting bits along the way,
• 0:25
  today we're really digging into one specific set, the condensed interim financial
• 0:30
  statements for Yoma Strategic Holdings LTD covering the periods ending March 31st, 2025.
• 0:37
  Yeah, we're going to try and unpack what these numbers actually mean,
• 0:39
  you know, look at the story behind them and figure out what they suggest about
• 0:42
  the company's health and where it stands right now.
• 0:44
  Exactly. It's not just about reading the figures off the page.
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  It's about understanding the context, especially given the complex environment they operate in.
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  We want to get past the surface level. Right.
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  Find the why behind the changes, the key drivers, and just get a feel for the
• 1:00
  company's position based on this data.
• 1:02
  Okay. So let's start with the big picture, the headline numbers.
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  Group net profit. For the latest six months, ending March 31st,
• 1:11
  2025, it came in at U.S. $24.1 million.
• 1:16
  That's actually a slight increase from the U.S. $22.49 million in the same period last year.
• 1:21
  Okay, a small step up for the half year seems positive on the surface.
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  It does, but when you zoom out and look at the full 12 months ending that same
• 1:29
  date, March 31st, 2025, well, the story changes. The group net profit was U.S.
• 1:35
  $13.58 million, which is quite a drop from U.S. $21.20 million the year before.
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  So a better second half couldn't quite make up for the full year,
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  a noticeable decrease overall then. That's right.
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  And if we narrow it down even further to the net profit that's actually attributable
• 1:49
  to the equity holders, you know, the slice of the pie belonging to the shareholders,
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  that trend is even clearer.
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  For the six months, it was U.S. $18.33 million this year, down from U.S.
• 1:58
  $20.93 million last year.
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  So even in the better six-month period, the profit specifically for shareholders
• 2:03
  actually decreased. Correct.
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  And over the full 12 months, that decrease was, well, pretty significant.
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  U.S. $9.32 million for the year ending March 2025 compared to U.S.
• 2:14
  $18.43 million the previous year. Wow.
• 2:17
  Okay, so nearly halved over the full year for the equity holders. That's a big hit.
• 2:21
  It is. And you see that directly reflected in the basic earnings per share.
• 2:24
  The EPS is basically the profit divided by the number of shares out there, a key metric.
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  For the six-month period, it dropped from U.S.
• 2:31
  Cents 0.92 down to 0.71.
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  And the 12-month EPS must have taken a bitter tumble then.
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  It did, a really noticeable fall, from U.S. cents 0.80 down to just 0.200 for the full year.
• 2:42
  So yeah, the overall group profit dipped for the year, but the bottom line specifically
• 2:46
  for shareholders dropped much more sharply.
• 2:48
  Okay, so a challenging year for shareholder returns based on these numbers,
• 2:51
  even with that recent six-month uptick in overall group profit compared to the
• 2:55
  prior year's six months.
• 2:57
  So how did we get here? Let's talk revenue, top line. Right.
• 2:59
  Total revenue. Looking at the six-month comparison again, it seems pretty flat in U.S. dollar terms.
• 3:05
  U.S. $109.97 million this year versus U.S.
• 3:09
  $109.23 million last year.
• 3:11
  Barely moved. Looks flat, yeah. But I have a feeling there's more to it.
• 3:15
  There absolutely is. And this, honestly, is probably the most critical piece
• 3:19
  of context in these entire statements.
• 3:21
  It's all about the currency effect, the depreciation of the Myanmar kiyot,
• 3:25
  the MMK, against the U.S.
• 3:27
  Dollar. Ah, the currency factor.
• 3:28
  Right. Always a big deal in markets like this. How did it play out here?
• 3:33
  Okay, get this. In that same six-month period where the USD revenue looked totally
• 3:38
  flat, like less than 1% change, the report clearly states that revenue,
• 3:42
  when measured in the local currency, the MMK.
• 3:45
  Actually increased by over 39%. Whoa, hold on.
• 3:49
  Over 39% growth in local terms? That's massive.
• 3:52
  It's huge. But during that same period, the MMK depreciated against the U.S.
• 3:57
  Dollar by over 36 percent.
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  So you take that nearly 40 percent local growth, you translate it back into
• 4:02
  U.S. dollars for the report.
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  And the growth just vanishes because of the exchange rate hit.
• 4:06
  It looks like nothing happened.
• 4:07
  Exactly. Less than 1 percent growth reported in USD. It's a stark example.
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  The underlying business activity, the actual sales happening on the ground in
• 4:14
  Myanmar was really strong.
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  But the reporting currency completely masks it. That really changes the whole
• 4:21
  perspective on performance, doesn't it?
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  What about the full year? Some story even more pronounced.
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  Over the full 12 months, the reported revenue in USD actually decreased by about 7%.
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  Went from around U.S. $221 million down to U.S. $205 million.
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  But again, the report clarifies. In MMK terms, the local currency,
• 4:40
  revenue for that full year, actually increased by over 37%. So strong local
• 4:45
  growth again over the full year.
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  Very strong. But the MMK depreciation over those 12 months was even steeper
• 4:51
  over 48%. So that 37% local growth gets completely swamped by the currency effect,
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  turning it into a reported 7% decrease in U.S.
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  Dollars. Okay, this currency dynamic is absolutely central then.
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  It's not just a minor detail.
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  It fundamentally alters how the company's performance looks in these financials.
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  You've got local growth that's pretty robust, but it appears flat or even negative
• 5:11
  when translated back to USD.
• 5:12
  Precisely. It means you have to be really careful reading these USD numbers.
• 5:16
  You have to constantly keep in mind they're being heavily influenced,
• 5:20
  dragged down even, by the exchange rate.
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  The reality on the ground, in terms of local business activity,
• 5:25
  is often much better than the reported USD figures might suggest at first glance. It's a key lesson.
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  Currency volatility can massively distort reported results. Okay, so revenue story.
• 5:35
  Dominated by currency headwinds, hiding local growth.
• 5:39
  What about profitability further down, like core EBITDA? How did that hold up?
• 5:43
  Right, core EBITDA. That's earnings before interest, taxes, depreciation,
• 5:47
  amortization, and some specific adjustments, a measure of core operating profit.
• 5:50
  For the six-month periods, it was actually pretty stable. U.S.
• 5:54
  $30.53 million this year versus U.S.
• 5:56
  $30.25 million last year. So fairly steady for the half year,
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  even with the currency pressure.
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  Yeah, it held up relatively well in that comparison. But over the full 12 months,
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  it did see a decrease falling from U.S.
• 6:07
  48.16 million dollars down to U.S. 44.22 million dollars.
• 6:12
  OK, so core operations held up better recently, but still saw a dip over the full year.
• 6:19
  Were there any big moves in operating expenses that explain some of this?
• 6:23
  There are a few things highlighted in the six-month comparison.
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  Costs for subcontractors and related items went up. That was mainly linked to
• 6:31
  the Yomaland development segment. Okay.
• 6:33
  Why the increase there? Tied directly to project activity.
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  Specifically, higher spending needed on infrastructure for the Estella and ARA
• 6:41
  development projects as they moved forward.
• 6:43
  More building means more costs, basically. Makes sense. And employee costs.
• 6:47
  You mentioned those went down. They did, yeah. The report puts it down to a few things.
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  Reducing the number of expat staff, which are typically more expensive,
• 6:55
  the MMK depreciation making local salaries cheaper in USD terms,
• 6:59
  and also some cost savings from a leadership transition within the group.
• 7:03
  Right, the currency effect helping on the cost side there.
• 7:05
  And marketing and commissions also down. Yes, that decrease was mainly connected
• 7:10
  to the wave money business.
• 7:11
  They paid out lower commissions to agents, which fits with the fact that over-the-counter,
• 7:16
  or OTC, transaction revenue decreased.
• 7:19
  We'll touch on that more when we get to the segments. Got it.
• 7:22
  So overall profitability is kind of a mixed bag currency hitting revenue.
• 7:26
  Some operating costs rising with activity, others falling due to savings or currency effects.
• 7:31
  To really get the full picture, we need to break it down by business segment,
• 7:34
  right? See where the action really was. Absolutely.
• 7:37
  The report gives us some good detail on the why behind the performance in each
• 7:41
  segment, especially for that six-month comparison.
• 7:44
  Let's start with Yomaland development. Right. This was one where we saw decent
• 7:48
  growth even in the reported USD numbers. Yeah, a real standout.
• 7:52
  Revenue up a solid 32.9% in USD and, like we said, a huge 83.9% jump in MMK
• 7:58
  for the six months. What drove it?
• 8:01
  Momentum at their Star City development was key. They mentioned the Estella
• 8:04
  project launch, sales, and importantly, completion handovers.
• 8:08
  They handed over 140 completed units in that period. Okay, so actual delivery
• 8:13
  of finished properties.
• 8:14
  Exactly. Plus, the ARA project also contributed significantly as they recognized
• 8:18
  sales based on its progress towards completion.
• 8:21
  And they also finished the last two city loft towers at Star City.
• 8:25
  It wasn't just Star City, though.
• 8:27
  Their Punthlang estate also chipped in with sales from the Wren Project and a land sale.
• 8:33
  So real tangible progress across multiple projects turning into recognized revenue. Precisely.
• 8:39
  And they also launched a new project at Punthlang Senduku Garden and reported
• 8:43
  getting initial bookings.
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  They also noted they have about U.S. $92.5 million in unrecognized revenue from
• 8:50
  sales already made but not yet completed or handed over. So that points to,
• 8:54
  you know, a pipeline of future revenue from existing sales.
• 8:57
  Okay, the strong story in land development. What about Yoma Land Services?
• 9:01
  The picture there was a bit different USD revenue down, but MMK up,
• 9:05
  if I remember correctly. That's right.
• 9:06
  The reported USD decrease was 25.2%, but the main reason for that was lower
• 9:11
  operator fee income from the golf club subsidiary, HRGCCL.
• 9:14
  Now, that fee income is linked to how they value the investment properties within that entity.
• 9:19
  Ah, so an accounting valuation thing. Basically, yes. The fair value gain on
• 9:24
  those investment properties was lower this period compared to last year.
• 9:27
  And because the operator fee is linked to that valuation gain,
• 9:31
  the fee income dropped in USD terms.
• 9:34
  Okay, so the drop wasn't really about the day-to-day business of managing the estates.
• 9:38
  Exactly. And the report highlights this. It says that if you exclude those operator
• 9:42
  fees, the revenue from their core leasing income and estate management fees
• 9:46
  actually increased by 36.5% in MMK terms. Why?
• 9:51
  Because more people are living in the estates they manage, so they're collecting
• 9:54
  more fees. Right. That makes sense. So the underlying service business grew
• 9:57
  locally. How about Yoma Motors?
• 9:59
  Another mixed picture. USD down, MMK up? Yep.
• 10:02
  MMK revenue for motors was up 22.6%. That was mainly driven by higher sales
• 10:07
  of Hino trucks and also Volkswagen passenger vehicles as they managed to restock inventory.
• 10:12
  But that local growth was partly offset and the USD number pulled down because
• 10:17
  demand for tractors and other agricultural equipment was lower.
• 10:20
  And why was demand lower for farm equipment?
• 10:22
  The report points to a couple of tough external factors hitting farmers.
• 10:26
  One was limited financing options being available, making it harder to buy big ticket items.
• 10:31
  And the other was crop losses due to flooding in parts of the agricultural sector.
• 10:36
  Just less ability or maybe less need for farmers to invest in new machinery.
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  Okay, shows how things like financing availability and even weather can directly
• 10:45
  hit specific business lines.
• 10:47
  Let's move to leasing Yoma fleet. That segment saw pretty steep declines in
• 10:52
  both currencies, didn't it? It did, yeah. A really significant drop.
• 10:55
  46.0% in USD and 24.0% in MMK.
• 11:00
  It seems like a combination of factors hit them hard.
• 11:02
  Import restrictions made it tough to bring in new vehicles for the fleet.
• 11:06
  Ah, supply-side issues. Right.
• 11:08
  Then on the demand side, financing was muted. Customers apparently needed more
• 11:11
  upfront cash. Daily rental utilization was also down, partly blamed on reduced
• 11:15
  domestic travel, but also on stricter KYC or know-your-customer requirements
• 11:19
  impacting renters. Okay, multiple headwinds. And there's more.
• 11:22
  They mentioned shrinkage in a fleet of Caterpillar equipment they manage for
• 11:26
  a third party, MSP, apparently due to difficulties accessing rural work sites.
• 11:31
  Plus, some existing lease contracts simply expired and weren't replaced at the same level.
• 11:36
  So yeah, operational issues, market demand, regulations, access problems,
• 11:40
  a whole raft of challenges for the leasing business.
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  They did note their third-party assets under management stood at U.S. $24.54 million.
• 11:48
  A tough environment for them. What about mobile financial services wave money?
• 11:52
  Also a significant decrease there. Yes, big declines here too.
• 11:56
  46.4% down in USD, 26.3% down in MMK.
• 12:01
  The main driver reported was lower over-the-counter, or OTC, transaction volumes.
• 12:06
  That's the traditional agent-based cash-in, cash-out service.
• 12:09
  And why did OTC volumes drop?
• 12:10
  Several reasons cited. a shift by users towards using the digital wallet directly,
• 12:14
  operational disruptions affecting agents in some areas, and just the general
• 12:18
  challenging macroeconomic conditions impacting people's ability or need for those transactions.
• 12:23
  I thought there was some good news on the digital side.
• 12:25
  There was, and that's the crucial nuance here. While OTC fell,
• 12:29
  the report explicitly states that digital transaction volumes actually grew.
• 12:32
  They attributed this to more transactions happening, better quality of active
• 12:37
  users, maybe meaning more engaged users, more use cases for the digital wallet,
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  and better liquidity management within the digital system itself.
• 12:45
  So it's not just a simple decline for wave money. It's also signaling a shift
• 12:49
  in how people are using the service moving from agent-based cash to digital. Exactly.
• 12:54
  It points to a changing landscape within that business.
• 12:58
  Now contrast that with Yoma F&B, the food and beverage segment,
• 13:01
  KFC and YKKO. That was a very different story.
• 13:04
  Strong growth. Right. This one really stood out. Yeah, a really strong performer.
• 13:07
  Revenue up 16.6% in USD and an impressive 58.5% in MNK. What was behind it?
• 13:14
  The report cites strong consumer demand, successful marketing campaigns,
• 13:18
  having a larger operating platform, which probably means more stores or better
• 13:21
  capacity, and also income coming in from expanding the YKKL restaurant franchise.
• 13:26
  And didn't the report mention they achieved this despite having to raise prices multiple times?
• 13:31
  It did, which is quite telling. It suggests that even with inflation and the
• 13:35
  MMK depreciation forcing them to adjust prices upwards frequently,
• 13:39
  consumers kept coming back.
• 13:41
  Demand seems pretty resilient for their offerings. So strong consumer appeal
• 13:45
  and good execution in that segment.
• 13:47
  Okay, so that segment breakdown is really illuminating. You've got land development
• 13:50
  and F&B showing strong underlying local growth, resilience even.
• 13:54
  Then motors, leasing, and wave money facing quite specific headwinds.
• 13:59
  Some external like import rules or financing, others internal like the shift
• 14:04
  from OTC to digital in wave money. and overhanging all of it is that major currency
• 14:09
  translation effect when reporting in USD.
• 14:11
  Precisely. It really paints a picture of, you know, vastly different performance
• 14:15
  across the portfolio shaped by both very specific market conditions for each
• 14:18
  segment and these broader macroeconomic forces like currency.
• 14:22
  Okay, let's shift slightly.
• 14:24
  Beyond the core operations and revenue, were there other significant financial
• 14:27
  movements we should highlight?
• 14:29
  Finance costs, for instance. They decreased quite a bit in the six months view.
• 14:32
  They did, yeah. Dropped by nearly half compared to the previous period,
• 14:36
  from about U.S. $22 million down to U.S. $11 million.
• 14:40
  The report gives a couple of reasons. One was a deliberate shift towards borrowing
• 14:44
  more in the local currency, MMK.
• 14:47
  The other was the depreciation of the MMK actually helping reduce the USD value
• 14:52
  of some existing MMK borrowings.
• 14:55
  Ah, so the currency depreciation had a positive impact on some costs.
• 14:59
  In this specific case, yes, for the USD reporting of those costs.
• 15:02
  They also mentioned getting a boost from currency translation gains on some
• 15:06
  loans they have in Thai bot because the bot weakened against the USD in this period.
• 15:10
  That contrasted with the prior period where they had losses because the USD
• 15:14
  had strengthened against the MMK impacting loans to Myanmar subsidiaries.
• 15:17
  So yeah, a mix of strategic debt changes and favorable currency moves on certain
• 15:22
  loans helped lower the overall finance cost number.
• 15:24
  Interesting. What about net
• 15:25
  fair value gains? That line item saw a big decrease. What's that about?
• 15:28
  Right. That dropped quite dramatically from US $43 million down to about U.S.
• 15:33
  $17.5 million in the six-month comparison.
• 15:37
  This line mostly reflects the gains from revaluing their investment properties
• 15:41
  in Myanmar each year based on market changes.
• 15:44
  So property values didn't increase as much this year?
• 15:47
  Well, it's a bit more nuanced. The report says the properties did increase in
• 15:50
  value in local MMK terms.
• 15:52
  However, the rate of that increase was lower this year compared to the big jump they saw last year.
• 15:57
  Then you combine that smaller MNK increase with the negative impact of the MNK
• 16:01
  depreciation when translating it back to USD, and the result is a much smaller
• 16:06
  reported gain in U.S. dollars.
• 16:07
  It shows how volatile this line can be, influenced by both local property market
• 16:12
  sentiment and the exchange rate.
• 16:13
  Okay, that makes sense. And the share of losses from associated companies,
• 16:17
  those losses decreased. Yes, they did.
• 16:19
  Losses went down from about U.S. $4.6 million to U.S.
• 16:24
  $2.9 million. The main reason given was that they needed to record lower impairment
• 16:28
  losses for their investment in the Peninsula Young-on-Hur-Tel project this period.
• 16:32
  It seems most of the necessary impairment for that investment had already been
• 16:36
  booked in previous years.
• 16:37
  They note the carrying value of that investment is now around U.S. $18.4 million.
• 16:42
  Got it. And similarly, impairment losses on other non-financial assets were also way down. Correct.
• 16:48
  Almost disappeared from U.S. $3.45 million to just U.S.
• 16:52
  $80,000. The reason was simple. The prior period included a specific impairment
• 16:58
  loss related to an investment in Seagram MM, and there was no similar charge this time around.
• 17:03
  Okay, so some of those other lines below operating profit improved mainly because
• 17:06
  prior periods had some specific negative hits that weren't repeated,
• 17:09
  while the big fair value property gain was much lower this year.
• 17:12
  Let's quickly touch on the balance sheet and any recent activities.
• 17:15
  How does the overall financial position look?
• 17:18
  The snapshot as of March 31st shows some shifts compared to the year before.
• 17:22
  Total assets edged down slightly from about U.S. $1.16 billion to U.S. $1.13 billion.
• 17:29
  Total liabilities ticked up a bit from U.S. $481 million to U.S. $489 million.
• 17:34
  And the net result was total equity decreasing from around U.S.
• 17:38
  $676 million to U.S. $636 million.
• 17:42
  And borrowings increased. Where's the little? Yeah. From $160.6 million up to U.S.
• 17:48
  $166.2 million. The report gives the usual breakdown secured versus unsecured,
• 17:53
  current versus non-current, and mentions collateral provided.
• 17:56
  But importantly, it explicitly states that as of the reporting date and even
• 17:59
  up to the announcement date, they hadn't received any notices from lenders demanding
• 18:03
  early repayment or accelerating any loans.
• 18:06
  That's a positive signal about their relationship with lenders and financial
• 18:09
  stability. Right. That's key context.
• 18:10
  They also mentioned perpetual securities. What's the story there?
• 18:13
  Yes. These are interesting instruments. They kind of sit between debt and equity.
• 18:17
  They pay distributions like bonds, but they're classified as equity on the balance sheet.
• 18:22
  The total amount increased from about U.S. $79 million to U.S. $90 million.
• 18:27
  Part of that increase was actually a subsequent event. They issued another U.S.
• 18:32
  $15 million worth in June 2024 after the period ended specifically to refinance other debt.
• 18:38
  And the reason they counted equity is important. Absolutely critical.
• 18:41
  The report makes it clear their equity because Yoma has the full discretion
• 18:45
  to defer the distributions indefinitely and crucially has no contractual obligation
• 18:50
  ever to repay the principal.
• 18:52
  So from an accounting perspective, it doesn't count as debt.
• 18:55
  They also noted they bought back and canceled about U.S. $3.9 million of older
• 18:59
  perpetuals during the year.
• 19:01
  OK. And one final notable event happened after the reporting period closed.
• 19:05
  Something about Yoma Fleet. That's right. In July 2024, they bought out the
• 19:09
  remaining 20% stake in their leasing subsidiary, Yoma Fleet,
• 19:14
  that they didn't already own.
• 19:15
  The price was U.S. $13.78 million, and they paid for it by issuing new company
• 19:21
  shares, about 137 million of them.
• 19:24
  So Yoma Fleet is now a wholly owned subsidiary. Interesting timing.
• 19:28
  Consolidating ownership even while that segment is facing the challenges we discussed earlier?
• 19:32
  It is. It suggests a long-term commitment to that business despite the current difficulties.
• 19:37
  Okay, so let's try and wrap this up. Bringing it all together,
• 19:39
  what's the main takeaway from this deep dive into Yoma's financials?
• 19:43
  It feels like the big story is this massive currency headwind, right?
• 19:47
  It's really obscuring what seems like pretty strong local currency growth in
• 19:51
  key areas like land development and F&B.
• 19:54
  Definitely. The reported USD numbers are just heavily skewed by the MMK depreciation.
• 19:58
  Meanwhile, you've got other parts of the business, like leasing and wave money,
• 20:02
  that are grappling with very real, specific, on-the-ground challenges,
• 20:06
  things like import rules, financing access, changing customer habits.
• 20:09
  And the bottom line for shareholders reflected this mix, taking a noticeable
• 20:14
  hit over the full year, even with a better second half.
• 20:17
  That was driven by that currency impact on revenue, lower property valuation
• 20:22
  gains this year, even though finance costs came down and some past impairments didn't repeat.
• 20:26
  Yeah, it really paints a picture of just how complex it is to run such a diverse
• 20:31
  group of businesses in an environment that's got so much macroeconomic volatility,
• 20:35
  especially on the currency front.
• 20:36
  The reported numbers in USD tell one story, but digging into the local currency
• 20:41
  performance and the drivers within each specific segment reveals a much more
• 20:44
  textured reality. Absolutely.
• 20:47
  It's a performance shape by both that challenging external environment and how
• 20:51
  they're executing within each different business line.
• 20:54
  And this kind of leads to a final thought, a question perhaps for you or a listener to consider.
• 21:00
  We spent a lot of time on the numbers and the huge impact of currency.
• 21:04
  But given everything we heard about the specific segments, the import restrictions
• 21:09
  hitting motors and leasing, the financing issues for farmers,
• 21:12
  the shift from cash to digital and mobile money,
• 21:15
  how much weight should we give to those non-financial operational market-specific factors?
• 21:20
  Could they ultimately be just as important, maybe even more important,
• 21:24
  than the currency adjusted UST figures when you're trying to gauge the true
• 21:27
  underlying health and the future prospects of a company like this?
• 21:31
  Something to think about. A very relevant question. Indeed. Well,
• 21:35
  that's our deep dive into these Yeoma Strategic Holdings financial statements for today.
• 21:38
  We hope pulling out these threads helps you make sense of the numbers and find the key insights.