3 factors that will boost Yoma's earnings in FY14

Star City construction to speed up.

According to DBS, recent developments provide tailwinds for stronger FY14 and beyond.

DBS noted three factors which support Yoma's positive run in FY14.

Here's more:

1) Enlisting an international player to fasten the pace of construction of Star City would significantly improve earnings recognition over the next few quarters.

2) The proposed tie-up with The Hongkong and Shanghai Hotels Limited (HSH) to develop Landmark’s 5* hotel shows that the Landmark project is progressing despite red-tape.

3) High class tourism and automotive segments while small are profitable and will be meaningful growth drivers for Yoma as it evolves into a conglomerate.

Core profit of S$2.5m was a shade below our S$3.5m forecast but the property boom continues, as seen in brisk sales of residences and Land Development Rights.

In FY13, Yoma sold a total of 491 units in Star City, ahead of our 430 units forecast. Gross margin of 42% was significantly higher than 4Q12’s 34%.

This looks sustainable as demand continues to outstrip supply of quality properties, a segment which is not expected to see new supply within the next year. ASPs grew 20-30% y-o-y and 5-10% q-o-q.

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