According to OCBC Investment Research, Yoma reported 3QFY14 PATMI of S$5.2m – up 42% YoY mostly due to a boost from land development rights (LDR) sales and a maiden contribution from their tourism business “Balloons Over Bagan”.
Here's more:
Overall, we judge 3QFY14 results to be above expectations as profit recognition from LDRs came in stronger than anticipated. In terms of the top-line, 3QFY14 revenues rose 132.5% YoY to S$30.2m, again boosted by real estate segment sales; we note that only S$14.8m out of a total S$60.6m from units sold in Star City to date has been booked, which points to S$45.9m of progress billings over the next 4 to 6 quarters.
Management continues to report a fairly healthy rate of sales conversion - 526 out of 528 units in Buildings A3 and A4 and 474 out of 1,043 units in Zone B has been sold as end of Dec 2013. We would speak with management regarding these results later today and, in the meantime, we put our fair value estimate of S$0.84 and hold rating under review.
Oilfield services firm Ezra Holdings said on Friday it has appointed JP Morgan Chase & Co to advise on strategic options for its subsea services division, including a possible listing of the business in the United States.
The subsea division contributed 62% of Ezra’s revenue in financial year 2013, which ended August 31. The unit reported a 44% year-one-year rise in revenue in 2013, but made a US$23 million ($29 million) operating loss as it struggled with higher-than-expected costs and delay in certain projects, Ezra’s financial reports showed.
“The fundamentals of the subsea industry are positive resulting in strong prospects for our subsea business in areas such as North America and Europe,” Lionel Lee, group chief executive officer and the company’s top shareholder, said in a statement.
Shares in Ezra jumped more than 40% over the past six months amid talks of a possible sale or merger of the subsea division. The company announced in early December that it was in discussions about its subsea unit following a query from the Singapore Exchange.
Ezra shares fell nearly 2% at $1.26 by 10:23 a.m.
“There is a lot of scepticism in the market,” said Clement Chen, a Barclays analyst.
“The only reason the share price performed the way it did in the second half of last year was speculation on M&A. Now the company says it is considering listing, some of the M&A premium may be withering down.”
Barclays has an underweight rating on Ezra, with a target price set at $0.90.
Subsea services providers install infrastructure on the bottom of ocean for the increasingly complex offshore oil and gas fields.
Cambridge Industrial Trust (SGX: J91U), a real estate investment trust that focuses on industrial properties in Singapore, just announced its full year earnings. CIT currently has a portfolio of 47 properties in Singapore that are grouped under 4 segments; logistics, warehousing, light industrial and general industrial.
Major Announcement
Together with its earnings report, Cambridge also announced that its Chief Executive Officer, Mr. Chris Calvert, will be resigning due to family reasons. Mr. Calvert has been with Cambridge Industrial Trust Management, the management company of CIT, for more than 5 years. A new CEO has been appointed and the REIT’s awaiting regulatory approval before further details are made known.
Performance for the Year
CIT has been able to increase its annual distribution per unit by 4% year-on-year to 4.976cents. At its current price of S$0.700 per unit, that is a yield of 7.1%. Annual revenue also went up by 8.4% to S$ 96.5 million compared to a year ago. Although the operating net income is down 23.8% due to higher expenses, the total return for the year increased 18% after gains from the disposal of some non-core assets were taken into account. Occupancy for the REIT has been good at 97%. On the acquisition side, the trust completed 4 acquisitions, amounting to S$ 92.7 million.
Outlook for 2014
From the REIT’s earnings presentation, it will continue to look for more acquisitions in 2014. CIT will also emphasize on divesting itd non-core assets while starting new asset enhancement initiatives. Given that its gearing is still manageable at 28.7%, it can be quite flexible in its options for financing these activities.
Foolish Bottom Line
Cambridge Industrial Trust is one of the REITs that are offering a yield above 7% yield. Other REITs that have a focus on industrial properties here in Singapore include Ascendas REIT (SGX: A17U), Mapletree Logistics Trust (SGX: ME8U), Sabana REIT (SGX: M1GU) and Soilbuild Business Space REIT (SGX: SV3U).
2 reasons why Yoma will be a solid stock pick in 2014
This year will be an inflection point.
Yoma Strategic Holdings is seen positively by OCBC Investment Research, as it expects the company to complete its Landmark acquisition in 1H14 and see its current share price as undervalued, creating an opportunity for wiser investors.
Here's the full analysis from OCBC Investment Research:
We turn positive on Yoma and upgrade the stock to BUY with a higher fair value estimate of S$0.97 (versus S$0.84 previously).
Our investment thesis rests on two key parts. First, our base case is for the Landmark acquisition to complete in 1H14.
The accretion from this project makes up 41% of Yoma’s fair value estimate and we anticipate a successful acquisition to be a key price catalyst. Second, note that Yoma’s share price in 2013 has stagnated mostly between S$0.70 and S$0.90 despite management penning potential deals across diverse businesses.
We believe the market is generally discounting these deals’ eventual earnings impact given their ubiquity across various companies on the SGX and a dearth of fruitful outcomes to date.
In 2014, however, we expect Yoma to transition from a mostly deal-making phase into one where management would deliver, from its incubated plans, large-scale operational traction and fuller earnings visibility.
We see this likely leading to a meaningful re-rating for the share price.
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