Yoma expects to ride on property market’s recovery

Pick-up in China’s second-tier cities gives a boost to company’s projects

YOMA Strategic Holdings should continue to be profitable in the current financial year as it rides on a recovery in the property market in China and Singapore, chairman and chief executive Serge Pun said.

The company’s projects in China are located mostly in second and third-tier cities which have shown a lot of promise over the last few months, Mr Pun said.

‘When the financial crisis hit, there was a stagnation of sales of projects in second and third-tier cities, although prices were holding,’ he said. But now, prices are picking up.

The company expects its business in China to be one of its growth drivers over the next two years. China contributed 10 per cent of the group’s total revenue in the financial year ended March 31, 2009 (FY2009) but the proportion could well grow in the next two years.

In particular, revenue in FY2011 (and to a smaller extent, in FY2010) is also expected to come from the soon-to-be completed Grand Central project in Dalian, China. Grand Central comprises three elements: a grade A office tower, five-star serviced apartments and a retail complex.

Mr Pun said last week that the retail complex was about 60 per cent let, while the office tower was about 20 per cent let. Take-up for the office space has been slow as some tenants who had earlier committed to taking up space have put their expansion plans on hold in the wake of the financial crisis, he said.

The serviced apartments, which are operated by Hong Kong’s Shama Group, are around 80 per cent occupied.

Mr Pun is also optimistic about the growth potential of Singapore, where Yoma set up a specialist piling unit in 2008. The unit has secured 13-14 contracts in the past year, and could win more jobs as construction work continues apace in Singapore. Yoma earned 24 per cent of its revenue in Singapore in FY2009.

Despite the growth potential of the Singapore and China units, Mr Pun said that Myanmar, where the company is headquartered, will continue to provide support for earnings. The country contributed 66 per cent of revenue in FY2009.

Yoma, which was listed on the Singapore Exchange in August 2006, reported a net profit of $1.5 million on the back of revenue of $15.4 million for FY2009.

Source: Business Times, 19 Oct 2009