Why has Yoma Strategic’s share price risen over 60% to a two-month high?

The Myanmar investment company’s stocks grew over 20% this week alone on the back of a new partnership with an Alibaba subsidiary.

Share price of Myanmar-founded and Singapore Exchange-listed investment company Yoma Strategic Holdings is up over 20% since the start of the week.

As at 13:00 SGT on Wednesday 20 May 2020, Yoma Strategic Holdings, based on IG data.

Yoma Strategic’s share price has risen over 62% since late-March but is down 28% year-to-date.

Alibaba’s Ant Group to invest US$73.5 million in Yoma-backed Wave Money

The boost came after it was announced on Monday 18 May 2020 that Alibaba’s fintech subsidiary Ant Financial Services Group will be pumping in US$73.5 million into Myanmar money transfer service provider Wave Money – a joint venture between Yoma Group and Norwegian telco Telenor Group.

Under the partnership agreement, Ant Group will become a substantial minority stakeholder, alongside existing shareholders Yoma Group and Telenor Group.

Ant Group’s stake in Wave Money will come by way of a new share issuance which is subject to certain conditions, including regulatory approval.

According to the joint press release, Wave Money will ‘leverage Ant Group’s experience in building mobile payment platforms to enhance its digital competence, capabilities, user experience and service offerings’ as part of the strategic partnership.

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Yoma seeking to leverage Myanmar’s financial sector boom

Besides running a network of more than 57,000 agents or ‘Wave Shops’ in urban and rural areas across 295 townships across Myanmar, Wave Money also operates the country’s most widely used mobile transfer app called WavePay.

With the Myanmar government planning to increase financial inclusion in the country from its current rate of 48% to 60% by 2022, financial technology and mobile solutions like Wave Money are expected and poised to play a significant role in this growth.

Yoma Strategic says it will look to ‘strengthen its interest’ in Myanmar’s digital financial services sector, which CEO Melvyn Pun says is still ‘massively underserved’ with ‘only a quarter of people having a bank account’.

Pun believes that Ant Group’s wealth of mobile payment and fintech expertise will ‘massively boost’ Wave Money’s capabilities to support this growing trend towards cashless payments, which is being accelerated by the Covid-19 pandemic.

Yoma Strategic added that it is considering increasing its shareholding in Wave Money.

Wave Money claimed that its transfer volume more than tripled year-on-year reaching 6.4 trillion Myanmar Kyat (US$4.3 billion). During the same period, revenue and transaction numbers also tripled.

The company also affirmed that it became EBITDA positive in September 2018.

Yoma Strategic posted a net loss of US$15.9 million in second half of 2020

Putting those positive fundamentals aside, potential and existing investors should probably note that the wider Yoma Strategic Holdings entity suffered a net loss of US$15.9 million for the six months ended 31 March 2020, versus a net profit of US$20.6 million in the same period a year prior.

Earnings per share for this period came in at a loss of -US$0.73 per share, compared with earnings of US$1.09 per share a prior.

Pun had attributed the losses to the Covid-19 pandemic, which ‘created unprecedented disruptions in every sector of the economy’. He said the outbreak had affected businesses across the group as the quarter progressed.

Although Myanmar only reported its first Covid-19 case at the end of March 2020 and the Myanmar government had only implemented strict control measures to limit the spread of the virus in late March, economic activities in the country began to slow at the end of January, given the business disruption occurring regionally and the consequential impact on consumer sentiment.

China, Thailand and India had also closed their borders to Myanmar in February 2020.

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