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YSX firms disclose mixed prospects ahead of foreign participation

Companies listed on the Yangon Stock Exchange (YSX) announced mixed prospects for 2020, the year Myanmar is set to allow direct foreign ownership of equities listed on the bourse. The Securities and Exchange Commission of Myanmar announced last July that non-Myanmar individuals and locally-registered entities would be allowed to invest in listed shares of up to 35 percent.

Analysts expect the move to spark interest mostly from Yangon-based retail investors, with this to be followed by institutional investors when the bourse has more listings and a broader array of sectors represented by its listed equities. No official timeline was given but analysts expect such trading to begin in the first half of this year.

Currently, there are six companies listed on the YSX with a combined market value over K620 billion. Of the companies that released performance announcements this week, First Myanmar Investment (FMI), which is controlled by tycoon Serge Pun, was the most bullish.

For the year ended September 30, 2019, FMI announced revenues totaling K168.4 billion, an increase of 29 percent compared to the previous transition period between April 1 and September 30, 2018. However, higher costs resulted in a 27pc dip in earnings to K7 billion for the period.

The main revenue driver was financial services, led by higher interest income earned from digital credit, mortgages, micro finance and overdrafts. Though still representing a small portion of total revenue, Pun Hlaing Siloam Hospital grew the most during the year, with demand for hospital services and equipment rentals on the rise. Over the next three years, FMI will construct a total of ten hospitals across the country.

FMI said it will continue to invest in its core businesses, namely financial services, real estate, healthcare and tourism. It expects the financial services sector to continue growing at a “remarkable” rate, with its subsidiary, Yoma Bank, aiming to lend largest sums of money to the small and medium-sized enterprise (SME) segment this year.

Last November, the Philippine conglomerate Ayala Corporation also bought a 20pc stake in FMI and Singapore-listed Yoma Strategic Holdings, which is also controlled by Mr Pun. The move involved an injection of $238 million into the two companies, including a $82.5 million convertible loan to FMI

“Ayala’s financial commitment underscores [its] confidence in the value of our stock and their optimism on the future of Myanmar’s economy,” Mr Pun said.

Things were rougher for TMH Telecom Public Limited (TMH). The firm announced revenues totaling K2.9 billion for the year ended September 31, 2019, which is 45pc lower than the half year ended September 31, 2018. Earnings for the period totaled K316.7 million.

TMH said this was because it cut under-performing projects and mainly focused on more viable long term investments during the period. However, it pointed out that although total revenue decreased, net profit margins improved as a result of cost-cutting.

TMH, which provides telecommunications services and infrastructure, noted in its report that the company is diversifying into new potential business areas such as electricity and media and entertainment to generate more value for its shareholders.

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Source : Myanmar Times

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