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vs. a net loss of US$1.6m in 1HFY17. Part of the increase in net loss
Key information
was due to positive one-off items in the previous half-year including a
Market cap. (m) S$126 /
US$300k write-back of over-accrual of bonus and a US$137k write-
USD93
back of over-accrual of corporate secretarial costs in 1HFY17. Notably,
Avg daily turnover (m) S$0.1 /
Duty Free & Fashion Retail and Construction Services made up 59.4% USD0.1
of 1HFY18 revenue, with profit (before unallocated expenses) Avg daily vol. (m) 0.8
increasing 60% YoY to US$2.1m – though that increase was more than 52-wk range (S$) 0.42 - 0.68
offset by the increase in the group’s head office expenses and finance Free float (%) 40.2
charges. Looking ahead to 2HFY18, management expects to post a YoY Shares o/s. (m) 280.7
Exchange SGX
increase in revenue, along with reduced operational costs.
BBRG ticker SMI SP
Reuters ticker SINO.SI
Airport duty-free retail player in a rapidly developing economy
SGX code Y45
Foreign arrivals at Yangon International Airport reached 0.75m for the GICS Sector Industrials
first 8 months of 2017, up 14% YoY. We do note that one key risk to Trading Comp &
GICS Industry Distri
our FY19 forecasts is any continuation of the Rakhine state atrocities, Wai Ho Kwok -
Top shareholder
which may deter visitors from signing on tour packages next year and 53.8%
put a damper on arrivals. Nonetheless, the long-term growth story is
still intact. We believe that SMI’s positioning in the profitable airport Relative total return 1m 3m 12m
Company (%) -4 -13 -19
duty-free retail space in a developing country – that is still at a low
STI-adjusted (%) -6 -16 -44
base in terms of economic indicators relative to neighbouring countries
– offers investors a unique opportunity to participate in the country’s Price performance chart
growth. The Asian Development Bank projects a 7.7% GDP growth rate
for Myanmar in 2017 and 8.0% growth in 2018. We highlight three
factors in SMI’s favor – the current low base that revenue is at, the
high gross profit margins of the Duty Free & Fashion Retail segment,
coupled with the less-than-proportional increase in fixed costs we
project going forward. With a change in analyst, after adjusting for the
placement and tweaking our assumptions for FY19F, our fair value
decreases from S$0.97 to S$0.665 (16x FY19F; year ending Mar
2019), which implies a healthy 48% upside from yesterday’s closing
price of S$0.45. Maintain BUY.
Sources: Bloomberg, OIR estimates
Note: Industry universe defined as companies under identical GICS classification listed
in the same exchange.
Sources: Bloomberg, OIR estimates
Please refer to important disclosures at the back of this document. MCI (P) 003/06/2017
OCBC Investment Research
Singapore Equities
Exhibit 2: Revenue, Gross Profit, Operating Profit, and Profit After Tax from Continuing Operations
(USD m)
2
OCBC Investment Research
Singapore Equities
3
OCBC Investment Research
Singapore Equities
Income statement
Year ended 31 Mar (US$m) FY16 FY17 FY18F FY19F
Balance sheet
As at 31 Mar (US$m) FY16 FY17 FY18F FY19F
PBT from cont. and discont. op. -9.6 -7.2 -2.1 8.7
Working capital change -0.7 -8.0 -0.9 -6.5
Operating cash flow -8.6 -11.5 -0.5 4.9
Purchase of PP&E -16.6 -16.9 -5.0 -5.0
Other investing flows 2.9 -1.0 0.0 0.0
Investing cash flow -13.7 -18.0 -5.0 -5.0
Financing cash flow 15.1 23.9 6.7 1.0
Net cash flow -7.2 -5.6 1.2 0.9
Cash at beginning of year 10.4 3.2 3.4 4.6
Cash at end of year (including overdraft) 3.6 3.4 4.6 5.5
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Important disclosures