Yoma plagued by higher staff costs and slow construction

Analyst cuts FY14 earnings forecast by 16%.

According to DBS, despite healthy property sales, Yoma’s earnings growth will be reined in by slow construction in 1H14 and higher staff costs due to several managerial appointments.

DBS raised SGA costs by 30-40% for FY14F/15F and cut net earnings by 16%/6%. For 1QFY14, DBS expects S$2.8m net profit and S$24m sales.

Here's more from DBS:

Cut FY14 F/FY15F earnings by 16%/ 6%; slow construction and higher staff cost (a few senior hires recently) expected to rein in overall earnings growth despite healthy property sales.

Overall, we expect healthy property take-up rate in FY14, but earnings growth would be moderate. Apart from continued slow construction in 1H14, we also expect significantly higher staff costs following several key management appointments announced in the June quarter.

Hence, we raised SGA costs by 40% and 33% for FY14 and FY15, respectively, and cut net earnings by 16% and 6%. For 1QFY14, we expect net profit of S$2.8m on sales of S$24m. Yoma is due to report results end July.

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