YOMA: Positions for Rich Harvest as Myanmar Opens

Yoma Strategic CEO, Melvyn Pun (Photo: Company)

As the saying goes, the apple doesn’t fall far from the tree, and in Melvyn Pun’s case, it’s certainly true.

The Chief Executive Officer of Singapore-listed Myanmar investment firm Yoma Strategic Holdings Ltd credits his indomitable spirit to his father, Serge, who is one of the country’s most successful entrepreneurs.

“We have a ‘can-do’, ‘never say never’ mindset. That’s the work ethic my dad passed on to me, which has distinguished the quality of Yoma’s products and projects all these years,” said Hong Kong-born Pun, the eldest of four sons.

Pun’s ethos bodes well for Yoma’s fortunes.

The company, which listed on the Singapore Exchange in 2006, has a portfolio of businesses ranging from real estate to consumer, automotive, agriculture, logistics and tourism in Myanmar.

Its international partners include Japan’s Mitsubishi Corporation across multiple businesses, Sumitomo Corporation in the automotive sector, US-based Yum! Brands in consumer, and Malaysia’s Axiata Group in telecoms infrastructure.

Yoma is affiliated to Serge Pun & Associates Ltd – a real estate firm founded by the senior Pun in 1983 – and First Myanmar Investment Co. Ltd. FMI will be among six local companies to start trading on the Yangon Stock Exchange in March, following the inauguration of the country’s first modern bourse earlier this month.

The country’s growth will be very strong, and a rising tide lifts all boats. For anyone with an entrepreneurial spirit, Myanmar is the place to be.

- Melvyn Pun
CEO

Yoma Strategic Holdings

His father remains Yoma’s Executive Chairman. The 62-year-old Myanmar-born ethnic Chinese, who developed a reputation as “Mr Clean” in a country ranked as one of the world’s most corrupt, consistently impressed upon his sons the importance of integrity.

The senior Pun is the chairman of Serge Pun & Associates Group, a MNC real estate firm, and Yoma Bank, one of Myanmar's largest commercial banks.
(Photo: Company) “Dad taught us to stick to our principles even when operating in a difficult environment – this was especially relevant during Myanmar’s darker days,” Pun recalled.

“He advocated responsible business practices, and was very vocal about not paying bribes, treating our partners well and doing community work. He made things absolutely black and white.”

The senior Pun returned to Myanmar in the 1990s, after fleeing the country following a military coup in 1962.

Thereafter, he built a sprawling business empire with interests ranging from property to banking and civil aviation. He was ranked 45th on Forbes’ list of Singapore’s 50 Richest in 2015, with a net worth of over US$500 million.

The son also inherited a thirst for learning from his father. “My dad focuses on improving himself through reading and learning new things – he is like a sponge that soaks up knowledge. That has rubbed off on me – I find the learning process totally stimulating.”

Pun hopes to inculcate the same moral values in his son and daughter, aged five and three.

“There’s no better experience than going home and having your kids jump into your arms,” he said, with a laugh.

“I want to pass on to them the same principles my dad taught me – be a good person, and go beyond what is required to be fair to your investors, colleagues or partners, because that will pay itself back in the long run.”

The fundamentals of justice and equality are in turn connected to one’s work ethic, Pun noted.

“There’s no successful or happy person who doesn’t possess a good work ethic, who isn’t totally dedicated to whatever he or she does.”

Having a good ROI is not the only criteria to consider, as almost everything in Myanmar can make money, due to the economy's low base. But every project has different risks, and we need to be mindful of the time frame. We also need to choose projects that will allow us to build for the next generation.

- Melvyn Pun
CEO

Yoma Strategic Holdings

On hindsight, Pun's decision to diversify away from real estate was a good one.

"I started the diversification process three to four years ago, and this was achieved without compromising the growth of the core property business," he recalled.

Yoma branched into "sexy" market segments by introducing Western consumer labels like Kentucky Fried Chicken, through a partnership with New York Stock Exchange-listed Yum! Brands.

"There's something about KFC that captures the imagination. It is more than just fried chicken – it's an aspiration. Some Burmese will travel six hours to the KFC store and queue two to three hours to eat there," he said.

Yoma's consumer segment, comprising of its KFC franchise in Myanmar, alcoholic drinks unit, and food distribution joint venture with Japanese F&B marketeer Kokubu, contributed 10.9% to 2QFY2017 revenue.
(Photo: Company) Prices on the menu, including the KFC Bucket Meals, are affordable, and the vibrant, energetic mood of the outlet is irresistible. Yoma opened its second KFC outlet in October, and the third in November.

"It's not price, but the status – the Burmese are experiencing a global brand in their own home market, and this reflects the coming of age of Myanmar," Pun added.

Yoma expects to open 50 KFC outlets in Myanmar "within a number of years". “There are 500 KFC restaurants in Thailand alone – that gives you an idea of the potential scope of the business in Myanmar,” he added.

Yoma also ventured into other industries, such as the tractor and vehicle leasing businesses, to broaden its revenue base.

"Our automotive revenues increased multiple times last year versus the previous year, and is increasing this year as well. This growth speaks volumes about our ability to execute in new areas," he added.

Dad taught us to stick to our principles even when operating in a difficult environment – this was especially relevant during Myanmar’s darker days. He advocated responsible business practices, and was very vocal about not paying bribes, treating our partners well and doing community work. He made things absolutely black and white.

- Melvyn Pun
CEO

Yoma Strategic Holdings

• As Myanmar’s new government may not be formed until April 2016, near-term political uncertainty may continue to weigh on business sentiment. The Group is optimistic that formation of the next administration could provide the catalyst for the next phase of economic development and investment in the country.
• The property market has been significantly impacted in recent months, as buyers delay their purchases ahead of the election. The outlook for the property market will likely remain slow until the new government is formed.
• The automotive businesses recorded strong growth, in particular in the New Holland tractor and Yoma Fleet businesses. The growth is expected to continue as the agriculture industry develops, and companies further expand in the country.
• The KFC business is expected to grow in the near to medium term, driven primarily by additional store counts. The Group plans to open additional KFC outlets in 2016.