Myanmar-based tourism focused company Memories Group posted its first full year results since completing the reverse takeover of SHC Capital Asia last year. The group comprises entities with interest in the hot-air balloon and luxury yachting businesses (Experiences segment), destination management services (Services segment) and the hotel operations (Hotel segment).
In FY18, the group registered revenue of US$8.8 million, a 43.6 percent growth, primarily driven by the consolidation of contribution from Hpa An Lodge and Asia Holidays Travel. However, gross profit margin decreased by 13.1 percentage points to 46.3 percent owing to lower gross margin attributable to Hpa An Lodge and the Asia Holidays. Largely due to a one-off non-operating reverse takeover cost of US$6.3 million, the group fell into the red with a net loss of US$6.4 million. Stripping that away, operating net loss would have only been US$0.1 million. With the enlarged portfolio, Memories Group’s net asset value per share increased by 154 percent to 12.5 US cents per share.
In March 2018, the group announced its plans to acquire Burma Boating, a luxury yachting company in Mergui Archipelago – the third preferred tourist destination in Myanmar. The premium cruising experience on luxury yachts would complement the group’s experience portfolios and help to extend its earnings base. As of 1Q18, Burma Boating has secured healthy pre-bookings until the end of May 2019 and is expected to give Memories Group’s revenue a boost in coming quarters.
Following in May 2018, Memories Group acquired Kayah Resort, a 26-key boutique hotel located in Loikaw, Kayah State. Home to many distinctive tribes, Kayah State offers an unique cultural experience to tourists. The total purchase price of US$2.9 million would be funded by cash of US$1.45 million while the remaining will be funded by the issuance of 7,781,280 new shares at an issue price of S$0.25, a premium to the current market price. The well-located Kayah Resort will be rebranded and improved into an upscale resort under the group’s four-star Keinnara brand to drive its occupancy rate. Room rates will also be revised to generate better yields for its investment.
The growth potential of the Myanmar tourism industry holds much promise for Memories Group. The Myanmar government expects the tourism industry to grow by 6.8 percent in 2018. Currently, Memories Group has expanded its footprint in six of Myanmar’s most visited tourist destinations namely Loikaw, Hpa-An, Bagan, Inle Lake, the Mergui Archipelago and Yangon. The recent acquisitions of Burma Boating and Kayah Resort also demonstrate the group’s efforts to look for quality assets in building a robust integrated tourism platform to capitalise on the growing Myanmar tourism industry.
Going forward, we expect to see gradual integration across the various interrelated business segments. With the right corporate strategy and growth plans, Memories Group would be able to unlock long-term value for both tourists and shareholders.