Singapore Myanmar Investco reports encouraging initial retail results at Yangon International Airport

Singapore Myanmar Investco Limited has reported revenue of US$13.3 million in its travel and fashion retail segment for the year ended 31 March 2017.

Subsidiary SMI Retail only began duty free operations at Yangon International Airport in September 2016, meaning there is little meaningful basis for year-on-year comparison. The company was awarded contracts for duty free, other retail and food & beverage outlets in 6,700sq m of space at the airport’s new International Terminal in December 2015.

Singapore Myanmar Investco Limited reported overall group revenue of US$23.3 million for the year, and a gross profit of US$4.8 million. Net of tax, the company reported a loss of US$7.3 million.

“The initial results of retail operations at Yangon International Airport are encouraging although it will take time for the new terminal to reach traffic flows at projected levels,” said SMI President and CEO Mark Bedingham in the company’s annual report.

“We have received much positive feedback from passengers and the airport management company on the quality of the duty free and travel retail stores that we have created and this initial success has been widely noticed in the city itself.

“Notably, we have used our relationship with DFS to supply a comprehensive portfolio of international wines & spirits and beauty brands for both departures and arrivals at Yangon International Airport and have introduced more than 30 international fashion and lifestyle brands to create an outstanding retail experience for this very modern, newly-built terminal.

“This new terminal has dramatically increased the capacity of Yangon International Airport to meet the expected rapid rise in international travellers; for business, for tourism and for Myanmar nationals who are also starting to travel overseas in greater numbers. This new terminal is already scheduled for further expansion and this will undoubtedly create new opportunities for SMI in travel retail at the airport.”

Bedingham also noted that a number of mall owners and developers in Myanmar saw SMI as a “highly desirable partner”. He continued: “We have been pleased to work with Junction City – a new integrated upscale development in downtown Yangon. We have been able to introduce several international brands that we work with at the airport into Junction City and nearly all of these retail stores have been opened by the end of April 2017.”

SMI signed an exclusive distribution agreement with Shiseido Asia Pacific in February 2017 and the first Shiseido flagship counter in Myanmar will open in Junction City by mid-year 2017.

Non-Executive Chairman Ho Kwok Wai said that SMI would now move focus on organic growth across its diversified business portfolio.

He noted a World Bank report issued on 30 January 2017 which stated that Myanmar’s economy will grow an average of +7.1% per year in the next three years.

“The landscape in Myanmar was very different when we began our transformation in 2013 but our objective for the group remains the same: to build a diversified business model to capitalise on the strong trends in consumer spending, international tourism and infrastructure investment in this frontier market,” he said.

“From the encouraging results shown in our portfolio of businesses so far, there is positive sentiment that we are on the cusp of major advances in Myanmar, with strong growth potential.”

Source: The Moodie Davitt Report