The circuit implements a combinational latch by specification, including an unknown initial state. It's exactly corresponding to the Verilog description.
Because the code below is a really poor description of a circuit
Code:
always @ (*)
begin
if (s)
y= a;
if (r)
y=b;
end
And based on the the above description, miskod gave a reasonable result of what a synthesis tool will likely implement.
This is why I really dislike people who insist on writing code where multiple lines are assigning the same signal that are not structurally within the same control statement.
How will output y gets values of input a when s=1 but r='x' or r='z' in the above schematic?
It won't get the value of a because the ridiculous coding style of following one if statement with another if statement that assigns the same variable ends up sequentially changing the value of y to x due to the x/z on r.
You need to read the LRM or a good book on the execution flow of Verilg.