Singapore Myanmar Investco - Well Diversified Myanmar play
- Proxy to Myanmar plays with five key business segments.
- Duty free shops, retail outlets and car rental services benefitting from growing tourism.
- Foothold in expanding construction sector; filling in on shortage of cold warehouse in Myanmar.
- Fair value of S$0.76 provides potential upside of 31%.
Proxy to Myanmar plays with five key business segments
- Singapore Myanmar Investco (SMI) is a proxy to Myanmar plays, with five key business segments:
- Travel & Fashion,
- Food & Beverage,
- Auto services,
- Construction, and
- Logistics & Warehousing.
- SMI aims to have all businesses satisfy at least one of the three criteria – leadership position, early-mover advantage, and monopoly position.
10-year merchandise supply agreement to duty free shops; franchise rights for retail outlets.
- SMI’s 10-year agreement for the supply of duty-free goods at the new terminal of Yangon International Airport and its franchise agreements with three retail outlets to date – Crystal Jade, IPPUDO and The Coffee Bean, is set to benefit from the growing tourism in Myanmar.
Strong demand for car rentals.
- The liberalisation of Myanmar’s economy has lead to a significant rise in tourism and FDI, resulting in strong demand for car rental services.
Leveraging on the rapidly expanding construction sector and the shortage of cold warehouse in Myanmar.
- SMI’s partnership with SANY, one of China’s leading heavy equipment manufacturers, is set to capture a significant pie of the growing construction sector. SMI aims to be a national logistics/supply chain player, especially cold warehouse, in Myanmar.
Fair value of S$0.76.
- We arrive at a fair value of S$0.76, based on 18x FY19F PE, and 0.3x PEG (peers 0.4x).
- The 18x valuation parameter is at a discount to our 20x valuation target for SGXlisted peer, Duty Free Int’l, given SMI’s limited track record.
- Loss of duty free supply rights and franchise agreements for retail outlets; political instability.
Return *: 1
Potential Target 12-mth* : 12-Month S$ 0.76 (31% upside)