Singapore Myanmar Investco - DBS Research 2016-12-07: Well Diversified Myanmar play

Singapore Myanmar Investco - DBS Vickers 2016-12-07: Well Diversified Myanmar play SINGAPORE MYANMAR INVESTCO LTD Y45.SI

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%.



The Business 


Proxy to Myanmar plays with five key business segments 

  • Singapore Myanmar Investco (SMI) is a proxy to Myanmar plays, with five key business segments: 
    1. Travel & Fashion, 
    2. Food & Beverage, 
    3. Auto services, 
    4. Construction, and 
    5. 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.



The Stock 


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.

Key Risks: 

  • Loss of duty free supply rights and franchise agreements for retail outlets; political instability.




NOT RATED 
Return *: 1 
Risk: Moderate 
Potential Target 12-mth* : 12-Month S$ 0.76 (31% upside)




Lee Keng LING DBS Vickers | http://www.dbsvickers.com/ 2016-12-07
DBS Vickers SGX Stock Analyst Report NOT RATED Maintain NOT RATED 0.76 Same 0.76

*This Equity Explorer report represents a preliminary assessment of the subject company, and does not represent initiation into DBSV’s coverage universe. As such DBSV does not commit to regular updates on an ongoing basis. The rating system is distinct from stocks in our regular coverage universe and is explained further on the back page of this report.



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