Yoma Strategic Holdings - DBS Vickers Research 2015-10-05: Christmas comes early !

YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - Christmas comes early !

Axiata Group to acquire Telecommunication Tower Leasing Business from consortium involving Yoma
Potential sale of Yoma’s 25% stake in Digicel Asian Holdings Pte Ltd could reap gains of US$20m
Maintain BUY, TP S$0.78

Yoma Strategic Holdings (Yoma) announced that its partner, Digicel Group Limited, has entered into a conditional sale and purchase agreement with edotco Group Sdn Bhd (edotco), a wholly owned subsidiary of Axiata Group Bhd to dispose of its 75% interest in DAHPL at an agreed enterprise value of US$221m.

DAHPL is joint venture company between Digicel Group (75% stake) and Yoma (25% stake). The JV company owns Myanmar Tower Company (MTC) and is involved in development, construction and leasing of telecommunication towers in Myanmar. The conditions of the Proposed Transfer include a written consent from Yoma and approvals from the regulatory authorities in Myanmar.

Based on the agreed sale price, Yoma’s equity stake is worth an estimated US$20m above its book value. We understand that Yoma’s management is evaluating its options and is in discussions with edotco. At this point, a sale of its 25% stake in this JV company is uncertain.
In our view, a sale will be the optimal outcome as it will further streamline the group’s focus towards its core businesses of real estate, consumer and automotive. We have not ascribed a value at this point and if a sale does materialise, Yoma is expected to realise a gain of 1.1 UScts a share.

Yoma’s stock price performance has been muted lately, which we believe is due to the uncertain political climate (elections are due to be held in mid-Nov-15) resulting in a slowdown in its core real estate business. Yoma is trading at an attractive 0.5x RNAV.
Catalysts hinge on
1. turnaround in the group’s real estate business;
2. better than expected operational results from its consumer (FMCG), tourism and automotive businesses.

Derek Tan DBS Vickers | Rachael TAN DBS Vickers | http://www.dbsvickers.com/ 2015-10-05

DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 0.78 Same 0.78