Yoma Strategic Holdings - DBS Vickers Research 2016-07-27: Landmark developer in Myanmar

Yoma Strategic Holdings - DBS Vickers Research 2016-07-27: Landmark developer in Myanmar YOMA STRATEGIC HOLDINGS LTD Z59.SI 

Yoma Strategic Holdings - Landmark developer in Myanmar

  • Slow quarter supported by fair value gains.
  • All segments excluding property recorded revenue growth.
  • New Landmark development signed.
  • Maintain BUY, raised TP to S$0.80 from S$0.78.



BUY, TP raised to S$0.80. 

  • We continue to like Yoma Strategic Holdings (Yoma) on the back of an improved operating outlook post elections in Myanmar. 
  • We believe the consistent delivery of the group’s real estate sales, coupled with the continued scaling up of its operations for its non-real estate segments, will represent upside to earnings and TP.


Revival of property sales with the new Landmark development. 

  • Management had on 23 July 2016 signed two master lease agreements on 
    1. the Peninsula Yangon (luxury hotel; Yoma owns 24%), and 
    2. a mixed development (Yoma owns 48%) comprising service apartments and business hotel, two towers of grade A offices, four floors of retail space and one tower of luxury residential units. 
  • With reputable international partners (IFC, ADB), there is more confidence on the successful execution of the development. Target completion is end-2020.


Non-real estate business segments to contribute positively. 

  • Yoma’s timely investments in growing its non-real estate business segments will start to contribute more significantly going forward. 
  • We expect the group’s tourism business to see stronger prospects on the back of robust visitor arrivals, while the group’s F&B and automotive segments will contribute more significantly as operations scale up in the coming year. 
  • Its investment in Myanmar Tower Company remains a wild card, where the number of towers under ownership is expected to triple in the next three years.


Valuation:

  • Maintain BUY, TP raised to S$0.80 from S$0.78 based on SOTP to factor in the increase in gross floor area (GFA) from the Landmark development. 
  • We remain positive on the prospects of the group and see it as a beneficiary of an improved economic outlook with the new Myanmar government.


Key Risks to Our View:

  • Political and economic risk. Myanmar is still a developing country and its real estate and infrastructure sectors are in the nascent stage of the cycle. As such, continued supportive government policies on foreign investments is key to improving sentiment within the real estate space.




Rachel Tan DBS Vickers | Derek Tan DBS Vickers | http://www.dbsvickers.com/ 2016-07-27
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 0.80 Up 0.78


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