Yoma Strategic Holdings - OCBC Investment 2016-10-26: Spinning off tourism businesses

Yoma Strategic Holdings - OCBC Investment 2016-10-26: Spinning off tourism businesses YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - Spinning off tourism businesses

  • Reverse-Take-Over into SHC Capital Asia Limited (SHC) on the Catalist Board.
  • Myanmar tourism focused spinoff.
  • To be led by new CEO, Michel Novatin.

Plans to spin off tourism business through RTO 

  • The group announced that it plans to spin off its tourism-related businesses as part of a Reverse-Take-Over of SHC Capital Asia Limited (SHC) which is listed on the Catalist Board of the SGX. 
  • A conditional sale and purchase agreement has been signed for the proposed sale of its tourism- related businesses, comprising the “Balloons over Bagan” business (a hot-air balloon business operating in the Bagan area in Myanmar), Pun Hlaing Lodge (a 46-key resort currently under construction on 2.192 acres of land on Pun Hlaing Estate) and Bagan Land (a 4.3-acre parcel of land in Nyaung U, Myanmar, that will be developed into a proposed commercial and tourism-related hospitality development). 
  • We understand that the new target company also plans to issue new shares to acquire two new businesses, which are Hpa-An Lodge (a 19-key lodge business in Hpa An Township, Myanmar) and Asia Holidays (a tourism and destination management company).

Yoma to hold 53.5% in SHC before any proposed compliance placement 

  • After the exercise, Yoma is expected to be issued 167m shares valued at an aggregate of S$43.9m which gives the group a shareholding of 53.5% in SHC before taking in account any shareholding effects arising from any proposed compliance placement of SHC. 
  • The group envisions that SHC will be transformed into a Myanmar-focused tourism company to acquire, develop and operate new tourism assets in the emerging economy. 
  • In addition, the group will be led by Mr Michel Novatin who is an industry veteran in managing luxury hotels. We believe this development is a sensible one as the proposed divestment of assets into SHC are conducted at reasonable valuations and that the spin-off, to be led by a new CEO, could likely gain a sharper focus in growing its operations in the burgeoning tourism sector in Myanmar. 
  • We highlight that the proposed exercise is subject to condition precedents and further approvals from relevant authorities. 
  • Maintain HOLD with an unchanged fair value estimate of S$0.54.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2016-10-26
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 0.54 Same 0.540