Yoma Strategic Holdings - RHB Invest 2016-10-26: Spins Off Tourism Assets into SHC; BUY Maintained

Yoma Strategic Holdings - RHB Invest 2016-10-26: Spins Off Tourism Assets into SHC; BUY Maintained YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - Spins Off Tourism Assets into SHC; BUY Maintained

  • Yoma Strategic has announced a proposed listing of its tourism assets via a Reverse Take-Over (RTO) of Singapore Exchange-listed SHC Capital Asia Limited
  • The transaction is expected to unlock a gain of $16m for Yoma. 
  • We maintain BUY on the counter with unchanged TP of SGD0.78.

The News:

  • Yoma Strategic has announced a spin-off of its tourism-related business via a Reverse Take-Over (RTO) of SHC Capital Asia Limited, a SGX listed shell company.
  • The tourism-related businesses that will be spin off comprise of: 
    • The hot air balloon business 'Balloons over Bagan' which operates a total of 14 balloons.
    • Pun Hlaing Lodge in Pun Hlaing Estate, and 
    • A parcel of land in Nyaung U in Bagan intended for the construction of a proposed commercial and tourism-related hospitality development.
  • SHC will simultaneously acquire additional tourism-related businesses in Myanmar comprising of Hpa-An Lodge, a hotel/lodge business and Asia Holidays, a Myanmar-based destination management company.
  • Following the proposed RTO, SHC will transform into a Myanmar-focused tourism company, which will be uniquely positioned to acquire, develop and operate new tourism-related assets in the country.

Our View

  • The proposed divestment of Yoma's tourism assets into SHC will unlock a gain of $16m, given the book value of $28m for assets under sale and a deemed market value of $44m.
  • SHC will issue consideration shares valued at an aggregate of SGD43.9m, giving Yoma a shareholding of 53.48% in SHC at an issue price of SGD0.263. Following the asset acquisition, SHC will have an initial market capitalisation of SGD82m. SHC intends to raise additional capital through a compliance placement to fund its expansion plans.
  • The latest transaction is in line with Yoma's decision to focus on its core businesses of property, automotive and consumer, while unlocking value from non-core assets through synergistic partnerships.
  • We maintain our BUY rating on the stock with unchanged TP of SGD0.78 based on SOTP valuation.

Goh Han Peng RHB Invest | http://www.rhbinvest.com.sg/ 2016-10-26
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.78 Same 0.780