Yoma Strategic Holdings - OCBC Investment 2018-01-02: Streamlining Process In Motion

Yoma Strategic Holdings - OCBC Investment 2018-01-02: Streamlining Process In Motion YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - Streamlining Process In Motion

  • Memories Group Ltd to become associate.
  • Global players to construct two major projects.
  • In-line with strategic priorities.

Sale completion of tourism related businesses 

  • Yoma Strategic announced that it has completed the proposed sale of its tourism related businesses on 26 Dec through a RTO of SHC Capital Asia Limited, now renamed as Memories Group Limited (Memories). Memories will be focused on three business segments (experiences, services, hotels), which will feature the Balloons Over Bagan business, the Hpa-an Lodge and Pun Hlaing Lodge businesses, among other offerings.
  • Memories also plans to expand its portfolio through acquisitions of tourism-related businesses and will also actively identify new destinations that may be developed into future tourism attractions. 
  • Approximately 167.1m new consolidated shares have been allotted and issued by Memories to Yoma at S$0.263 per share as consideration shares, which represent 54.1% in the enlarged issued and paid-up share capital of Memories. 
  • Following the proposed compliance placement which will be taken by Memories, the latter will become an associated company of Yoma. We note that Memories has launched a compliance placement of up to 50m shares at a price of S$0.25 per share.

Contracts awarded to renowned construction players 

  • Separately in end-Nov 2017, Yoma announced that it has signed an agreement with Bouygues Construction and Taisei Corporation for the construction of Yoma Central and The Peninsula Yangon. The combined contract value of the two projects is over US$400m, with the main works contracts including civil, structural, architectural, mechanical, electrical, plumbing and heritage works. 
  • We are encouraged by the involvement of two global construction companies, as the hotel and residences in the two projects have been designed with an element of luxury in mind, with the residences being sold on an exclusive invitation-only basis.

Maintain HOLD 

  • In our view, the two latest announcements continue to be aligned with management’s intention of growing its core businesses (Yoma Food, Motor and Land) and streamlining its noncore operations. That said, we think that Yoma continues to retain meaningful exposure to Myanmar’s growing tourism business through its stake in Memories Group Limited
  • According to the World Travel and Tourism Council, Myanmar’s visitor exports (spending within the country by international tourists for both business and leisure trips) is forecasted to reach US$5.2b in 2027 from its 2016 level of US$2.3b. 
  • We maintain our HOLD rating and our fair value estimate of S$0.55.

Joseph Ng OCBC Investment | http://www.ocbcresearch.com/ 2018-01-02
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 0.550 Same 0.550