Since our buy-rated initiation on 5 Sep 2012, Yoma Strategic Holding’s (YOMA) share price has appreciated a whooping 47% over five weeks from S$0.375 to S$0.55. Over this period, we have seen the US ease restrictions on Myanmar imports after Aung San Suu Kyi’s visit to the country. In addition, plans were announced by the Myanmar central bank for implementing an independent monetary policy and allowing JVs with foreign banks in the banking sector next year. While we acknowledge an improved long term outlook for YOMA as Myanmar continues to hit significant milestones in opening up its economy, these developments were mostly in line with our base-case expectations. We raise our fair value estimate to S$0.51 from S$0.45, as we incorporate into our model stronger selling prices for Star-City, but downgrade YOMA to HOLD as we view its shares to be fairly priced given current fundamentals.
Process of liberalization in-line with expectations
In our report last month, we had expressed the view that the process of political and economic liberalization in Myanmar would likely be a sustained and meaningful one. Since then, we have seen the US ease restrictions on Myanmar imports after Aung San Suu Kyi’s visit to the country. In addition, plans were announced by the Myanmar central bank for implementing an independent monetary policy and allowing JVs with foreign banks in the banking sector next year. These developments are much in line with our base-case expectations, which continue to validate our positive outlook of the company’s macro-economic drivers.
Potential acquisition of central Yangon site
YOMA has recently indicated, on 1 Oct 2012, affirmative interest in acquiring the land development rights of a central Yangon site owned by the SPA Group and now has 30 days to confirm its acceptance. Going forward, we believe YOMA is likely to accept and, using the Star City acquisition as a guide, could over the next few months conclude a process of an independent valuation of the site and accessing equity capital markets to fund the acquisition and redevelopment.
Focusing on fundamentals - downgrade to HOLD
Since our buy-rated initiation on 5 Sep 2012, the share price has appreciated a whooping 47% over five weeks from S$0.375 to S$0.55. While we acknowledge an improved long term outlook for the company as Myanmar continues to hit significant milestones in opening up its economy, these developments were mostly in line with our base-case expectations. We raise our fair value estimate to S$0.51 from S$0.45, as we incorporate into our model stronger selling prices for Star-City, but downgrade YOMA to HOLD as we view its shares to be fairly priced given current fundamentals.
In our report last month, we had expressed the view that the process of political and economic liberalization in Myanmar would likely be a sustained and meaningful one. Since then, we have seen the US ease restrictions on Myanmar imports after Aung San Suu Kyi’s visit to the country. In addition, plans were announced by the Myanmar central bank for implementing an independent monetary policy and allowing JVs with foreign banks in the banking sector next year. These developments are much in line with our base-case expectations, which continue to validate our positive outlook of the company’s macro-economic drivers.
Potential acquisition of central Yangon site
YOMA has recently indicated, on 1 Oct 2012, affirmative interest in acquiring the land development rights of a central Yangon site owned by the SPA Group and now has 30 days to confirm its acceptance. Going forward, we believe YOMA is likely to accept and, using the Star City acquisition as a guide, could over the next few months conclude a process of an independent valuation of the site and accessing equity capital markets to fund the acquisition and redevelopment.
Focusing on fundamentals - downgrade to HOLD
Since our buy-rated initiation on 5 Sep 2012, the share price has appreciated a whooping 47% over five weeks from S$0.375 to S$0.55. While we acknowledge an improved long term outlook for the company as Myanmar continues to hit significant milestones in opening up its economy, these developments were mostly in line with our base-case expectations. We raise our fair value estimate to S$0.51 from S$0.45, as we incorporate into our model stronger selling prices for Star-City, but downgrade YOMA to HOLD as we view its shares to be fairly priced given current fundamentals.
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