Yoma Strategic Holdings

OCBC on 5 Sept 2012

Yoma Strategic Holdings Ltd (Yoma) was listed on the SGX in Aug 2006 and is primarily involved in the real estate sector in Myanmar. It is the only publicly listed company globally today providing almost pure exposure to Myanmar with an average daily liquidity over USD5m. Given the political will shown by President Thein Sein so far, we believe the process of economic liberalization in Myanmar will likely be meaningful and sustainable, which bodes well for Yoma’s long term outlook. Yoma is also an affiliate of the SPA Group (SPA), an established conglomerate in Myanmar with a track record in acquiring, developing and marketing large residential projects. This gives Yoma a strong competitive edge and a first mover advantage in the Myanmar real estate sector. We initiate coverage with a BUY rating and a fair value estimate of S$0.45, based on a scenario-weighted RNAV methodology.

Only listed company offering pure Myanmar exposure
Yoma Strategic Holdings Ltd (Yoma) was listed on the SGX in Aug 2006 and is primarily involved in the real estate business in Myanmar – selling, developing and managing land and real estate projects. It is the only publicly listed company globally today providing almost pure exposure to Myanmar with an average daily liquidity over USD5m.

Positive long-term outlook and a clear competitive edge
The Myanmar economy is a key driver of Yoma’s business outlook and, given the political will shown by President Thein Sein so far, we believe the process of economic liberalization will likely be meaningful and sustainable. Yoma is also an affiliate of the SPA Group (SPA), an established conglomerate in Myanmar with a track record in acquiring and developing large residential projects. This gives Yoma a strong competitive edge and a first mover advantage in the Myanmar real estate sector.

Access to capital markets - a key source of strength
Yoma’s ability to access capital markets and acquire attractive assets from SPA also enables SPA to focus on what we view to be a core competency: seeking, gestating and recycling capital to a pipeline of accretive Myanmar opportunities. This niche - Yoma’s key role in the larger virtuous dynamic of capital flow within the group – is crucial in addressing two common investor concerns. First, that Yoma does not have direct ownership of its land in Myanmar; secondly, that transactions between Yoma and SPA may potentially involve conflicts of interest. Because Yoma’s access to capital is clearly underpinned by its long-term financial transparency and health, we see it in SPA’s paramount interest to be a careful fiduciary of Yoma’s land assets and ensure transactions at arms-length prices.

Initiate with BUY and fair value estimate of S$0.45
We initiate coverage with a BUY rating and a fair value estimate of S$0.45, based on a scenario-weighted RNAV methodology.