DBS Group Research, Sept 4
YOMA has finalised its 1-for-3 rights issue to raise circa S$164 million to kick-start the Landmark development and to acquire more land in Pun Hlaing. This issue of 432.5 million rights shares (at S$0.38/share) will enlarge its share base by 33.5 per cent. Yoma's chairman Serge Pun undertakes to subscribe all excess entitlements on top of his own. Previous indication is for the exercise to be completed by end-September, subject to SGX (Singapore Exchange) and shareholders' approval.
The entire rights proceeds will be utilised for 1) 1st land payment for Landmark (S$54 million); 2) 70 per cent interest in development rights to 10.8 million square feet of land in Pun Hlaing (S$95.9 million); and 3) acquisition of an authorised dealer of New Holland tractor and farm equipment for S$14.8 million. The S$0.8 million shortfall will be funded internally.
We are positive that funding is available now to kick-start the long-awaited Landmark project. We look forward to milestones such as a successful extension of master lease, partnerships with more branded hoteliers or retailers, and possibly sales of apartments. Near term, we expect this rights issue to sustain interest in the stock. We have tweaked our fair value to S$0.88 from S$0.90 to account for a 135 million new share placement in July. Maintain "buy".
BUY
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