Yoma Strategic Holdings
Will Yoma hit a new Landmark?
▊ Yoma’s outlook has benefited enormously from Myanmar’s opening-up. The immediate catalyst ahead would be the potential completion of the Landmark development acquisition. In light of the upcoming 2015 elections in Myanmar, political uncertainty is a key risk. Yoma’s share price today reflects a full RNAV of its existing assets. Further upside from here depends on the company sealing the Landmark deal. We initiate coverage on this Myanmar proxy with a reduce rating and a target price of S$0.75 (based on 1x FY15 RNAV excl. Landmark). Clinching of Landmark will add $0.09 to our RNAV.
Liquid Myanmar proxy
Yoma is still the only pure-play Myanmar stock. As long as Myanmar does not backtrack on its reforms, Yoma’s property focus and early- mover advantage provide ample room for earnings growth. Helmed by an experienced management team and enjoying a capital-raising platform advantage with its SGX listing, Yoma has an edge over its local peers that may not have such access to capital. A conglomerate structure leaves room for multiple earnings engines to develop.
Ample low cost landbank
In contrast to competitors scrambling for reasonably priced land, Yoma is holding a landbank with an enviable size of over 10m sq m. The fair value of its overall land development rights (LDRs) has more than tripled vis-à-vis its cost. In particular, the recent selling price for LDRs at PHGE, one of Yoma's key residential developments with 4.7 m sq ft of LDRs left, has surged to US$48 psf, 6.4x the purchase cost of US$7.5 psf.
Fully Valued with Landmark a future catalyst
Our valuation for Yoma’s existing assets stands at S$0.75 per share and the current trading price indicates full valuation. We initiate our coverage on Yoma with a Reduce rating. A key near term catalyst lies with the pending acquisition of a 10-acre site in downtown Yangon. If the deal is completed, development of the site into a mixed-use estate could add 9 Scts to our valuation. Key risks include the Myanmar government backpedalling on reforms and a slower-than-expected pace of business development.
Publish date: 03/01/13