SINGAPORE (Aug 21): OCBC Investment Research is maintaining its “hold” call on Yoma Strategic Holdings with an unchanged fair value estimate of 58 cents, following news of a slight adjustment to Yoma’s shareholdings in SHC Capital Asia post its proposed reverse takeover (RTO) deal.
To recap, the Myanmar-focused conglomerate is looking to spin off its tourism-related businesses through a RTO of SHC, which was announced in Oct 2016.
It was recently revealed that the consideration for SHC’s acquisition of a target company, through the issuance of new consolidated SHC shares, would be reduced to about $69.7 million from $70.7 million previously.
In a Monday report, lead analyst Joseph Ng notes that while there has been no change in the $43.9 million consideration payable or the number of shares to be issued to Yoma through the deal, the group will now hold 63.05% of the target company – up 62.17% previously.
As such, Yoma’s post-RTO shareholdings in SHC will now increase from 53.48% to approximate 54.1% before any compliance placement, says Ng.
“We reiterate our view that the proposed spin-off of the group’s tourism assets into an independent platform is a positive one. By spinning-off non-core assets, the group is able to increase its focus on its key business units in the real estate, automotive & equipment and consumer space,” elaborates the analyst.
Ng believes that through Yoma’s specialised platform achieved through the deal, the group will be able to continue participating in Myanmar’s tourism market. This will also enable Yoma to combine other third party tourism assets to achieve commercial and cost synergies, he adds.
The stock has however been kept at a “hold”, as OCBC notes that completion of the propose sale is still subject to certain conditions and regulatory approvals that may be acquired.
“Xinhua recently reported that Myanmar has attracted over 2 million tourists in January – July 2017, increasing by 20% YoY, according to the Myanmar Entrepreneurs Association. This reinforces the World Travel & Tourism Council’s forecast for the direct contribution of travel and tourism to GDP for Myanmar in 2017 to grow 0.5% pts y-o-y to 3.5%,” says the analyst.
As at 4:28pm, shares in Yoma are trading 1 cent higher at 58 cents.
