SINGAPORE (Mar 7): OCBC Investment Research says it is “broadly positive” on Yoma Strategic Holdings’ foray into mobile financial services in Myanmar.
To recap, Yoma announced Tuesday that it is acquiring a 34% stake in Digital Wave Money Myanmar Co. – the first licensed provider to offer simple and reliable mobile financial services to consumers in the country – for US$19.4 million ($25.6 million).
According to Yoma, Wave Money now serves 1.3 million customers, or 2.5% of Myanmar’s population. Over 80% of the population currently remains unbanked, the group said.
The customers are served by a network of more than 20,000 agents across Myanmar, which Yoma says is 10 times the number of bank branches in the country, and over six times the number of ATMs.
See: Yoma acquiring 34% stake in Myanmar's Wave Money for $25.6 mil
“In our opinion, Yoma’s investment in Wave Money should be beneficial in the mid to long term,” says lead analyst Joseph Ng in a report on Wednesday. “We understand that the business should be cash flow positive within the next couple of months.”
In addition, Ng believes Wave Money could also complement Yoma’s existing businesses of real estate, consumer, and automotive & heavy equipment in Myanmar.
“Over time, the newly-acquired platform should allow Yoma Fleet to expand finance lease and hire purchase services, as well as for the group to put out other lending offerings,” says Ng.
OCBC is keeping its “buy” call on Yoma. However, the brokerage adds that it is staying conservative at this point.
Due to the relatively early stage of Wave Money’s growth, it has not yet incorporated the new business into its assumptions.
“In light of recent market volatility, as well as the continued oversupply of condominiums in Yangon, we prefer to adopt a conservative stance and employ a higher discount to our SOTP valuation,” says Ng.
As a result, OCBC’s fair value estimate for Yoma drops to 51 cents, from 55 cents previously.
As at 11.48am, shares of Yoma are trading 2 cents up, or 4.8% higher, at 44 cents. This implies an estimated price-to-earnings multiplier of 35.1 times and a dividend yield of 1.3% for FY18.
