SINGAPORE (Nov 7): Yoma Strategic has raised gross proceeds of $82.2 million following the closure of a placement exercise involving the issuance of 155 million new shares at 53 cents each.
See: Yoma Strategic raises $82 mil in private placement to fund business
This comes at a 9.4% discount to the volume weighted average price of 58.52 cents per share for trades done on Nov 2-3 up to the time of the trading halt. We understand that the pricing range to investors was between 53-54 cents each. This placement will represent 8.2% of the enlarged share capital of the company.
Yoma will be setting aside 50%-60% of the net placement proceeds for the group’s Real Estate businesses, 15-20% for the group’s Automotive & Heavy Equipment businesses, and another 15-20% for its KFC store expansion and potential new F&B investments.
“We understand that the group foresees capex requirements of US$150-200 million ($204- $272 million) and this is to be funded through a mixture of equity fund raising, additional debt, as well as the sale of non-core assets, possibly including its interest in a retail mall in Dalian, China,” says lead analyst Joseph Ng who expects the group to gear up once it has built up a steady stream of recurring income.
While this latest round of equity fund raising would likely be dilutive in the near term, Ng says the acqusition is congruent with management’s intention of growing its core businesses and streamlining its non-core operations.
Specifically, management has decided to focus and organise the group into three verticals: Yoma Food, Motor and Land.
In light of more focused growth, OCBC is incorporating slightly firmer assumptions, but adjust for the enlarged share base following the placement exercise.
“All considered, our fair value estimate dips to 55 cents from 58 cents. Maintain “hold”,” says OCBC’s Ng.
Shares in Yoma are trading at 54 cents or 28 times FY18 earnings.
