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Trading Ideas: Vard Holdings And Yoma
Tradeable Ideas | 19 March 2014
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By: Raymond Leung
Articles (142) Profile
By: Nicholas Tan
Articles (71) Profile

The FTSE Straits Times Index gained 18.42 points to close Tuesday’s trading at 3,092.14 as markets traded in a tight boundary. Investors seemingly shrugged off the narrow scope of European Union and US sanctions on top Russians and Ukrainians deemed responsible for a breakaway vote in Crimea in favour of joining Russia.

In Singapore, home sales climbed 1.7 percent year-on-year and 28 percent month-on-month to 724 units for the month of February, according to data from the Urban Redevelopment Authority.

This was not able to halt the downtrend of Singapore’s largest property developer City Development Limited (CDL). In early trading today, CDL, deemed as the bellwether of the local property market fell $0.13 or 1.3 percent.

The broader market saw 249 gainers and 181 losers, with total trading value at approximately $1 billion.

Vard Holdings: Back To Its Glory Days?
Analysts have renewed their interest in Vard Holdings following consecutive contract wins. Notably, Vard received a Letter of Intent from Solstad Offshore for a large offshore subsea construction vessel (OSCV). Although the purchase price was not made known to the public, it is the largest single vessel order in the company’s history.

The following day, Vard announced another contract win for two offshore support vessels which is worth NOK600 million. It was sold to an unknown buyer and will be delivered in 3Q15 and 4Q15. The vessels will be constructed in Romania and completed in Norway.

On Friday, the company announced yet another contract win which drove its share price up to a six-month high. Mermaid Marine Australia contracted Vard to build two platform supply vessels for an unknown price. The vessels will be constructed at its Vietnam yard and be delivered in 4Q15 and 1Q16.

The contract which was awarded to the Vietnam yard can be seen as an assurance for investors. For a period of time, the yard was having trouble due to a lack of orders causing it to sustain operational losses. With orders starting to build up in Vietnam, it is now safe to say that they are out of trouble.

However, cost overruns from the Niteroi yard in Brazil is still dragging down the company. If Vard is able to solve the issues in Niteroi, its share price could rebound back to its former glory days.

Maybank Kim Eng Research highlighted Vard’s record intake of NOK14.2 billion in FY13 and believes that the strong order win momentum will follow through to FY14.

Excluding the contract from Mermaid, it estimates the year-to-date order wins stand at NOK4.6 billion (OSCV estimated at NOK1.7 billion) representing 36 percent of their full-year forecast (NOK12.8 billion).

Averaging four price targets, Vard has a potential upside of 7.3 percent.

Yoma: Conglomerate In The Making?
Yoma Strategic Holdings made multiple developments in Myanmar in recent weeks. The developments attracted attention from market watchers as the company showed signs of a possible transformation to a conglomerate. Yoma announced that they will venture into the hospitality, agriculture, logistics and education sector in Myanmar.

The company is in an agreement with Hongkong and Shanghai Hotels to re-develop the former Myanmar Railway Company headquarters on the Landmark site into The Peninsula Yangon Hotel.

Yoma will also be forming Yoma Agriculture & Logistics Holdings with the International Financial Corporation, a member of the World Bank Group. The joint venture will focus on coffee or milk production, cold chain businesses and commercial vehicle leasing.

Two schools which include an international and a private school have been planned as part of two partnerships.

Harrows International will manage the early years centre in Pun Hlaing Golf Estate while Dulwich College International will manage an international college in Star City. Both schools are expected to open by 2016 and enroll about a thousand students each.

However, all the above developments are in the stage of memorandum of understanding. They will be subjected to change if the individual criteria for the agreements are not met. Yoma is well liked by DBS Vickers Research which gave the company a “Buy” call with a fair value of $1.02.

This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

Yoma Strategic Hldgs  0.320 -- --   
Business: Co operates mainly in Myanmar under several business segments. [FY18 Turnover] Automobile (40.5%), real estate (20.8%), real estate services (18.4%), consumer (12.9%), financial services (6.2%), investments & others (1.2%).

Insight: Feb-19, 3Q19 revenue jumped 12.1% to $27m mainly a... Read More

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