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Yoma Hits A Snag, Still Formidable Myanmar Play
Tradeable, Tradeable Ideas | 25 June 2014
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By: Raymond Leung
Articles (142) Profile
  1. Landmark deal currently facing some delay in obtaining lease extensions.
  2. Yoma will go ahead with the deal for a shortened lease period. This still gives Yoma a sizeable plot of land that has been earmarked for a mixed-use development.
  3. To fund the deal, Yoma intends to issue rights. The rights issue will be one rights share for every eight existing shares at $0.38 apiece.

Yoma Strategic Holdings (Yoma) is one step closer to being a real estate giant in Myanmar last week following new developments in the Landmark deal. This came after delays from SPA Group, the vendor of Landmark, in obtaining an extension to renew the lease of the site to 70 years.

Yoma intends to go ahead with the Landmark project even though lease extensions have not yet been granted

Yoma decided to go ahead with the deal as it is unlikely for the bureaucratic government to renew the lease before the deadline stipulated in the deal with SPA Group.

Yoma will now pay SPA Group based on the remaining tenure of the Landmark site while the remaining sum will only be paid after the successful renewal of the lease.

The Landmark site consists of two sub plots with a remaining lease of 26 and 24 years. Yoma will now make a payment of US$43.2 million instead of the one-time payment of US$81.28 million that was based on the preceding plan.

The remaining US$38.08 million will only be made when SPA Group successfully renews the lease for the site. To fund this acquisition, Yoma will be making a one-for-eight rights issue at $0.38 per right shares.

As the payment will now be split into two parts, the rights issue was also reduced from the previous one-for-four ratio. Yoma’s Chairman and majority shareholder, Serge Pun, has expressed his interest to fully undertake his rights and all other rights that were not taken up by other shareholders.

If successful, the development of the Landmark site will consolidate Yoma’s position in Myanmar as a major real estate developer. The site has been earmarked for a mixed used development consisting of retail spaces, office units, and a hotel.

Either way, Serge Pun will still emerge as the biggest winner. Serge Pun is the majority owner of Yoma and the owner of Serge Pun & Associates (SPA Group).

Based on the recent progress in the Landmark deal, analysts from DBS Vickers Research reiterated Yoma’s “Buy” call. However, they gave Yoma a lower price target of $0.90 after factoring in the uncertainties in this deal.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Yoma Strategic Hldgs  0.315 -0.005 -1.56%   
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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