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Investors’ Corner (Yoma Strategic Hldgs, Riverstone Hldgs, Croesus Retail Trust, Singapore Exchange)
Investors' Corner | 08 October 2015
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By: Tan Jia Hui
Articles (82) Profile

Yoma Strategic Holdings
Price – $0.35
Target – $0.78

Yoma Strategic Holdings’ (Yoma) partner, Digicel Group, has entered into a conditional sale and purchase agreement with edotco Group (subsidiary of Axiata Group) to dispose of its 75% interest in Digicel Asian Holdings (DAH) at an agreed enterprise value of US$221m. DAH is a joint venture firm between Yoma (25% stake) and Digicel (75%), which owns Myanmar Tower Company and is involved in development, construction and leasing of telecommunication towers in Myanmar. Based on the agreed sale price, Yoma’s equity stake is worth an estimated US$20m above its book value. While Yoma is evaluating its options and is in discussions with edotco, a sale of its stake at this point is uncertain. In our view, a sale will be the optimal outcome as it will further streamline the firm’s businesses. Stock price performance has been muted lately, which we believe is due to the uncertain political climate. Yoma is trading at an attractive 0.5 times revalued net asset value. Maintain BUY. DBS Vickers (5 Oct)

Riverstone Holdings
Price – $1.66
Target – $2.12

During our recent non deal roadshow, investors were impressed with Riverstone Holdings’ dominance of the lucrative cleanroom-glove segment and in particular, liked the firm’s above-average ROEs, margins and less demanding valuations than local peers. The company has also been able to reap the most benefits from US dollar/Malaysian ringgit strength due to low competition in the cleanroom space. Though demand in the hard disk drive segment had been flat, new customers in Vietnam have helped to take up the slack. Riverstone has filled its entire production capacity till year-end and Phase 3 of its expansion has started with full production possibly commencing in Oct-16. While liquidity remained an issue, management is considering options including bonus issues, stock splits and share placements to boost liquidity. Maintain BUY. Maybank Kim Eng (1 Oct)

Croesus Retail Trust
Price – $0.835
Target – $0.875

Croesus Retail Trust (CRT) proposed to acquire Torius Property (TP), a suburban retail mall located in Fukuoka Prefecture, Japan. The consideration of approximately JPY9.4b will be financed mostly by the issuance of JPY4b 5-year specified bonds and from $69.7m (JPY5.9b) rights issue of 22 new units for every 100 existing units. The acquisition is accretive, given that the net property income (NPI) yield of TP is 7.8%, higher than the average of 6.6% for CRT’s portfolio. There are prospects to grow TP’s NPI further. Though the bulk of the rental reversion may occur only from FY18, we note potential upsides as CRT is studying the potential for asset enhancement at TP. CRT’s dependence on Aeon Town will decrease following the acquisition. TP also offers a stable profile with JPY24.5 to JPY26b annual tenant sales between 2012 and 2014, and has minimal competition within its trade area. CRT may also benefit from a strengthening yen during a risk-off market. Maintain BUY. KGI Fraser (30 Sep)

Singapore Exchange
Price – $7.19
Target – $8.13

Securities market’s average daily turnover (ADT) remains respectable as 1Q16 ADT of $1,180m was 8% higher than FY15’s. We maintain our FY16 and FY17 securities market ADT assumption of $1,170m and $1,270m respectively. The China A50 Index Futures average daily volume of 403,000 in Aug-15 was 35% lower month-on-month although it represents a sharp 124% y-o-y spike. The recent weakness in Chinese equities has contributed to the China A50 Index Futures’ trading volume weakness and this volatility could add to Singapore Exchange’s (SGX) earnings fluctuations. However, there seems to be limited share price downside risk, but good upside potential. We roll forward our valuation to factor in FY17 earnings, setting a 23 times target FY17F P/E (a slight discount to the 5-year average of 25 times). We also consider SGX’s forecasted yield of 4% to be attractive. Upgrade to BUY. RHB Research (30 Sep)

Armed with a bachelor in mathematics, Jia Hui keeps close tabs on the oil & gas, and manufacturing sectors in Singapore.

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Yoma Strategic Hldgs  0.325 -- --   
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
Riverstone Hldgs  0.980 -- --   
Business: Glove manufacturer specialised in production of nitrile & natural rubber clean room gloves. [FY18 Geographical] M'sia (92.4%), Thailand (3.6%), China (3.3%), others (0.7%).

Insight: May-19, 1Q19 revenue rose 14.6% to RM240.5m due to... Read More
Singapore Exchange  8.400 +0.18 +2.19%   
Business: [FY18 Turnover] Equities & fixed income (48.2%), derivatives (40.2%), mkt data & connectivity (11.6%).

Insight: Jan-19, 1H19 operating revenue increased 5.7% to $... Read More

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