• Landmark and PHGE acquisitions approved
• 1-for-3 rights issue ahead
• Ex-date on 12 Jan 2015

Approval of 1-for-3 rights issue at EGM

At Yoma’s EGM yesterday, the group obtained shareholder approval for its proposed 1-for-3 rights issue at S$0.38 for each rights share, which will raise up to S$164.7m. This will be used to finance acquisitions of 1) an 80% stake in the land development rights (LDRs) relating to the Landmark site in central Yangon (S$54.0m); 2) various stakes in the LDRs for 11.4m sq ft of land in Pun Hlaing Golf Estate (S$95.9m); and 3) Convenience Prosperity Co. Ltd, a dealer of tractors and farm equipment (S$14.8m). Yoma’s shares will trade exrights on 12 Jan 2015.

Acquiring LDR stakes in Yangon Landmark site and Pun Hliang Golf Estate

To recap, Yoma will be acquiring 80% of the LDRs for the Landmark site with its existing leases (comprising two sub-plots with remaining leases of 24 and 26 years respectively) for S$54.0m (US$43.2m); an additional payment of up to S$45.2m (US$38.1m) will be payable if and when a master lease extension for Landmark is secured in future. The group will also acquire, for S$95.9m, various stakes in the LDRs relating to 11.4m sq ft of land in PHGE, which comprises 9.6m sq ft of golf course and country club and also 1.8m sq ft of LDRs. Note that this is is separate from the 7.7m sq ft of LDRs in PHGE that Yoma acquired in 2006, of which ~.4.5m sq ft is still unsold.

Overall a net positive

Overall, we see this latest rights issue as a net positive, given that these acquisitions are anticipated to be value-accretive over the long term. We note that Yoma’s balance sheet has been strengthened after a series of capital-raising activities over the last 12 months, and the group also recently obtained approval for a significant US$100m loan from the the Asian Development Bank (ADB) to supports its various businesses including telecommunications, logistics, vehicle leasing, distribution and education. Maintain BUY; our value value estimate slips to S$0.72, from S$0.74 previously, mainly due to a marginally higher discount rate assumption

Source: OCBC Research - 7 Jan 2015