• Yoma Strategic (Yoma) will enter into a share exchange agreement with Tokyo Century Asia (TCA). Yoma will acquire a 20% stake in Yoma Fleet for US$18.5mn from TCA. In exchange, Yoma will issue 137mn new shares (or 5.74% stake) to TCA at an issue price of S$0.135. TCA cannot dispose the shares without consent within 60 months after the transaction.
• Yoma Fleet operates a fleet of 1,129 vehicles comprising passenger cars and commercial and heavy vehicles. The division also provides financing for consumer products such as mobile phones and washing machines.
• We believe Yoma will have a new substantial shareholder available for deeper collaboration and access to funding. The share exchange will cause the March 2024 net tangible asset (NTA) per share to decline 7.4% to US$0.1311. Yoma Fleet’s growth plans include expanding the operating fleet, especially heavy machines, increasing lease rates, and introducing new synergy with Wave Money.

Key Highlights
i.    Transaction: Share exchange agreement with Tokyo Century Asia (TCA). Yoma will acquire a 20% stake in Yoma Fleet for US$18.495mn. In exchange, Yoma will issue 137mn new shares (or 5.74% stake) to TCA at an issue price of S$0.135. TCA cannot
dispose the shares without consent of Yoma within 60 months after the completion of the acquisition.
ii.    Financial Impact: Yoma Fleet will become a wholly-owned subsidiary post-transaction. The share exchange will result in a decline in Mar24 NTA per share by 7.4% to US$0.1311. The implied valuation of Yoma Fleet is US$68.37mn.
iii.    Tokyo Century Asia: TCA is a subsidiary of Tokyo Century Corporation, one of Japan’s largest leasing companies and listed on the Tokyo Stock Exchange.
iv.    History of Yoma Fleet: Yoma Fleet was established in Myanmar on 15 January 2014. TCA acquired a 20% interest in Yoma Fleet for US$26.6mn on 30 April 2019.
v.    Background of Yoma Fleet: The company is in the business of vehicles, equipment and other consumer products leasing and rental. It provides four types of services – operating lease, finance lease, daily rental and consumer product financing. Customers include multinationals, local corporations, small medium corporates and individuals.
vi.    Rationale of transaction: Yoma views the valuation as attractive, and 100% interest will align the company with its future corporate plans. We expect an area of collaboration will be with Wavemoney. Wave Money is creating a lending platform for unsecured lending and buy now and pay later financing. Wave Money can create a credit score on its users’ payroll, spending and location patterns. Lenders, such as Yoma Fleet, that join the platform can provide loans to users with the appropriate credit scores.
vii.    Outlook for Yoma Fleet: The company will look to expand its operating fleet, especially through the second-hand market. Heavy equipment imports are still available. Leasing rates can also rise as available credit financing has shrunk due to fewer banks and
microfinance operators.

Source: Phillip Capital Research - 1 Jul 2024