As a follow up to a reader's request, here is an analysis of Yoma Strategic Holdings.
1) Building up the conglomerate story
- Real Estate and Construction
- Agriculture
- Retail
- Luxury Tourism
- Automotive
Real Estate/ Construction/ Retail
The real estate story is largely intact. As the middle class begins to grow in the myanmar, the demand for quality houses continues to grow. Yoma has the equivalent reputation of capitaland (Singapore company) and it would do well to serve this. Impressively, we have begin to see the return of overseas burmese back to myanmar to help their country - restart.
Small initiatives that have great potential include a small sales office in Singapore for burmese nationals to buy houses at star city.
Mitsubishi Estate has teamed up with Yoma to work on the Landmark development
'Located opposite Trader’s Hotel and adjacent to Boyoke Aung San market, the US$350 million project will include office buildings, serviced apartments, a hotel and a mall when completed.' This is a highly primed location and its really a very good place for future Grade A offices.
Also being built is the telecoms tower for Ooredoo - one of the winner of the telecommunications bid, such deal savvy moves speaks well of the companies ability to win deals and connect with the right partners for future growth and good yield projects.
Collaboration with Parkson to start Parkson retail mall starting a possible mall trend "similar to the Singapore retail mall story".
Agriculture
Although not a big contributor to the company as yet, agriculture has a potential. Currently being run by the former Director General, Department of Agriculture Planning in the Myanmar government. Good connections definitely are a plus in this case.
Luxury Tourism
Having bought over a hot air balloons business for $10m, the former management joined Yoma team to manage the business. Being a rather profitable business already, the business has interesting potentials as increasingly more tourists are coming to myanmar.
Automotive
With the relaxation of automotive ownerships by the burmese governments, the price of a toyota altis fell from US100,000 to about US20,000 overnight. An amazing phenomenon which would definitely lead to more ownership of cars. Yoma having a strong partner in Volkswagon is definitely in the right position having won the deal to running the after sales service centre for Volkswagon.
2) Management
Serge Pun being a well known, well connected businessman who has gone through losing everything to making a comeback is the right person to place your money on. In my opinion, he is comparable to Chua Thian Poh of Ho Bee Land group, another well connected, well respected businessman who has gone from rags to riches to rags and to riches again.
Serge Pun's successors and his sons, Cyrus Pun, executive director having graduated from London School of Economics runs the real estate department. The alternative director to Serge Pun, his other son Melvyn Pun is a former goldman sachs almuni, where he spent 12 years at Goldman Sachs in Hong Kong, where he was Managing Director, Head of Asia Ex- Japan Corporate Solutions Group. He currently heads SPA group, a sister company of Yoma.
Given the number of sizable experts in corporate finance - CEO included. I believe the company may be in a good position to utilize any possible debt and capital raising for future growth.
3) Valuations
Giving Yoma a market valuation is quite a tricky situation, should we priced in the conglomerate story? Should we add on the fact that there is a severe lack of quality pure myanmar listed company on the market? Does the management deserve a high premium on its deal savvy moves?
While the above are valid questions, it can be rather difficult to justify a P/E of 45.32 at current prices of 0.755. That being said, consider the following merits
Aberdeen asset management, a long only company with strong Graham investment principles invested in the company at $0.8/share - coatail investing may be a strategy that works here. Jim rogers owns the shares too, at a much lower price though.
Real estate is the right theme for a country where the demand is severely outstripping the supply. The first mover advantage as well as the visibility of Mr Serge Pun and well known individuals (Soros, Jim Rogers, Digicel, Volkswagon, Parkson) just to name a few want to work with this company just shows that they understand Yoma's position in the market.
Catalyst - Strong earnings would come from Star City development as well as the landmark development grade A office.
Personal conclusion
As a last note, I own 2 lots of this company and it is my dream to own 50 lots of this company because I believe it is the right company for the long run. A valuation purely on numbers call for a sell on this stock, I feel personally in 10 years, this company could be worth 3 times its current value. Additionally, I believe this is a possible 'buy and hold forever' company. Conglomerate building stabilizes the company, opening up of the country helps to boost business connections and ties, and finally the citizens own growing income can help are trends that this company continues to ride on. Highly qualitative in merits at the current moment.
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