• No change to consideration payable to Yoma
  • Retains presence in local tourism sector
  • Maintain HOLD

Slight Adjustment to Post RTO Shareholdings

Yoma recently announced that the consideration for SHC Capital Asia Limited’s (SHC) acquisition of a target company, through the issuance of new consolidated SHC shares, will be reduced from ~S$70.7m to ~S$69.7m. As announced in October 2016, this target company would hold Yoma’s tourism related businesses that the group is looking to spin off as part of a Reverse Take-Over (RTO) of SHC. This reduction was due to the target company agreeing to assume certain liabilities amounting to ~S$980.9k that were due by one of its shareholders to Asia Holiday Travels & Tours Co., Ltd, with the latter being one of the businesses injected into the target company.

While there has been no change in the consideration payable (S$43.9m) or a number of consideration shares to be issued to Yoma, the group will now hold 63.05% of the target company, up from 62.17% previously. Based on our estimates, Yoma’s post-RTO share holdings in SHC will now increase from 53.48% to approximately 54.1% before any compliance placement.

Exposure to the Growing Tourism Business Remains Intact

We reiterate our view that the proposed spin-off of the group’s tourism assets into an independent platform is a positive one. By spinning-off non-core assets, the group is able to increase its focus on its key business units in the real estate, automotive & equipment, and consumer space. Also, Yoma is able to continue participating in Myanmar’s tourism market albeit through a specialized platform.

Xinhua recently reported that Myanmar has attracted over 2 million tourists in January – July 2017, increasing by 20% YoY, according to the Myanmar Entrepreneurs Association. This reinforces the World Travel & Tourism Council’s forecast for the direct contribution of travel and tourism to GDP for Myanmar in 2017 to grow 0.5% pts YoY to 3.5%.

The platform will also combine other third party tourism assets to achieve commercial and cost synergies. We do note, however, that the completion of this proposed sale is subject to conditions precedent being fulfilled and regulatory approvals that may be required.

For now, we maintain HOLD with an unchanged fair value estimate of S$0.58.

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