Yoma proposed 1-for-3 rights issue at S$0.38 per rights share

S$164m rights issue. Yoma has finalised its 1-for-3 rights issue to raise c.S$164m to kick-start the Landmark development and to acquire more land in Pun Hlaing. This issue of 432.5m rights shares (@ S$0.38/shr) will enlarge its share base by 33.5%. Yoma’s chairman Serge Pun undertakes to subscribe all excess entitlements on top of his own. Previous indication is for the exercise to be completed by end-Sept, subject to SGX and shareholders’ approval.

Funds to proceed with Landmark and landbank for Pun Hlaing. The entire rights proceeds will be utilised for 1) 1st land payment for Landmark (S$54m);
2) 70% interest in development rights to 10.8m sqft of land in Pun Hlaing (S$95.9m); and 3) acquisition of an authorised dealer of New Holland tractor and farm equipment for S$14.8m. The S$0.8m shortfall will be funded internally.

Overall, positive for the future; next catalyst would be further development of Landmark. We are positive that funding is available now to kick-start the long-awaited Landmark project. We look forward to milestones such as a successful extension of master lease, partnerships with more branded hoteliers or retailers, and possibly sales of apartments. Near term, we expect this rights issue to sustain interest in the stock. We have tweaked our fair value to S$0.88 from S$0.90 to account for a 135m new share placement in July. Maintain BUY.