Monday, April 28, 2014
Yoma: UBS initiates coverage with Buy rating and $0.87 TP, on the group's unique growth potential in an undersupplied frontier market. House view Yoma as a proxy to Myanmar's rapidly growing economy and think the trend of urbanisation will be an important factor driving demand for real estate in Yangon. House think the trend of urbanisation will be an important factor driving demand for real estate in Yangon, where acute undersupply of commercial, hospitality and quality residential assets has led to home rentals more than doubling in the past four years, and hotel room rates soon reaching levels comparable with Singapore. UBS believe Yoma benefits from significant first-mover advantages: management's presence in the country since the early 1990s has helped it understand local demand, and gain unique access to low-cost landbank. A solid reputation has also helped it secure reputable partners such as Mitsubishi, Sumitomo, and International Finance Corporation (a World Bank member). Recent acquisitions and joint ventures for expansion of the non-property businesses are encouraging. House think some of these businesses have significant upside potential if executed well and if Myanmar lives up to its economic growth potential over the next five to 10 years. We note that the TP of $0.87/share includes $0.20/share attributed to Yoma's Landmark Development project, which has not been confirmed at this point.