Yoma Strategic mulls mergers for new tourism firm with an eye on the SGX

Yoma Strategic Holdings is restructuring its tourism assets and plans to create a new Myanmar tourism-focused firm that will merge with other players in the sector and potentially list on the Singapore exchange, Yoma’s chief executive told The Myanmar Times.

The company announced on September 2 that it had bought the remaining 25 percent it did not own in a tourism subsidiary – Chindwin Holdings – that operates, among other ventures, a popular air-balloon business in Bagan.

But the purchase is only part of a wider restructuring that will see Singapore-listed Yoma Strategic spinoff its tourism assets into a new entity.

“We feel that tourism [in Myanmar] is a very significant opportunity but requires dedicated management and expertise,” said chief executive Melvyn Pun, “At Yoma we’re not ready to scale up to that, so in setting up a new company our intention is to merge our assets [with those of other firms].”

Yoma Strategic has already put in place a dedicated management team for the new entity, and has under-construction hotel projects that will be transferred to the new firm. Mr Pun says the plan is to construct hotels in key tourist cities, and to build smaller hotel projects in less well-known destinations.

“It’s not that we want to be in the high-end or any [specific] part of the tourism sector,” said Mr Pun. Instead Yoma is looking to capitalise on the broad range of tourism experiences, from cruises to balloon rides, from cities to villages. The new company will market its tourism businesses under an undisclosed “unifying brand”, which the firm is in the process of developing, Mr Pun said.

The company is seeking Myanmar Investment Commission (MIC) approval for several tourism-focused projects that will run under the new entity, and has its eye on potential partners engaged in already-approved tourism ventures, Mr Pun added.

Yoma Strategic will initially restructure its tourism-assets into a Yoma controlled venture, which will then merge with other firms and shareholders. The result will be that over time Yoma Strategic will own “a smaller stake in a larger tourism platform”, said Mr Pun.

He said Yoma hopes to announce further details of mergers and the new tourism entity in coming months.

One option is to have the new tourism-focussed firm list in Singapore, which has the advantage of drawing additional capital, he said. The other is to have the firm stay unlisted in the short to medium term and rely on private equity funds or individual investors, “with the aim of getting listed two or three years later”, Mr Pun said.

Either way the plan is to have a Singapore-listed venture, but Mr Pun also sees a Yangon Stock Exchange listing further down the road. Yoma Strategic chair Serge Pun owns First Myanmar Investment, which was the first company to liston the YSX earlier this year.

FMI also holds a minority stake in Chindwin Holdings, which now owns 100pc of Balloons Over Bagan.

Potential partnerships for the new tourism entity will include those in the hotel and travel agency business, the firm said. Yoma Strategic already has exposure to the hotels business through its Landmark Project in downtown Yangon, which includes a luxury hotel in which Yoma has a 24pc stake. But this will be treated as a real estate project and is unaffected by the restructuring, Mr Pun said.

Yoma Strategic focuses on four main business pillars – real estate, automotive and equipment, the consumer sector, and investments. The restructuring will allow the firm to keep its focus on these four pillars, while retaining an investment in the lucrative tourism sector, Mr Pun said. But he expects the tourism entity to contribute less and less to Yoma’s overall profits over time as its core businesses grow.

Wong Yew Kiang, an analyst at Hong Kong firm Credit Lyonnais Securities Asia (CLSA), said the restructuring was unlikely to affect Yoma’s popularity with equity investors. CLSA has a buy recommendation on Yoma Strategic stock, which it said was the only way for capital market buyers to gain exposure the Myanmar real estate market.

Yoma Strategic’s shares were up 0.87pc at S$0.58 on the Singapore stock exchange yesterday afternoon.

 

Source: The Myanmar Times

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