Monday, June 10, 2013

DBS Vickers (Spore): Thematic Report : Myanmar: Ride on coattails of Myanmar's reforms

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD
Research House: DBS VickersPrice Call: BUYTarget Price: 1.08

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED
Research House: DBS VickersPrice Call: BUYTarget Price: 3.00

Stock Name: Yongnam
Company Name: YONGNAM HOLDINGS LIMITED
Research House: DBS VickersPrice Call: BUYTarget Price: 0.41

Stock Name: Tiong Seng
Company Name: TIONG SENG HOLDINGS LIMITED
Research House: DBS VickersPrice Call: BUYTarget Price: 0.33

Stock Name: SingTel
Company Name: SINGTEL
Research House: DBS VickersPrice Call: HOLDTarget Price: 3.80

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.
Research House: DBS VickersPrice Call: BUYTarget Price: 5.35

Stock Name: F & N
Company Name: FRASER AND NEAVE, LIMITED
Research House: DBS VickersPrice Call: HOLDTarget Price: 9.52




Myanmar

Ride on coattails of Myanmar's reforms


· Myanmar's growth is fast and sustainable

· Abundant opportunities in consumer, tourism, infrastructure and O&G sectors

· Direct access is limited; invest through foreign companies already in or expanding into Myanmar

Reforms have been progressive. Despite skepticisms and multiple challenges, Myanmar's sweeping reforms have resulted in further easing of sanctions on the country, which in turn is drawing new aids, more visitors and even higher interest to trade and invest in Myanmar. Foreign direct investments (FDIs) have reportedly jumped >40% to US$1.4bn in FY2013 while tourist arrivals have surged 54% to 1m. ADB projected that Myanmar GDP would expand >6% in 2013 and could grow 7-8% p.a. over the decade.

Opportunities abound, but pure plays are scarce.
To ride on this theme, Yoma (BUY, TP: S$1.08) is our top pick as the most direct play on Myanmar's boom. Share price has hit new highs recently following our upgrade, but we see possible upside to our fair value pending further developments, such as progress of the Landmark project, telco license win or agricultural development amongst others.

Singapore companies expanding in Myanmar are good gateways.
Singapore companies are good proxies to ride on several segments in the country's current stage of development.

Infrastructure:
Infrastructure development and planning is rapidly underway. To fast track development, foreigners have been invited to bid for mobile networks, airports, and oil & gas exploration. We like Ezion (BUY, TP: S$3.00) and Interra Resources (NR, TP: S$0.57) as Oil & Gas proxies with operations there. Other potential beneficiaries include Yongnam (BUY, TP: S$0.41) in the development of airports, Tiong Seng (BUY, TP: S$0.33) to set up a pre-cast factory, and SingTel (HOLD, TP: S$3.80) in the bidding for a mobile phone license.

Hospitality:
Our visit to Yangon earlier this year revealed overwhelming demand for quality hotels, service apartments and offices from the continuous influx of travelers. On this, we expect Amara (NR, FV: S$0.75) to be a beneficiary with its proposed JV for the development of a hotel.

Consumer goods/ services:
Lastly, demand for consumer goods and services is poised to grow as affluence picks up. We like Super (BUY, TP: S$5.35) with its leading share in the packaged coffee market. Other companies with presence include FNN (HOLD, TP; S$9.52) with its 55%-owned brewery, and Parkson Retail Asia, which has a 70%/30% JV with Yoma for a 4,000 sqm retail store in Yangon.

Important events:
Outcome of telco license (27 Jun), airport tender (July).




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