Yoma proposes 1-for-3 rights issue to raise $163.9m

Find out its business expansion plans.

Farm equipment acquisitions and land development rights are among Yoma's key projects in the coming months, complements to Yoma's existing agriculture business and fleet leasing operations.

Yoma will issue 432.5m rights shares, an enlargement of its share base by 33.5%, to kick-start the landmark development and to acquire more land in Pun Hlaing.

In a report by DBS, 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.

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.

Here’s more from DBS:

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.

In reviewing its auto businesses, Yoma is acquiring 100% interest in Convenience Prosperity Co Ltd (CPCL), which is an authorised dealer of New Holland tractors and farm equipment in Myanmar in 10 cities across the country. Based on CPCL’s annual net profits of S$0.4m and the purchase consideration of S$2.8m, the acquisition is priced at an undemanding 7x PE. Yoma will separately pay S$12m to acquire a batch of 176 tractors and 306 units of farming equipment. Hence, collectively, Yoma is acquiring all of CPCL for S$14.8m.

This acquisition will not only broaden Yoma’s product and customer base, but also complement Yoma’s existing agriculture business and its fleet leasing operations.