Yoma Strategic Holdings to operate Volkswagen's first service center in Yangon

Affirms the company's deal-making ability.

Yoma reported that it will operate Volkswagen’s first service center in Yangon, which is expected to begin operations in Oct 2013, reports OCBC, with Yoma’s 70% owned subsidiary, German Car Industries Company, entering into a service partner agreement with the car manufacturer to provide maintenance and repair services.

The deal though will have only a small impact on the Yoma's bottom line, according to OCBC.

"We understand that the automotive market in Myanmar is currently dominated by Japanese vehicles and that VW has no manufacturing facilities or car show room in Myanmar. Therefore, this agreement is expected to have limited financial impact over the near term,"

Despite the tiny contribution to earnings in the near term, OCBC believes the deal is bodes positive growth prospects for the group's automotive division as the Volkswagen agreement is the second one it has clinched following a similar agreement with Mitsubishi.

OCBC further noted that management has shown a continued deal-making ability and was positive on the group's ambitions to grow as a major conglomerate.

"In our view, the alliance with the blue-chip Mitsubishi also further cements Yoma’s reputation as a solid name (note that Mitsubishi Estate and CapitaLand are partners in Singapore) and would likely widen its access to capital and business opportunities in Myanmar," said OCBC.