Yoma Strategic Holdings Ltd - Why is it taking so long to arrive at the master lease for the Landmark Development?

14/1/2014 – Yoma Strategic Holdings shares have gained one per cent since Christmas, despite the company announcing a delay in approvals for its Landmark Development in Yangon.

On December 20, 2013, it disclosed that discussions with the Burmese government over the terms of the Master Lease of the property would not be concluded by the end of the year, as planned.

It has now given itself until June 30 this year to conclude those negotiations, which are being led by the vendor of the site, Serge Pun & Associates (Myanmar).

Serge Pun is also the Chairman of Yoma Strategic and 19% shareholder.

Discussions with The Hongkong and Shanghai Hotels Limited on the design and planning of a hotel at the Landmark Development are also yet to be concluded.

But there were also positive developments.

International Finance Corporation, together with the Asian Development Bank, might come in as debt and equity investors.

Discussions for an equity investment by Mitsubishi Corp and Mitsubishi Estate are also progressing, Yoma says.

As negotiations go on, Serge Pun & Associates will continue development of the Landmark Project through existing leases of the Development.

Separately, Yoma also issued an update on its spending of proceeds from a share placement in November 2012.

As of December 31, 2013, Yoma has spent:

1. US$4.8 mln (S$6.1 mln) on land and preliminary construction costs of the Pun Hlaing Lodge Hotel in the Pun Hlaing Golf Estate.

2. US$1.5 mln (S$1.9 mln) for the remainder of the "Balloons Over Bagan" hot air balloon tourism business.

By our back-of-the-envelope calculation, Yoma's total commitment for buying a 75% stake in the business through its 70%-owned joint venture Chindwin is US$7.49 mln, based on a purchase price of US$10.7 mln.

3. S$2.5 mln on existing activities in automotive and construction businesses and joint ventures.

All up, Yoma has S$25.7 mln left, out of S$101.2 mln raised in November, 2012.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. Why is it taking so long to arrive at the master lease for the Landmark Development?

Yoma had previously given itself a deadline of March 20, 2013, then June 20, and extended that to December 30.

Now that date has been blown as well.

What's going on?

Question

2. What is the state of Burma's property market and is that the cause of the delays?

According to a story in Emerging Frontiers, Yangon property prices are rocketing, as a shortage of quality office space drives up rent.

What impact is the heated property market having on the negotiations?

Question

3. What are the details of the Mitsubishi investment?

According to Yoma, discussions are "progressing".

This suggests that the size of the investment and the per-share commitment have already been penciled in.

So, how much are they buying, and how much for?

What are the sticking points?

(Total number of questions in the full story: 7)

Management Reply:Thank you for the opportunity but I regret that we have to decline it as management would be quite tied up in the next couple of weeks.

Let's keep in touch and perhaps we can re-look at it sometime later.


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