What Investors Need To Know About Yoma Strategic Holdings Ltd’s Latest Rights Issue


Yoma Strategic Holdings Ltd (SGX: Z59) is the only listed company in Singapore with significant operations in the fast growing Myanmar. The company had proposed a few acquisitions this week in addition to a rights issue.

There are multiple deals announced at the same time and it might be difficult to piece everything together in a coherent manner. So, I’m here to help.

Land acquisitions

Yoma Strategic is looking to expand its land bank in Pun Hlaing Golf Estate (PHGE) in Myanmar. Within that estate, the company is already developing its flagship high-end residential property project. Through more land banks, Yoma Strategic can further expand its development activities in the area.

The company is planning to acquire about 31.3 acres of land for that purpose. Yoma Strategic is also looking at acquiring another 12 acres of land for the development of an international school.

To top everything off, the company is also looking to acquire the majority rights (some 70%) to operate the PHGE Golf and Country Club which spans across 219.2 acres of land.

Automotive buys

Moving away from real estate-related acquisitions, Yoma Strategic is also looking to purchase Convenience Prosperity Co. Ltd, an authorised dealer of New Holland tractors and farm equipment in Myammar. Convenience Prosperity currently operates in 10 cities in the country – Yoma Strategic believes that this acquisition would have synergistic benefits with its existing agricultural and vehicle leasing businesses.

Landmark redevelopments are on the way

Coming back to something real estate-related, Yoma Strategic revealed that its redevelopment project of the former British Burma Railway Headquarters has finally commenced. However, the company added that itwould need additional funds to finance the redevelopment of the old landmark into a luxury hotel.

All roads lead to rights

So, we’ve finally arrived at the final destination: A rights issue. Yoma Strategic would need additional funds to complete all the deals and projects listed above. Thus, it is planning to raise S$163.9 million by undertaking a 1 for 3 rights issue. The capital raised will just be sufficient to fund all the above growth plans the company has.

Interestingly, the company is offering a significant discount for the issue price of the Rights. Shareholders are able to subscribe for the rights shares at S$0.38 each, some 47% lower than its closing price of S$0.715 per share on Wednesday.

Foolish Summary

On the surface, it looks like a great deal for shareholders. You would be able to buy shares of the company at a large discount to fund projects which seem to have strong future potential for growth. However, even at the issue price of S$0.38 each for the rights shares, shareholders would still be paying 29 times Yoma Strategic’s estimated earnings per share this year.

It should also be noted that this is hardly the first time the company had raised capital through a rights issue. With its low cash balance and negative free cash flow for the past few years, investors should not be too surprised if the company would need to raise more money again in the not too distant future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.