An Investor’s View On The Possibilities For Myanmar And Yoma Strategic Holdings Ltd

“Maingalarpar!” (That’s hello in the Myanmar language.)

I am currently in Yangon, on a trip to better understand Myanmar and Yoma Strategic Holdings Ltd (SGX: Z59), a company with wide business interests in the country.

Yoma Strategic can be thought of as a small conglomerate given its business interests in real estate development, agriculture, construction, tourism, automobiles, and even retail in Myanmar. Over the weekend, a group of Yoma Strategic’s shareholders and I had spent a great deal of time looking at the company’s different businesses and Myanmar itself.

I thought one particular business of note is a residential property development project of Yoma Strategic that’s known as Star City. I thought that it might help shed some light on the future of the company and Myanmar.

Winding back the clock

Although my trip to Myanmar over the weekend was my first to the country, there was a sense of déjà vu for me when I arrived. That’s especially so when we visited Star City.

I grew up in Johor Bahru, a Malaysian city just north of Singapore that many Singaporeans are likely to be familiar with. And, the town I lived in just started developing as I was growing up.

My family and I were one of the first few to move in to the town when it was barren – a mixture of developing land and forest were our closest neighbours. The town was separated from the city by a river and there was no bridge to take us to the other side. So each time we had to travel to the city, we had to travel around the river, which resulted in an hour-long detour.

Constant electrical blackouts and the occasional visit by snakes and lizards in our living room were the norm. Meanwhile, the next town from us was an industrial town with a port that just began operations.

A connection to the past

Star City is a development that’s located about an hour’s drive away from the city centre of Yangon. Moreover, a river sits between Star City and the city. Although there is a bridge that allows some traffic to cross the river, the single-lane bridge did not seem to me to be at all adequate for any large amount of traffic flow.

Currently, Star City is at a very early stage of development with only a few blocks of apartments that are housing residents. The property project is also standing right in between Yangon and a planned special economic zone, an industrial town with ports that was about to see construction start.

So, at first glance, Star City looked to me to be a project that’s still very much in infancy. It is thus hard to predict if the project would be a success with its less than ideal connectivity to the city and minimal amenities available in the surrounding precinct. Moreover, through my conservations with locals in Myanmar, I found out that Yangon is notorious for electrical blackouts that happen once in a while.

When I piece together all the points about Star City that I have shared, it can be described as a project with barren surroundings that’s also seated in a location with poor infrastructure (such as utilities and transport).

Yet, I cannot help but wonder about the possibilities for Star City – and to a wider extent – Myanmar. I trust it’s obvious by now that Star City has plenty of similarities to the place in Malaysia where I grew up in.

Growing up in that barren small Malaysian town over the past 20-plus years, I have witnessed first-hand how my town transformed. It is now one of the busiest townships in Johor Bahru, with two bridges connecting it to the city. The previous one hour journey by car into the city is now just a 10 minute drive for me. There is even an expressway connecting the town directly to Kuala Lumpur (the capital of Malaysia) and Singapore!

A Foolish Conclusion

I think there is huge potential for Star City and Myanmar over the coming decades.

But, I’m also aware that what I’ve just shared about the project is merely an anecdotal observation of mine; moreover, it’s just one of the many business projects that Yoma Strategic has in its hands right now. Investors who are interested in the company should conduct deeper research – on things such as its multiple business segments and valuation issues – before any investing decision can be reached.

In a country like Myanmar that has just opened its doors to the world in recent years and that is still growing, investors have to note that there are substantial risks that come with the huge opportunities. That’s because it would take plenty of political will from Myanmar’s leaders to push through what is necessary for the country to be travelling along a sustainable growth path.

And when it comes to politics, I don’t think the outcomes are predictable. As a Malaysian, I think I know a thing or two about this.

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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 writer Stanley Lim does not own shares in any companies mentioned above.