OCBC Report 17 Jun 14

KEY IDEA Yoma Strategic Holdings: Adjustments to the Landmark deal Yoma announced that, instead of acquiring 80% of the Landmark site after the SPA Group secures a master lease extension to 50+10+10 years (as originally planned), Yoma will now acquire the site with its existing leases (comprising two sub-plots with remaining leases of 24 and 26 years respectively) with a first payment of US$43.2m. The remaining payment of up to US$38.08m will be paid to SPA if and when the master lease extension is secured in future. SPA is also expected to procure approval for the transfer of the site to Yoma, by end Dec-15, from the Myanmar Investment Commission. Yoma’s pro rata development cost for Landmark will be capped at US$40m till Dec-15, in addition to the S$7m already incurred, and should SPA fail to obtain approval for the transfer by then, it will refund Yoma US$43.2m and all monies disbursed for the Landmark project. To fund this acquisition, Yoma has proposed a 1-for-8 rights issue at 38 S-cents, expected in Sep/Oct 2014 pending approval from shareholders and the exchange. Maintain BUY on Yoma; our fair value dips slightly to S$0.85, from S$0.87 previously, due to a lower NPV surplus from the Landmark project as the cash-flow from residential pre-sales are delayed. (Eli Lee)

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NEWS HEADLINES - US stocks on Mon finished a choppy day of trade slightly higher as investors weighed the Iraq crisis and merger news ahead of a US Federal Reserve policy decision on Wed. - The IMF slashed its forecast for the United States and urged policymakers to keep interest rates low and raise the minimum wage to strengthen growth in the economy. - Developers' sales of private homes nearly doubled in May from a month ago as new launches were priced to target buyers who have become more price-sensitive as a result of loan curbs. - TT International said that it expects to raise net proceeds of S$24.8m from its proposed placement of up to 167.3m new ordinary shares at 15.45 S cents each. - Huan Hsin Holdings is planning to dispose of 30% of the capital of Li Sheng Electronic (Kunshan) for US$3.5m (S$4.38m) in cash. - Taiwan's Ralec Electronic Corp, which is looking to take ASJ Holdings private, has received valid acceptances representing 74.32% of the total issued share capital of ASJ.