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Acquisition of Wave Money a positive for Yoma Strategic Holdings, say analysts

Felicia Tan
Felicia Tan6/25/2020 03:19 PM GMT+08  • 2 min read
Acquisition of Wave Money a positive for Yoma Strategic Holdings, say analysts
DBS analysts Rachel Tan and Derek Tan, and Phillip Capital analyst Tan Jie Hui have maintained their "buy" calls on the stock.
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SINGAPORE (June 25): Analysts are in favour of Yoma Strategic Holdings raising its effective stake in Digital Money Myanmar Limited (Wave Money).

The company announced on Wednesday that it will be acquiring Telenor Group’s 51% stake in Wave Money for US$76.5 million (S$106.4 million), and will raise funds from a consortium of investors led by Yoma Strategic.

See: Yoma Strategic to become largest controlling shareholder in Myanmar's Wave Money for total of $141.5 mil

DBS analysts Rachel Tan and Derek Tan have maintained their “buy” calls on the conglomerate, with a target price of 50 cents.

“While the next part of the journey may be rocky with increased competition, we believe Wave Money’s dominant position in Myanmar and the synergistic opportunities that both Yoma Strategic and Ant Financial can provide will give Wave Money a firm platform as it expands into a super app,” they write in a note dated June 24.

“We believe there will be synergies and cross business collaboration with Yoma Strategic’s current business, especially in fleet leasing, consumer (digital payments) and real estate services that could drive the digital wallet segment further. In addition, we believe there could be future synergistic opportunities as Ant Financial builds its e-commerce platform in Myanmar,” they add.

Phillip Capital analyst Tan Jie Hui feels the acquisition was made at an attractive price of US$76.5 million (S$106.4 million), which is a 20% discount to the brokerage’s projected valuation for Wave Money.

As such, she has maintained her “buy” call and target price of 46 cents.

“We increased the valuation of Yoma’s stake in Wave Money, offset by a 15% devaluation in Pun Hlaing Estate’s land bank due to the expectation of a weaker outlook in the premium property space. Property and financial services will constitute 68% and 19% of the valuation respectively,” she says.

Tan says the acquisition will have a positive impact on the conglomerate as it will give Wave Money a better strategic focus to grow its e-wallet business.

“Post Telenor’s exit, Wave will be more focused in its strategy to grow, underpinned by Ant’s strength in financial services and technology coupled with Yoma’s local presence and expertise,” she says.

Both brokerages agree that the unchanged key management team in Wave Money is also a plus.

As at 3.18pm, shares in Yoma Strategic Holdings were changing hands 2 cents higher, or 6.7% up, at 32 cents.

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