UOB Kay Hian do have a different view on Yong Nam with target buying price of S$0.41;
=>The Myanmar government has chosen Incheon International Airport Corp as the preferred bidder for its new US$1.1b Hanthawaddy Airport, over a consortium formed by Yongnam, Changi Airport Planners and Engineers (CAPE) and JGC Corporation (JGC).
Â· While we are disappointed about the outcome, management had reiterated before that chances to win this bid are slim in the midst of global competitors.
Â· On the brighter side, taking on such a large project in Myanmar may also carry inherent risks to the group due to its long tenure (50 years' Build Operate Transfer) and intensive capital expenditure. Yongnam may also have to go through an equity fund raising exercise to finance this project if they were chosen.
Â· We believe Yongnam can now refocus its resources to bid for infrastructure projects in the region, such as Singapore's MRT Thomson Line, Hong Kong's MTR, Changi Airport Terminal 4 and MS Development. According to management, there are currently about S$1.32b worth of contracts up for grab in 2H13, of which 50% resides in Singapore.
Â· Maintain BUY and target price of S$0.41. No changes to our earnings estimates as we had not factored in the Hanthawaddy project.
Share price has declined 25% from the recent high and we believe the market has already factored in the news after the dateline has lapsed.
The Board of Directors of Yongnam Holdings Limited (the “Company”) refers to its earlier
announcements dated 18 June 2009 and 10 February 2012 when the Company was informed by Mr Chia Sin Cheng, its Finance and Executive Director and Mr Seow Soon Yong, its Chief Executive Officer respectively, that they were assisting the Commercial Affairs Department (“CAD”) in its investigation on possible infringement of Section 218 of the Securities and Futures Act.
The Company has since been informed by Mr. Chia and Mr. Seow that they had been informed by the CAD recently that their cases had been closed. Pursuant to this, both Mr. Chia and Mr. Seow have received a copy each of the respective letters sent by the CAD to each of their respective banks notifying the banks that the fixed deposits held by the banks as security for bail can now be released.