Catalist-listed Emerging Towns & Cities Singapore Ltd. (“ETC Singapore") said its wholly-owned subsidiary, DAS Pte. Ltd., has on 5 Sept 2017, entered into agreements to purchase a 17.0% equity interest in Uni Global Power Pte. Ltd. (“UGP”), for US$11.9 million.

ETC Singapore will issue 179,161,111 new shares to the vendors at S$0.09/share, a premium of 5.9% over the last closing price of S$0.085/share.

UGP currently owns a 70.0% stake in Golden Land Real Estate Development Co. Ltd. (“GL”), the developer of Golden City, a mixed-use luxury development project in the affluent Yankin township of Yangon, Myanmar. 

See video of our visit to Golden City -->


While the acquisition is expected to cause a dilution of 18.6%, elevating the number of shares post-acquisition to 1,141,328,045, it will free up cash vital for the Group’s plans to expand its existing portfolio of projects. 

Stock price 

8.3 c

52-week range

5 – 16 c

PE (ttm)

2.9

Market cap

S$80 m

Shares outstanding

962 million

Dividend 
yield (ttm)

--

Year-to-date return

1.2%

Source: Bloomberg

Moreover, the sellers of the UGP stake receiving the Group’s shares are either key management or investors in the Golden City project. This further aligns their interests with the Group's.


More notably, the immediate impact post-acquisition would be an increase in the effective interest in Golden City to 60.9%, allowing the Group to recognise a substantial increase of 11.9 percentage point in profits attributable to shareholders (Pre-acquisition effective interest of 49.0%) going forward.

The consideration of the acquisition was favourable as it was based on the valuation for the maiden acquisition announced on 17 October 2016. This would allow the Group to capture the upside of the growing GDP of Myanmar and value of the Golden City project over the course of the year since.

TTH briefing3.17Driven by the robustness of Myanmar’s economy and the continued interest in the Golden City project, the Group is taking proactive steps to position ourselves in Myanmar to capture the potential upside.

Tan Thiam Hee (photo),
Executive Director and Group CEO, ETC Singapore.

This is further supported by the strong demand for Golden City units evidenced by its record pre-sales deposits of S$44.7 million, as reported in the 1H2017 results. The promise of the Myanmar Government passing the condominium law, slated to be drafted within the next two months, would provide the impetus for greater demand of the luxurious Golden City project.

Mr. Tan Thiam Hee, Executive Director and Group Chief Executive Officer of ETC Singapore, remarked, “Taking a long-term view of our investment in Yangon, we are confident that an enlarged stake in GL will also allow the Group to reap greater share of profits attributable to shareholders.

"After initiating our investment into Yangon almost a year ago with a smaller exposure, we progressively invest in bringing the right people onboard to assemble a strong management and operational team to manage Golden City.

"This was a deliberate effort to manage our risks as we venture into a new geography but we believe the timing is ripe to step up a notch. With present demand led by domestic consumption, the passing of the condominium law will boost the accessibility of the real estate market to foreign investors looking to invest in one of the fastest expanding nations in the region.”

The transactions are subject to shareholders approval at an Extraordinary General Meeting to be convened.


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