16/17E TP set at Kyat4,335 based on MTSH forecasts
MTSH accomplished a share split of one existing ordinary share into ten shares at the end of October and started trading with new par on Nov 4, 2016. Hence, the target price after the share spilt is Kyat4,335 based on 2016/17E PER of 11 (implying a 35% discount from the historical 2012-15 PER of Asian Industrial Estate developers of 17X) given the company’s negative 2016/17E earnings growth of 25.9% YoY and soft growth of 4.7% in 2017/18E, compared with regional peers at average 2016-17E earnings growth of 34.3% YoY and 27.6% YoY, respectively.
Signing of the third JV agreement for Zone B Project
MTSH signed the “Third Amendment and Restatement of the Joint Venture Agreement” for the implementation of the Zone B, Phase-1 Project Area with Thilawa SEZ Management Committee (TSMC), MMS Thilawa Development Co., Ltd (MMSTD) and Japan International Cooperation Agency (JICA) on Oct 21, 2016. Zone B comprises 700 hectares, which will be developed as follows: i) industrial business area of 262 hectares, and ii) logistics-dependent Industrial area for residential, commercial and logistics and industrial business of 438 hectares. The parties have agreed to develop about 101 hectares of the Zone B, Phase-1 Project within the industrial area. Meanwhile, the parties intend to continue discussing whether to develop the rest of the Zone B Project (438 hectares).
Zone A and Zone B development both going well
According to the Thilawa SEZ Management Committee (TSMC), a total of 68 companies have been permitted to invest in the Thilawa Special Economic Zone A. Currently, a total of 20 of the 68 companies are now operational and more than 40 are under construction. Meanwhile, development of Zone-B, Phase-1 is to be started at the end of 2016.
TPD is on path
Thilawa Property Development (TPD) mainly focuses on developing and operating residential and commercial developments of Zone-A with a total of 86.5 acres. TPD has finished three buildings of six-storey accommodations for 2,340 workers. At present, TPD is inviting investors to construct hotels, petrol stations, banks and condos under a tender system, which will set to open for submit intentions soon.
Myanmar’s new Foreign Investment Law to become effective in Apr-17
The Myanmar Investment Commission (MIC) recently announced that the new Foreign Investment Law (FIL) will become effective in Apr-17. The new FIL, which merges the 2012 Foreign Investment Law and the 2013 Myanmar Citizens Investment Law, was signed by President Htin Kyaw on Oct 18, 2016. The main amendments include a new approval process for the MIC, tax incentives by zoning, and easing of land leases for foreign investors. As the new law will be more investor friendly, the government expects to attract more FDI to the country.
