Jun 12, 2013

Riding on Myanmar's growth via S'pore-listed companies

For those keen to profit from Myanmar's boom, direct investment opportunities are limited. DBS Vickers Securities said an alternative worth considering is to invest in Singapore-listed firms with exposure to Myanmar.

Tan Ai Teng, vice president of equity research at DBS Vickers, said: "You can still consider exposure into the country via Singapore companies who are expanding quite nicely into that market.

"This way, the investors can actually get certainty of existing proven businesses, and also the opportunity to profit indirectly from the companies' venture into Myanmar."

Singapore-listed firms with existing operations in Myanmar include property developer Yoma Strategic Holdings, food & beverage firms Super Group and Fraser and Neave, as well as energy-related players like Interra Resources and Ezion.

Over the past year, the share prices of these firms, on average, have more than doubled. For example, Yoma's stock is up close to 150 per cent from a year ago, while Ezion's share price quadrupled over the same period.

Still, investors need to exercise caution. Some analysts said many of the counters are close to record prices, and any further upside is limited.

Ng Kian Teck, lead analyst at SIAS Research, said: "Some of the counters, as a matter of fact, the valuations have already run ahead of fundamentals. So when investors buy into such counters, they have to be aware of the kind of upside that they are looking at, and the kind of risk they are dealing with."

For an investors with a high risk appetite, SIAS Research recommends that no more than 20 per cent of the portfolio to be allocated to such Myanmar proxy stocks. That is because companies operating in Myanmar face significant risks, given the lack of a legal framework.

Source: Channel NewsAsia