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RHB: 4 Sectors to Watch in Myanmar

Following the four reasons to invest in Myanmar, here are four sectors that investors ought to look out for to invest in Myanmar’s growth in the coming years.

1. Consumer

Why Should You Care About The Consumer Sector?

Myanmar is one of the fastest growing economies over the next decade. This leads to opportunities arising from a change in consumption patterns. Rising income levels and changing lifestyles, as well as a growing tourism sector, are likely to increase consumer demand for convenience and luxury food items.

Company: Yoma Strategic Holdings Limited

According to RHB, Yoma Strategic Holdings Limited offers investors the best proxy to invest in Myanmar with a strong and diversified business model.

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The group is a key beneficiary of the rapid urbanisation trend in the country, with its strong foothold in the real estate sector through its township projects. Yoma also offers optionality from the upside of its non-real estate businesses, which are fast-growing but not yet well appreciated by the market due to gestation losses.

Yoma currently owns a 52 percent stake in Balloons over Bagan, one of the country’s most iconic tourist attractions. It currently has 14 balloons in operation and plans to increase its fleet of balloons in Bagan and elsewhere to meet the growing demand.

Bagan-Myanmar-Balloons-1024x460
Bagan-Myanmar-Balloons-1024x460

Myanmar’s tourism sector continues to benefit from the increasing number of visitors to Myanmar. The group also intends to develop new luxury lodges and adventure products in Bagan to cater to the rising number of tourists.

Yoma Strategic: BUY, TP $0.78

2. Infrastructure

Why Should You Care About The Real Estate Sector?

The weak existing infrastructure provides many greenfield opportunities across all infrastructure sub-sectors. The Government is keen to develop the tourism sector, with an ambitious target of 7.5 million foreign visitors by 2020, thereby boosting demand for transport infrastructure. Given the large scope, there will be much more international involvement due to limited domestic expertise. This presents development opportunities for international players looking to expand their overseas operations. This is further supported by the government’s keen interest to attract private companies to invest in infrastructure through public-private partnership (PPPs).

Company: ISOTeam Ltd

The current situation in Myanmar is that there is currently a lack of supply for luxury housing in Yangon due to the influx of expatriates. As local and foreign investors have been flocking to Myanmar, developers have been building more mega-residential developments. As many of these “cities” popping up around Yangon are set to be completed in the next 1-2 years, there is demand for a supplier that provides top-quality paint and painters with good execution record. Isoteam is one of the leading players and is already negotiating for a few potential projects that are likely to be secured in the near term.

ISOTeam: BUY, TP $0.41

3. Offshore and Marine

Why Should You Care About The Offshore And Marine Sector?

Offshore remains mostly unexplored, with high prospective given that a few large discoveries are already made. There will be wide exploration opportunities for companies with deepwater technical capabilities, and deepwater frontier exploration and production would in turn create large opportunities for oil field services companies providing the required set of skills

4. Utilities

Why Should You Care About The Utilities Sector?

Myanmar has one of the lowest electrification rates and per-capita electricity consumption in the region, with significant potential for growth. The Government intends to raise generation capacity in Myanmar to 16.5GW by 2022 (from around 4GW at present) at an estimated cost of US$20 billion. Investor confidence and the bankability of opportunities available in Myanmar’s power sector are increasing too.

Sembcorp Industries Ltd

ST_20151208_KPSEMBCORP08_1898260
ST_20151208_KPSEMBCORP08_1898260

Sembcorp Industries will be building a 225 megawatt (MW) gas power plant in Myanmar for a cost of USD300m. The build, operate and transfer project will be the biggest gas-fired independent power plant in Myanmar. Sembcorp Industries will own 80% of the power plant while its partner, MMID Utilities, will be holding the rest of the stake.

Sembcorp Industries expects to add over 3,800MW of power and over 1.3 cu m per day of water and wastewater treatment capacity from FY16F to FY18F with a slew of projects in India, Singapore, United Kingdom, Bangladesh and Myanmar.

Sembcorp Industries: BUY, TP $4.00