TIDMMIL
RNS Number : 9925B
Myanmar Investments Intl Ltd
10 April 2017
RNS
10 April 2017
Myanmar Investments International Limited
Strategic and Trading Update
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the AIM-quoted Myanmar focused investment company,
today announces a Strategic and Trading Update which gives detail
on the Company's recent performance for the year ended 31 March
2017 and prospects for the next stage of growth. All financial
estimates are based on unaudited initial management estimates.
Overview and Financial Update
-- MIL's two existing joint venture businesses have achieved
positive results over the last year.
o Apollo Towers Pte Ltd ("Apollo"), one of Myanmar's leading
telecom tower companies, has now built 1,800 towers, giving it an
approximate 15% share of the Myanmar telecom tower market, and is
expected to benefit from the imminent entry of a fourth mobile
telecom operator.
o Myanmar Finance International Limited ("MFIL"), the Company's
microfinance joint venture, has continued its strong growth on the
back of securing additional debt funding. As a result, its loan
book increased by 148% to US$5.7 million and the number of
borrowers has increased to over 42,000 since the initial
investment.
o The Company has recently signed two non-binding memoranda of
understandings ("MOU") based on which the Company expects to sign
definitive contracts within the next few months: the first being
with a pharmacy, healthcare and personal care product joint
venture; the second being a tour operator and travel agency joint
venture.
-- MIL continues to keep its cash overheads tightly under
control. In the year to 31 March 2017, management estimates cash
overheads at around US$1.9 million which is the same as the
previous year. On a per share basis this equates to a 25% reduction
year-on-year.
-- As at 31 March 2017, management estimates that the Company
had cash resources of approximately U$3.2 million (2016: $1.4
million).
-- The Company continues to develop its proprietary business
pipeline in segments of the economy where the Directors see
investment and growth opportunities arising; currently this
includes prospective investments in the healthcare, retailing,
mobile financial services, technology and energy sectors.
-- Myanmar's new administration, under the guidance of Daw Aung
San Sui Kyi, has now been in office for a year and has made
progress on a number of initiatives designed to streamline foreign
investment including the revised Myanmar Investment Law passed in
October 2016 and a revised Companies Act being finalised and
expected to be passed in the near future.
Apollo Towers Pte Ltd ("Apollo")
-- The telecoms sector continues to experience rapid growth in
Myanmar with strong demand for capacity expansion. Myanmar's mobile
penetration rate continues to grow with estimates currently as high
as 75%.
-- Apollo has nearly doubled its tower portfolio to 1,800 towers
since MIL's investment in 2015 and the company has plans for 2,000
more towers to be constructed in its next phase of development.
-- 15% of Myanmar's telecom towers are now under Apollo's management.
-- Apollo expects to experience a significant increase in the
number of co-tenants on its towers from both the imminent entry of
Myanmar's new operator, MyTel, and also the country's multiple new
internet service providers.
MIL first invested in Apollo in July 2015 when it led a
consortium of investors that invested US$30 million for a 14.18%
shareholding in Apollo. The other shareholders are Sanjiv Ahuja,
the ex-Orange CEO, and TPG Growth, the middle market and growth
equity investment platform of TPG (formerly Texas Pacific Group),
the global investment firm. As at 31 March 2017, MIL's indirect
shareholding in Apollo was 9.3% for a cost of US$21 million. In
June 2016, Apollo successfully secured a US$250 million loan from
the United States' Overseas Private Investment Corporation ("OPIC")
marking OPIC's first financing in the country.
Myanmar Finance International Limited ("MFIL")
-- MFIL continues its strong growth trajectory with its borrower
base now at over 42,000 and its loan book up to MMK 7.8 billion
(US$5.7 million) as of February 2017, a Combined Annual Growth Rate
("CAGR") of 78% and 148% respectively since MIL's initial
investment in September 2014.
-- The average loan size provided by MFIL has increased by 129%
to MMK 183,000 (US$135) from MMK 80,000 at the time of the initial
investment.
-- MFIL has now launched a new micro-business product to
complement the strong growth in group loans.
-- Seven branches are now open, including four in Yangon and
three in Bago; an additional Yangon branch is scheduled to open by
May 2017.
-- MFIL has US$2 million worth of Kyat-denominated debt facilities now in place.
-- For the year ending 31 March 2017 MFIL expects to see the
second consecutive year of increased net profitability.
MFIL is a joint venture established in August 2014 by MIL and
Myanmar Finance Company Limited ("MFC") a company controlled by U
Htet Nyi, a Myanmar entrepreneur and honorary consul for Norway and
Finland. In November 2016, the Norwegian Investment Fund for
Developing Countries ("Norfund"), the Norwegian development finance
institution, also became a shareholder such that the shareholdings
today are MIL 37.5%, MFC 37.5% and Norfund 25%, with total paid up
capital of nearly US$ 5 million.
Potential Pharmaceutical Investment
-- MIL signed an MOU in February 2017 to set up a pharmacy,
healthcare and personal care product joint venture in Myanmar.
-- The two joint venture partners are an experienced retail
group (that runs over 50 pharmacy, health and beauty outlets in a
neighbouring Asian country) and an industry veteran with
significant experience leading Asian-based retail concepts
including Wal-Mart in Korea and India, VinMart in Vietnam and
Reliance Markets in India.
-- MIL is in the process of negotiating final terms with the
joint venture partners and is aiming to finalise contracts for this
investment within the next few months.
-- MIL is excited at the prospects for the pharmacy, healthcare
and personal care retail sector given the expected rise in consumer
spending power. McKinsey has predicted that the middle and affluent
classes in Myanmar are set to boom in the coming years and this
segment could grow to 19 million people by 2030, tripling consumer
spending from US$35 billion to US$100 billion.
Potential Investment in a Tour Company
-- In March 2017 MIL signed an MOU with a well-established local
tour operator and travel agency to set up a joint venture company
that will develop the business further as well as invest in tourism
related assets.
-- The tourism sector in Myanmar is experiencing rapid growth
with the number of arrivals growing at a CAGR of 40% between 2010
and 2016 to six million and continued growth over the next several
years.
-- MIL is in the process of negotiating final terms and is
aiming to finalise contracts for this investment within the next
few months.
-- The proposed joint venture tour operator and travel agency is
profitable and will act as a spring board for further investments
that will benefit from the growth in tourist arrivals.
Pipeline
-- Leveraging off its network of relationships in Myanmar and
the immediate Asia region, MIL continues to see a flow of exciting
business opportunities each of which demonstrate an acute imbalance
between the supply and demand of investment funding in their
various sectors. Many of these potential investee businesses are
attractively priced and are in either the consumer or
capacity-constrained sectors.
-- Many of the consumer opportunities offer the prospect of a
modest initial investment with scale-up potential once the business
model has been proven. The rise in spending power of the middle and
affluent class in Myanmar is expected to make this a very
attractive sector.
-- Capacity-constrained opportunities benefit from the ability
to partner with proven international operators as well as introduce
significant offshore-sourced leverage, both of which MIL is able to
provide.
-- MIL is looking specifically at identified opportunities in
the healthcare, retailing, fintech and traditional financial
services platforms, technology and energy sectors.
-- Having determined its "sweet spot" MIL actively sources
opportunities from its own network of relationships both within
Myanmar and the immediate Asia region.
Strategic Update
MIL is an active Myanmar-focused investment and management group
producing long term capital appreciation and income from proactive
participation in Myanmar's re-emergence.
MIL has a clear business strategy for its current and potential
investments in Myanmar.
-- To stay focused on the business development process and
actively manage risk minimisation / reward maximisation to produce
superior long term returns. This starts by:
o identifying sectors with strong growth;
o identifying credible partners with strong senior and
line-management;
o the partners might be proven local entrepreneurs or foreign
companies looking to enter Myanmar; and
o looking to de-risk the business where needed through bringing
in new managers, mentors and strategic partners.
-- MIL's permanent capital structure allows it to optimise
returns by determining the point and method of monetisation.
-- MIL targets returns of 30%+ and / or 3x capital, on a pre-leverage basis:
o this can come from capital gains; dividends and/or fee
generation;
o aiming to maximise returns by exiting at the right time;
and
o focusing on value creation and monetisation.
-- Investment yields are complemented by generating revenue from fee earning activities.
In essence, MIL's strategy is to build net asset value per share
as well as to generate dividends when it becomes commercially
appropriate. Over time this will provide an attractive total return
to its shareholders.
In continuing MIL's clearly defined strategy, the Company may
raise additional capital as and when required.
Furthermore, as part of increasing liquidity and visibility of
the Company's shares, the Board is considering a dual listing in
the Asian region.
Commenting on the Strategic and Trading Update, Mr. Aung Htun,
Managing Director of Myanmar Investments International Limited,
said:
"We are exceptionally proud of the businesses that we are
building in Myanmar. Like all frontier economies, especially a
country that has been isolated for over 50 years, there are many
challenges. I am pleased that the unsustainable euphoria of 2012
has now given way to more realistic expectation of the time
required for change. However, as MIL has been on the ground now for
nearly four years we see the determination, continual progress and
significant growth potential in many different sectors. We are
confident in the prospects of Myanmar for the future."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
- Ends -
For further information please contact:
Aung Htun Michael Dean
Managing Director Finance Director
Myanmar Investments International Myanmar Investments International
Ltd Ltd
+95 (0) 1 391 804 +95 (0) 1 391 804
+95 (0) 94 0160 0501 +95 (0) 94 2006 4957
aunghtun@myanmarinvestments.com mikedean@myanmarinvestments.com
Nominated Adviser Broker
Philip Secrett / Jamie Andrew Pinder / David
Barklem/ Herring
Carolyn Sansom Alistair Roberts (Hong
Grant Thornton UK LLP Kong)
+44 (0) 20 7383 5100 Investec Bank plc
+44 (0) 20 7597 4000
Public Relations
Julian Bosdet / Dr. Jenny
Lee
Abchurch Communications
+44 (0) 20 7398 7714
Notes to Editors:
Myanmar Investments International Limited ("MIL") is the first
Myanmar-focused investment company to be admitted to trading on the
AIM market of the London Stock Exchange. It was established in 2013
to act as a conduit for overseas investors to invest in businesses
led by dynamic and visionary Myanmar entrepreneurs and foreign
companies investing in the country. MIL is led by co-founders Aung
Htun and Mike Dean, private equity professionals and entrepreneurs
with a strong regional track record of investment and profitable
exits in Southeast Asia.
MIL aims to identify investments with strong growth which if
necessary can be "de-risked" through the introduction of
experienced senior line-management, mentors and / or strategic
partners sourced by its Founders. Key sectors are those
experiencing acute supply versus demand imbalances, such as
consumer and other capacity-constrained sectors.
With its strong proprietary investment pipeline of deals, MIL
provides investors with a highly disciplined and conservative
investment process into one of the most promising growth
opportunities of this era.
To date, MIL has invested in Apollo Towers, one of Myanmar's top
telecom towers companies with 1,800 towers, and MFIL, a top 10
microfinance company.
Myanmar, a country of approximately 51.4 million people and
roughly the size of France, has been isolated for much of the last
50 years. Once it was one of the more prosperous countries in
Southeast Asia as it has an abundance of natural resources
including oil, natural gas, arable land, tourist attractions and a
long coastline. It is now one of the least developed countries in
the world.
The country has undergone a transformational reform process,
kick-started by U Thein Sein's Administration and now continued
under the fully civilian democracy in half a century led by Daw
Aung San Suu Kyi. While the process is still underway, significant
progress has been made to the economic prospects of the
country.
In October 2016, the United States government lifted all
remaining sanctions against Myanmar and re-admitted the country
into its preferred tariff system.
For more information about MIL, please visit
www.myanmarinvestments.com
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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