2 reasons why Yoma will be a solid stock pick in 2014

This year will be an inflection point.

Yoma Strategic Holdings is seen positively by OCBC Investment Research, as it expects the company to complete its Landmark acquisition in 1H14 and see its current share price as undervalued, creating an opportunity for wiser investors.

Here's the full analysis from OCBC Investment Research:

We turn positive on Yoma and upgrade the stock to BUY with a higher fair value estimate of S$0.97 (versus S$0.84 previously).

Our investment thesis rests on two key parts. First, our base case is for the Landmark acquisition to complete in 1H14. The accretion from this project makes up 41% of Yoma’s fair value estimate and we anticipate a successful acquisition to be a key price catalyst. Second, note that Yoma’s share price in 2013 has stagnated mostly between S$0.70 and S$0.90 despite management penning potential deals across diverse businesses.

We believe the market is generally discounting these deals’ eventual earnings impact given their ubiquity across various companies on the SGX and a dearth of fruitful outcomes to date. In 2014, however, we expect Yoma to transition from a mostly deal-making phase into one where management would deliver, from its incubated plans, large-scale operational traction and fuller earnings visibility. We see this likely leading to a meaningful re-rating for the share price.

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