Loi Hein ramps up real-estate ventures

Drinks manufacturer Loi Hein Company has shelved plans to list on Yangon’s stock exchange, but a series of potential foreign joint ventures means the firm should have no difficulty growing, CEO Sai Sam Htun told The Myanmar Times.

At one stage he intended to take the company public when its annual revenue hit US$100m. He expects revenue to touch $150m in 2016 and the Yangon Stock Exchange is up and running. But there are no plans to list Loi Hein in the next two years, he said.

One reason is that the disclosure requirements and necessary changes to the corporate structure are simply too onerous, he said.

He has a business partner in Thailand who is in the middle of the IPO process in that country.. “They face a lot of difficulties and it’s quite painful for them to go through,” he said. “I talked to my family, my son, and the next generation. At the moment we’ll leave it.”

Loi Hein could well go public in the future, he added, but once the decision to start down the IPO path is made it could take another two or three years to get the company ready.

The lack of listing is unlikely to hold Loi Hein back from expanding into new areas. Sai Sam Htun has spent the last decade collecting as much land as possible, partly to benefit from rising prices. Not only have land prices in many areas rocketed, there is now huge scope for development.

Loi Hein provided for Singaporean firm Soibuild Group to build the luxury housing project Rosehill Residences. The project has already started construction, and now the Condominium Law has been passed marketing has also begun, Sai Sam Htun said.

The law was passed on January 29, and allows foreign ownership of up to 40 percent of residential units.

“We were waiting on the condo law and now our partner is doing marketing in Singapore,” he said, adding the he is eyeing another real estate development with a Japanese firm.

“If everything goes well we’ll build a commercial complex with office and shopping [space],” he said, but declined to name the Japanese partner.

The issue with property projects is a lack of investment, he added. “We can’t handle the big projects by ourselves. We need joint ventures.”

His first joint venture was with Japan’s Asahi in 2014. When Coca-Cola and other international firms began to enter the Myanmar market Sai Sam Htun wondered “whether I will get killed if I don’t partner”, he said.

The Asahi partnership, of which Loi Hein owns 49pc, opened up access to Japanese bank financing and the opportunity to expand, he said.

Loi Hein also owns a 37-acre plot in Thilawa Special Economic Zone, and is in talks with yet another Japanese firm to partner on an offshore supply base.

Whether Loi Hein will supply investment as well as land for the potential project has yet to be decided. But if the company is asked to invest there is a local bank interested in providing financing, Sai Sam Htun said.

“Our investment scope is $150m,” he said.

Loi Hein is moving to position for more foreign investment in others areas too. The firm’s core business is still beverages, where it concentrates on energy drinks, soft drinks and mineral water. It has recently also set up Loi Hein Distribution Company, which will focus entirely on logistics.

This new distribution arm is only a few months old and has just a few contracts – including SPY Wine and My Paris cosmetics from Thailand. But more and more foreign firms will be eager to sell products in Myanmar, and could struggle with distribution, Sai Sam Htun said.

“We do business with about 400 wholesalers who have their own connections,” he said. “I think we can touch 100,000 outlets easily. If a foreign firm comes in it might not have [that kind of access].

Source: Myanmar Times

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