Straco -- gem?

Aquariums are a rarity in China, which partly explains why Straco has enjoyed growing visitor numbers at quite high entry ticket prices. High, even by Singapore standards.

A new aquarium has opened in Zhuhai. Will this be a threat? I don't think so. For one thing, the aquarium is about 800 - 1000 km from Xiamen where Straco's No.2 aquarium is sited.

A reader, GOH, would like to share pictures from his visit to Shanghai Ocean Aquarium recently:

Once again, we learn what a wonderful business Straco is.
In 3Q, Straco unfailingly generated loads of cash from its operations : S$30.14 million.

As at 30 September 2014, its cash in the bank = $134.32 million (excluding S$21.2 million deposited to bid for Singapore Flyer).


To quote CityFarmer, who put it aptly: "It is indeed a company worth our attention and money."

www.valuebuddies.com/thread-2915-post-100325.html#pid100325

Straco Reports Double-digit Growth In Revenue And Earnings For 3Q2014

3Q revenue grew 26.4% to $38.57 million
Profit increase 28% to $20.3 million
Net profit margin 52.7%
EPS increase from 1.8 cents to 2.3 cents
Strong cash balance of $134.32 million
Generate net cash flow of $31.4 million for the quarter

Cumulatively, Group revenue for the nine months period registered growth of 25.2% year on year while Group profit increased 16.9% over the corresponding period to $33.26 million. Current period net profit was hit by an exchange loss of $1.45 million from a weaker Chinese Yuan against Singapore Dollar, as opposed to an exchange gain of $1.70 million recorded in the corresponding period. Taking away the foreign exchange differences in both period and the one-off gain on the disposal of a Land Use Rights in last year, Group profit for the current period would have increased approximately 32% over the corresponding period in FY2013.


Two key outstanding area to take note on Straco 3rd quarter 2014 result are:

1. Net profit margin increase further to 52.7%
2. Generate addition net cash flow of $31.4 million for the quarter.

Great 3Q and performance is commendable and should warm the hearts of its shareholders. I believe Straco will do well with the purchase of Flyer.

Business model is sustainable and price inelastic. I would classify the company as a "cash machine". Expect a price breakout soon.

Is PE a good way to value Straco? I doubt it -- One key factor to bear in mind is, its cashflow is strong (since visitors pay cash at the door!) and of high quality as compared to accounting earnings *(of other types of businesses) that are owed 3 months or more or even at risk of some impairment.

A Motley Fool article however has used PE and said that the PE is slightly high by historical std.




source: www.fool.sg/2014/11/17/this-reasonably-c...s-poised-for-growth/