Straco -- gem?

GEO
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11 years 1 month ago #13359 by GEO

Replied by GEO on topic Re:Straco -- gem?

I am aware of its huge cash pile, no debts and good operating cashflow. As of FY2012, the operating cashflow should be enough to cover both the dividends payout and share buyback. What i am implying is if straco continues its frequent daily share buy back, it will need to pay more cash from its operating cashflow assuming it buys the same amount of shares. Usually share price will go higher due to daily share buy back and if straco keep on frequent share buy back meansÂ paying more as the stock price goes higher and higher. Of cos this will depends on how many shares were buy back for the year (max 10%) and the price when it was buy back at. If straco also gives a higher dividend, there will be lesser operating cashflow added to the cash pile. Why do straco keeps such a huge pile of cash? Are they planning something big? (Bold assumption:Including taking private). If straco does have big plans and have a target amount of cash to be added to the cash pile each year, then the dividend payout will be lesser assuming frequent daily share buyback is ongoing and huge amount of shares were buyback. I do hope straco do not do "frequent" daily share buy back and save the cash for acquistions, make acquistions or buy into other company shares in order to boost its cashflow thus giving better dividends and adding growth to the company. But without the share buyback, i wonder if this stock has liquidity. Perhaps the stock price need to be push higher to lure the major bulk of shares that are transacted at S$0.355 out so as to improve the liquidity of this stock.

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yeng
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11 years 1 month ago #13471 by yeng

Replied by yeng on topic Re:Straco -- gem?

GEO, today should be the day Straco releases its 4Q result. Wonder why they need to do it only on the last day when their operations are quite simple. Maybe there is a lot of cash to count -- :-)

As at end 3Q, Straco had S$91.3 million cash in the bank and zero borrowings. I expect at end-4Q, they would add a few more million $. 4Q is usually a less hectic period, unlike 3Q when it's the month-long school holidays in China.

Let's say they have $95 million by end of 2012. It is a big chunk compared to the current market cap of $244 m. In other words, about 40% of the market cap is cash! (The stock is now 29 cents.)

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GEO
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11 years 1 month ago #13474 by GEO

Replied by GEO on topic Straco -- gem?

Total Dividend is 1.25c which is within my predict dividend of 0.95c to 1.5c. At price of $0.29, yield is 4.3%.

I will be attracted to buy only if it's price is $0.17 and below which gives yield of around 7% or more.

Wondering if Straco will still adopt frequent daily share buy back for 2013 or not. Let's see.

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peterlynch
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11 years 1 month ago #13475 by peterlynch

Replied by peterlynch on topic Straco -- gem?

Hi Geo, I agree with you. Although Straco is a solid company, it is over-priced. 17 cents is a good entry price.

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Dongdaemun
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11 years 1 month ago #13482 by Dongdaemun

Replied by Dongdaemun on topic Straco -- gem?

I was just thinking of a rather extreme scenario whereby Straco is unable, for the next five years, to acquire another tourism-related asset to expand its current business portfolio. Its cash pile will by then reach about S$200 million, assuming S$15-17 million a year. It's not an unpleasant scenario, is it?

In that event, as the years unfold, Straco must pay out more dividends in order to meet shareholder expectations. I hope they have some internal target --perhaps $100 m and anything more will be paid out as special dividends.

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niadmin
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11 years 1 month ago #13487 by niadmin

Replied by niadmin on topic Straco -- gem?

adding to the growing discussion on Straco, Nick posted in www.valuebuddies.com/thread-2915.html :

Since its listing in SGX in 2004, the Company has only made 1 major M&A - acquiring Underwater World Xiamen for $12.33 million in Sept 2007. In FY 2006, the asset generated NPAT of $1.9 million so it was a pretty decent buy. Going forward, the asset enabled Straco aquarium division results to surge dramatically with PBT increasing from $14.5 million in 2008 to $31.7 million in 2012. This is attributed to rising visitor level (the Underwater World Xiamen had seen visitors increasing by over 50% and higher ticketing price). Unfortunately, this was the sole major M&A in this period highlighting the difficulty of acquiring excellent assets in China.

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