Straco plans to hike the ticket prices for its two aquariums (in Shanghai and Xiamen) by 19-33% from Nov 1 this year. NextInsight file photo.
Excerpts from RHB Reseach's "billion & below" report
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Analyst: Goh Han Peng
Straco develops and runs tourism-related assets in China. Its key assets include:
1) the Shanghai Ocean Aquarium, situated besides the Oriental Pearl Tower near the Bund;
2) Underwater World Xiamen, on the scenic Gulangyu Island, a key tourist attraction in Xiamen;
3) Lixing cable car service at Mount Lishan. Straco generates 100% of its revenue from China till late last year, when the company added the Singapore Flyer to its portfolio for SGD140m.
Straco is the prototype of a dream business. Its attractions are strategically located in key cities in China, the most populous country in the world. The group enjoys a growing stream of visitors to its aquariums in Shanghai and Xiamen year after year.
The bulk of its operating costs are fixed and Straco enjoys rising profit margins due to operating leverage as its ticket revenue grows. 
@ Singapore Flyer. NextInsight file photo.Net profit compounded at 23% per annum in the last five years, reaching a record SGD37.7m in FY14.
Straco plans to hike the ticket prices for its aquariums by 19-33% at the end of this year.
This, coupled with contribution from the newly-acquired Singapore Flyer, should propel the group’s earnings by an average of 30% over the next two years.
On a multiple of 16x FY16 P/E, the stock is worth SGD1.33, representing a 32% upside.
