A flat performance based on revenue and net profit which decreased by 2% and 5.2% respectively. Management guided that Shanghai Ocean Aquarium (SOA) and Singapore Flyer (SF) continues to improve in its revenue but Underwater World Xiamen's (UWX) profitability was affected by the typhoons. Net profit margin remains high at ~37%.
On the cash flow front, Straco generated more than $65 mil for the second year running. This has allowed its cash holding to raise by $30 mil to $160 mil. As expected, the company continues to pare down the debt taken in 2014 for acquisition of Singapore Flyer. They have cleared a third of the loan over the past 2 years.
I am hopeful that with its strong cash generating capability, the balance sheet will continue to improve for the next few years. This may result in an increase in dividend declared or other new acquisitions. A possible catalyst will be an increase in ticket price for SOA which was delayed in 2015/16.
Continue to hold on to my stake for a stable 3% dividend yield. May add more at appropriate juncture.
Hi Kin Chuah, Nice to chance upon your blog. Thank you for your sharing on the various stocks. Many of them are in my portfolio too. As for Straco, i was disappointed that no developments has been made to the premises of the Singapore Flyer as was indicated during last AGM that they are in touch with the relevant authorities to make it more accessible for tourists or locals to visit the Flyer. As you have mentioned that the performance is flat, do you think it is still a good share to hold onto or will it turn into a value trap share? Appreciate your comments and thank you. Grace
ReplyDeleteHi Grace,
DeleteThanks for reading my ranting. While disappointed with its performance in terms of top and bottom line, I am impressed by its cash generating ability.
I am treating Straco as a dividend stock even though my purchase yield is only 3%. I might be wrong but I think SOA and SF will continue to perform well in the next few years. So, I am hopeful that dividend might increase further in future (don't know must wait for how long) even if there is no further growth.
Currently, Straco is taking up about 8% of my portfolio, so unless there are signs that SOA and SF are getting worse, I will just continue to hold on to my current holding.
You will have to decide for yourself whether to hold or sell based on your portfolio/investing strategy/purchased reason.
A few others in investing not have also highlighted its risks. You can view the comments at https://www.investingnote.com/posts/49273
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