Straco

Straco: Makes a new 5 year high at $0.315 today. See our recent postings on the counter below. - Straco: Reported FY12 results. No major surprises at the operating level with the co delivering revenue and profit growth of about 20%. The pleasant surprise was a dividend which total 1.25c vs 0.75c in 2011 comprising a final dividend of 0.75c and a special dividend of 0.5c. Grp’s balance sheet healthy with net cash of $95.9mn or about 11.3c per share. Going forward, grp expect business to remain robust in view of the fast-growing domestic tourism market in China and the government’s initiatives to boost the tourism industry. NRA Capital note that organic growth in this business is usually about 10% and house comforted by mgt's positive forward looking statement of robust growth and remains in its Stock Picks Yield list. House raise the fair value using dcf and cash calculation but the stock like Cerebos is likely to see slow and steady gains supported by its reasonable yields and strong cash backing. Straco Corp: Counter has been gaining traction with the investor’s radar, with NextInsight featuring the co. after NRA’s Kevin Scully recommended accumulating the stock late last yr. Note that following the world's largest aquarium at RWS, tons of cash have poured into the coffers of the business, which leads to the topic of Straco Corporation, who owns and operates 2 aquariums, 1 in Shanghai and another in Xiamen. Add that Straco’s businesses not only are very visible and easy to understand but also generate tremendous free cash flow. As a result, Straco has no bank borrowings, and has amassed $91 m cash in the bank (as at end-Sep12) vs its recent market cap of $230m. Two interesting snippets: - The ground breaking ceremonies of Straco’s aquariums were graced by no less than Lee Kuan Yew (in Shanghai) and Goh Chok Tong (in Xiamen, for Phase 2) in their capacities as Senior Ministers then. - Straco is 54% owned by its SG chairman-cum-CEO, Wu Hsioh Kwang. An investment-oriented Chinese state-owned enterprise, the China Poly Group owns 22%, and its chairman, Chen Hong Sheng, sits on the Straco board as a non-executive director. The standing of the China Poly Group is reflected in the fact that its current chairman He Ping, the son-in-law of late Chinese leader, Deng Xiaoping Business background & financial traits: 1) 9 years ago, in Feb 2004, Straco was listed on SGX at 26c. Recently, the stock price was still at the 26c level. There is no need, for comparison purposes, to adjust the IPO price for corporate actions such as rights issues, bonus issues or placement of new shares since Straco has never carried out any of these exercises. 2) Its high free cash flow ensures it doesn't need to ask shareholders for money. 3) While its recent stock price is almost unchanged from its IPO price, Straco's earnings have soared over the years -- from $7.7m in 2002 to $16.5m in 2011. For 9M2012, net profit was $16.58m. 4) Straco’s rev contributors are the Shanghai Ocean Aquarium (about 2/3), Xiamen Underwater World (1/3) and the Lintong Cable Car business (small contribution) in Xi’an. 5) Straco has no bank borrowings since 2008. Unlike its Shanghai asset, which it developed from scratch (for USD$50m), the Xiamen Underwater World was bought over by Straco ready-made in 2007 (for $12.5m). These assets are carried on Straco’s books at historical cost. By estimates, these aquariums would cost around US$100m and US$30m to develop today