Straco

Straco Corporation: 4Q13 results came in at the higher end of estimates, as net profit surged 79% to $5.6m taking FY13 net profit to $34.1m (+73%). Revenue for the quarter grew 32% to $14.6m, led by increased visitation to its two aquariums, where combined visitation grew 17.1% to 0.59m visitors. Bottom-line was buoyed by other income which jumped 21.2% to $1.3m, due to higher retail concessionaire income and certain government subsidies and cash awards received by the group's two aquariums. Overall operating margins grew further to 59.0% vs 45.8%. Going forward, Straco guides that domestic tourism is expected to continue growing with the nation’s increasing affluence and accessibility, which augurs well for the Group. The first China Tourism Law, which came into effect in Oct’13, is reshaping the domestic travel industry, and has increased the number of higher-yielding free independent travellers (FITs) to Straco’s attractions since its implementation. Overall, the group’s fundamentals remain solid with a whooping net-Cash of $108.1m (12.8c per share), representing 26.4% of market cap. At the current price, Straco trades at just 8.8x FY13 ex-cash P/E. The group has declared total dividends (First and final + special) of 2c per share (FY12: 1.25c per share) Latest broker ratings as follows: CIMB maintains Add with TP $0.61