Straco

Straco: 2Q14 net profit rose 8.4% to $8.7m, while top line grew 20.1% to $19.7m, on the back of a 22.4% increase in visitors to Shanghai Ocean Aquarium and Underwater World Xiamen. Nevertheless, a 24.4% increase in tax expense partially mitigated bottom line growth. Share price has risen 25% since 1Q14 results on the anticipation of an announcement of a tourism asset. This potential acquisition is a distressed tourism asset located outside China, but within Asia, to which Straco will likely take a 90% stake in the project, and the remaining 10% to be held by a strategic investor. Straco is trading at 25.3x annualized 1H14 P/E. Latest broker ratings: CIMB maintains Add with increased TP of $0.96.