Straco

Straco: 1Q15 results in line. Net profit soared 60.5% to $8.7m, while revenue surged 71.5% to $25.2m, led by the first full quarter contribution of the Singapore Flyer acquired in Nov ’14, as well as increased revenue from Shanghai Ocean Aquarium (SAO) due to increased visitor arrivals.

Visitor ship for its Underwater World Xiamen was however impacted by the relocation of the visitor ferry terminal to another end of the island from where the aquarium is situated at.

Overall visitation to all the group’s attractions was 942,000 visitors (+32.9%) for the quarter, buoyed by the addition of the Singapore Flyer.

Bottom line growth was slightly weighed by an overall increase in operating expenses (+75.7%), attributable to additional expenses incurred by the Singapore Flyer.

Going forward, additional catalysts for Straco will stem from the group raising its ticket prices at SAO, which will take effect from 1 Nov ’15, with the average increase set at ~16.7%.

Separately, Straco guided that China’s domestic tourism market is expected to remain buoyant, as the industry plays an important role in the country’s economic growth. Despite new government guidelines to manage overcrowding, the group opined that the long term effect will be the smoothening out of domestic travel over the year, leading to less overcrowding and more optimal experience for its visitors.

In Singapore, while the outlook in 2015 appears to be challenging, Straco expects the nation’s Golden Jubilee campaign to have a positive impact on its business.

At the current price, Straco trades at 15x FY16E P/E, in line with its regional peers.

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