Straco Corp

In its latest 2Q13 results, the under-researched operator of premier attractions and tourism-related projects in China, extended its stellar earnings performance, chalking up strong 2Q13 net profit of $7.8m (+31% y/y, +42% q/q), bringing 1H13 earnings to $13.2m (+71% y/y). This was accompanied by a robust top-line showing, with 2Q13 revenue at $16.4m (+19% y/y, +45% q/q), as all three of the group’s attractions - Shanghai Ocean Aquarium (SOA), Underwater World Xiamen (UWX), and Lintong Lixing Cable Car (LLC) - registered increases in revenue and higher visitor numbers. In particular, the combined visitation to the group’s two aquariums rose 14% to 687,000 visitors. Going forward, management notes that the new Chinese national tourism strategy aims to focus on boosting the healthy development of the tourism sector in China and believes that the group is well positioned to benefit from initiatives aimed at improving China’s travel and tourism infrastructure to make inbound travel easier for tourists visiting China. Overall Straco’s fundamentals remain solid. Valuations are undemanding with the stock trading at just 8x ex-cash trailing P/E, backed by net cash of $100m, or 11.7¢ cash per share.