Monday, March 16, 2015


Straco: Share price jumps to an all-time high at $0.90, taking its one-week return to ~15%. The latest outperformance comes after two local brokers cited last week that the counter remains undervalued and placed a Buy rating on the counter.

The investment theme for Straco lies largely on a potential turnaround of the Singapore flyer, which analysts highlighted that subtracting off once-off items, the flyer actually turned positive in 4Q14, registering a profit before tax of $1.4m.

As such, analysts are largely expecting the flyer to be profitable for FY15, further aided by Straco’s efforts to improve yields at the flyer, via lowering discounts to tour groups, attracting more walk-in visitors and implementing cost efficiencies.

Another catalyst for Straco would be a potential hike in ticket prices at its Shanghai Ocean Aquarium, where market watchers highlighted that Straco typically raises its ticket prices every two to three years, and the last revision was done in Nov ’11. A rise in ticket price is expected to contribute positively to both the group’s top and bottom-line.

Straco currently trades at 15.3x FY15E P/E versus its peer average of 22.4x. Overall, the street has 1 official Buy call with a TP of $1.01.

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