Straco -- gem?

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11 years 6 months ago #12885 by yeng
Replied by yeng on topic Re:Re:Straco -- gem?
I need to correct myself -- I was mistaken in thinking that the crowds have approached the max capacity of the aquariums. Based on 1.2 m a year for Shanghai and 1.2 m for Xiamen, the aquariums have much room to increase revenue. In fact, the extra $ will flow straight to the bottomline.  

SOA was designed with a capacity of 21,000 people in a day. That's a lot more than the 3,300 on average that the aquarium has achieved.  
 
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[yeh 20-10-2012]:

Its net margin is indeed great. And so is the free cashflow.

However, revenue / profit growth may be rather limited because I suppose its tourist attractions are already at near full capacity. Unless of couirse, as someone pointed out, Straco uses its massive cash hoard to acquire another acquarium, or whatever.

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11 years 6 months ago #12914 by Dongdaemun
Replied by Dongdaemun on topic Re:Straco -- gem?
Wonder why they are low profile. 

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11 years 6 months ago #12915 by greenrookie
Replied by greenrookie on topic Re:Straco -- gem?
I took a look at the numbers after forummers highlight this stock.
Althought its a solid business that generate good FCF, current price makes valuation fair at best.
When a counter is fairly valued, there is no safety margin, not a stock I will accumulate at current prices.
Straco is not a growth stock, until they make a aquisition to expand their business, if you are paying for yield then sub3% i say forget it, there are many instructments much less riskier and giving a dividend of around 4%,
If you are paying for potential growth, then you may be right. Also, I am not sure how the Disney at Shanghai will affect its business.
From value buddies, dydx highlight another counter, nam lee pressed metals, also generating solid FCF, a have a moat in terms of being the only supplier to carrier. I find barriers to tourist attrractions low. maybe forummers can take a closer look too
 

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11 years 6 months ago #12936 by yeng
Replied by yeng on topic Re:Straco -- gem?
At 27 cents currently, it's 'fairly valued'? Hmmm..... I think you saw its PE is 12.2X.
I go on ex-cash, which gives a PE of 6.1.

Let me elaborate: Straco has S$92 million cash. Take that off its market cap of S$227 m, and you get S$135 m.

So its business is being valued at $135 million, or about 6.1X earnings.  That makes it cheap in my eyes. And don't forget, every year it can generate more free cashflow in excess of S$10 million a year at least.

Maybe other investors think differently. To me, dissenting views are always welcome. Pls share your thoughts before I add more to my holding. :-)

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11 years 6 months ago - 11 years 6 months ago #12940 by greenrookie
Replied by greenrookie on topic Re:Straco -- gem?
HI Yeh,
Thank you for being so open minded, I agree that straco business is solid and potential great(If they invest the hughcash hoard properly). It might be a sound investment strategy to enter early in expectation of the realisation of its profits. 
Straco is just personally not for me, as i look for other things, I dun buy on potential, but different risk profile for different ppl, you might be right about the stock just like many others.
Why i considered it fairly valued:
P/b of above 1.5
I do not look at PE that much as of PEG, I do not see it shrinking going forward, more like a plateau of gradual improvement.
Its has more than 800 million shares, assume the 10 million cash pile up keep going, the NAV pershares is not going to improve drastically, given that its already at a prenium of P/B, it will not be undervalued (NAV
There are many counters trading a multiples of p/b, but there are mostly blue chips with a leadership position in their various fields and most give constant and high dividend payout 5% or more. I do not see Straco to be in a leadership position. How much to pay for FCF then? To me, FCF is a good guarantor for sustainability of dividends. GIven the payout ratio is around 40% for the past years, and assume Straco continue its stellar performance and achieve record EPS of 3 cents and increase dividend to 1 cent, yield would be just  3.6% at current price.
 
So if i am not paying for yield or NAV, then i must pay for growth. That is when it gets tricky and you may be right. 2 tourist attractions does seems to have a moat in business, since it has very impressive results compare to other companies with tourism exposure (HAw Par). I am very bad at valuing growth, I can't project how much more vistors they can attract, so i will give it a miss.
just my 2cents worth for discussion, maybe you can tell me why you like the company. NOnetheless, hope u gain big time with this shares, and given that your entry price is much lower, you might just have the margin of safety.
Last edit: 11 years 6 months ago by greenrookie.

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11 years 5 months ago #12984 by yeng
Replied by yeng on topic Re:Straco -- gem?
hey greenrookie, are u a fund manager or accountant or analyst? i am impressed with your views & yr backup facts. I can't refute them. In fact I agree with u. I just like Straco for the reasons I have posted b4 & a bit more, including the fact that I like the idea of adults&kids going to an aquarium and really enjoying watching oceanlife and paying a fair price for the pleasure. It's that kind of biz unlike manufacturing,or property development, and what have u. I am pretty certain that Straco will give me a decent return & it doesn't bother me that its 'EPS growth' & 'dividend yield' don't look great (for now). What some people may not recognise using conventional financial analysis is the certainty of the cashflow of Straco & to me this is a nice tradeoff for the lack of stunning EPS growth & high yeld. Just my 2 cents.

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