price to book is 1.5 but it is not the metric to be concerned about. Straco's assets are recorded at historical cost. These are assets which have proven to be powerful cash generators. U know, income and wealth are rising in China, the middle class is burgeoning Â and resulting in a very powerful growth in domestic tourism. The aquariums of Straco are giving absolutely great returns on capital. That is how I view Straco, which by the way has touched 29 cents liao.
Is Price to book the correct way to measure Straco? Some investors view cash flow as what it's all about. Very high % of its ticket sales becomes free cash flow. Â I will wait for its full year results in a few weeks time. I think free cash flow is no problem at all. Just see if the company will pay at least 1.5 cent dividend (5% yield).Â
Oi Muddy Waters, instead of turning nasty on Olam, hey, why not turn go long on Straco?
U are disturbed by Olam's high debt? High leverage?Â
See Straco, no debt at all for many years after paying off a $5m bank borrowing. Now in fact sitting on S$92 million cash in the bank versus a market cap of about S$240 m! Â U will have no necessity to vent spleen no more.
Olam has made numerous acquisitions with funny accounting that disgust Â you?
Hey, Straco has made just 1 -- the Underwater World in Xiamen.
And they did a very good job in turning it around and it's been free cashflow for many years and earned several multiples of the purchase price!
Want to know more? It's entire business is overwhelmingly free cashflow, has pricing power and has hundreds of millions of domestic tourists in China yet to buy a ticket to visit.
And it pays a rising dividend. Of course, you can use your infamous boyish tempestuosness to demand a higher dividend. Â Get interested!
The handsome profit margin is indeed attractive -- what I would like to see is the company returning a nice wad of cash to shareholders via a special dividend. Come on, the biz can easily generate the free cashflow in no time to flood their account again. Â
[Big Fish 14-10-2012]:
Straco's net profit margin (not gross margin) has been ranging between 34-36% in the past 3 years. Find me another company that has this amazing pricing power.
Straco has embarked a frequent daily share buy back since Jan 2011.
The total no of shares transacted since Jan 2011 till 15 Feb 2013 is 77,684,000 shares (8.94% of total shares 868,929,580)
The no of treasury shares accumulated through share buy back is 26,890,000 shares (3.09% of total shares 868,929,580). It is 34.61% of the total no of shares transacted 77,684,000. If we include the treasury shares that are transfer to employees, the percentage will be higher.
For full year 2012,Â straco has usedÂ approximately S$4.418 million toÂ finance share buy back. For 4th quarter, straco used S$222,267.25 for share buy back of 847,000 shares.
My Dividend Prediction:
Last year S$6.451 million is used as dividend payout (S$0.0075 dividend)
Scenario 1: Same Amount
Approximately S$6.5 million is used as dividend payout, divided by 842,039,580 shares = approximately S$0.0075 dividend, yield is 2.5% based on S$0.30 share price.
Scenario 2:Â High Amount
Approximately S$8 million to S$12 million is used as dividend payout, divided by 842,039,580 shares = approximately S$0.0095 to S$0.015 dividend, yield is 3.1% to 5% based on S$0.30 share price.
If straco continues its frequent daily share buy back in 2013, it will need alot more $ millions to pay for the higher share price and this may result in allocatingÂ less $ as dividend payout. What straco should do is perhaps investÂ in good companies sharesÂ which gives good dividend.
As of now, straco is quite illiquid. IfÂ straco comes back to life at S$0.40 where bulk of shares were transacted about $0.27 to $0.355 during 2005, then perhaps Straco will not need toÂ practice frequent daily share buy back.
Last edit: 11 years 2 weeks ago by GEO. Reason: Add info
Hi GEO, did you take into account the free cashflow of Straco?Â This annual cash inflow will easily cover the dividends and the share buyback. Â Easily.Â
I have just checked the 3Q statement, & can point to you Â that in the preceding 12 months, Straco increased its cash by nearly S$12 million. This was after paying the dividend and after some share buyback.
For the 9m 2012, the operating cashflow was S$15 million. Straco spent S$540,000 on share buyback, which actually is peanuts.
And take note : They spent only$336,000 on Property, Plant & Equipment. It's so low capex for maintenance. And this was more than amply covered by the interest income on their cash in the bank. The interest income for 9m2012 was S$748,000.