BNN wrote: Straco's visitorship numbers has reached very interesting levels, enabling the company to earn very high profit margins.
In 1H of this year, the pre-tax profit was S$21 million. Add back S$2 million in depreciation for assets, and you get S$23 million.
Compare this with the revenue of S$34.3 million, and you can see how much profit Straco makes for every S$1 of ticket sales it makes.
Acquarium is a fixed-cost business.
Cost of producing sea water (Straco buys salt to produce clean water instead of using sea water that may be polluted), cost of fish feed, cost of medical care for fish, and airconditioning are independent of visitorship.
It follows that incremental revenue flows almost straight to the bttom line.
Operationally, Straco is getting stronger and this trend is likely to continue.
However, Straco needs to address 2 matters - to diversify its earning streams (less exposure to RMB). Current FEX loss is a good reminder of this weakness. Also, liquidity of its shares need to be raised (perhaps from bonus issue) in order to move to next level of play.
Selling pressusre on Straco seem over, selling volume very low.
I like Straco for the following reason.
1. Resilence business
2. Able to grow its profit yearly
3. Gross profit margin of 67%
4. Cash-rich & no debt
5. Paying out perputual dividend. if this year profit increase by 25%, dividend at 2.5 cts = 3%.
6. Potential acquisitiuon for future growth