The following was recently published on www.nracapital.com, and is reproduced with permission

350_kevin_aiceKevin Scully, executive chairman, NRA Capital.
NextInsight file photo
STRACO CORPORATION reported a strong set of Q1-2013 results which were significantly better than expected. 

Key highlights:

a) revenue rose 25% to S$11.3mn - the growth rate was driven by stronger visitor growth of 19% for SOA (Shanghai Ocean Aquarium) and 25.6% for UWX (Underwater World Xiamen).

b) pretax profit rose 167% to S$7.77mn while net profit was higher by 201% to S$5.6mn.

c) EPS was 0.65 Sing cents compared to 0.21 Sing cents in Q1-2013 and Q1-2012 respectively

d) NAV was 16.4 Sing cents compared to 15.5 Sing cents over Q1-2013 and Q1-2012 respectively.

e) balance sheet remains very healthy with net cash rising to S$101.7mn from S$95.9mn over Q1-2013 and Q1-2012 results.  This works out to about 12 Sing cents per share of cash.

straco_websiteScreenshot of Shanghai Ocean Aquarium website www.sh-aquarium.com/en 

Comments

A better than expected set of results BUT don't expect the significantly better Q1-2013 numbers to be repeated in Q2 and for the rest of 2013.

The current outbreak of H7N9 has so far had some impact on visitor arrivals at SOA - it would be safe to assume that revenue growth for the full year should return to more normal levels of 10-15%.

The better than expected profit was boosted in Q1-2013 by two non operational factors:

a) Straco had a one-off gain arising from the disposal of a land use rights at our subsidiary, Xián Lintong Zhongxin Tourism Development Co. Ltd, to the local government.  This can be seen in the 122% increase in other income to S$1.7mn from S$0.8mn or about S$0.9mn.

b) exchange gains from a stronger RMB versus S$ of S$0.6mn in Q1-2013 compared to an exchange loss of S$0.8mn in Q1-2012.

Adjusting the Q1-2013 net profit for these two items would bring the net proift down to S$2.3mn from S$5.6mn resulting in profit growth of about 23% which is inline with its revenue growth.

Still like Straco  and it remains on my Yield Stock Picks list - am raising my fair value price target - check our premium section.


Recent story: STRACO CORP: After another solid year and a bigger cashpile, will there be M&A?

 

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