STRACO: What a cash-generating machine!

"Rock" contributed this article, which builds on his earlier forum post, to NextInsight

tix4.15 Tourists at Singapore Flyer. NextInsight file photo When the news emerged in 2014 of Straco Corp buying over Singapore Flyer, Straco shares were sold down from 83.5 cents to as low as 72 cents.

The question on many shareholders' mind: Will Singapore Flyer be profitable or be a liability to the company?

Time has proved that buying Singapore Flyer was a wise move.

Mr Wu Hsioh Kwang, Straco's founder and executive chairman and his team, through years of experience have developed plans and calculated all the risks in order to land this spectacular deal.

Straco has turned around Singapore Flyer and made it profitable from day one.

netcash8.17 Before buying over 90% of Singapore Flyer, Straco was debt-free.

After that, Straco's total debt stood at $93.3 million while it held $112.5 million cash. It was still in a net cash position of $19.1 million.

Today, about 2.5 years later, Straco has used its strong operating cashflow to pare down its borrowings.

Total debt decreased by $37.6m. In 2.5 years Straco debt had reduced by 40%.

The outstanding amount decreased from $93.3m to $55.9m.

Straco's net cash shot up from $19.1m to $$103.6m. Total net cash increased = $84.5m.

In 2.5 years net cash had increased by 442% -- and it had continued to pay dividends and it did some share buyback.

	$’000	2012	2013	2014	2015	2016	1H2017
Dividend (to owners)		6.5	10.5	17.0	17.2	21.5	21.5
Dividend (to minority owners)		0.4	1.3	1.3	1.2	1.6	1.7
Share buyback		4.6	0.1	0.6	4.2	0.5	0.0

With so much cash in hand, Straco is capable of doing another fruitful M&A deal.

Straco has proven to be truly a cash-generating machine and I will be holding on to this stock for as long as the company continues to generate rich cash.

Counter Name	Last	Change
AEM Holdings	2.340	-0.020
Best World	2.460	-0.010
Boustead Singapore	0.960	-0.005
Broadway Ind	0.133	0.004
China Aviation Oil (S)	0.925	0.005
China Sunsine	0.415	-
ComfortDelGro	1.480	-0.020
Delfi Limited	0.895	-0.010
Food Empire	1.260	-0.010
Fortress Minerals	0.305	-0.005
Geo Energy Res	0.310	-
Hong Leong Finance	2.500	0.010
Hongkong Land (USD)	3.120	0.050
InnoTek	0.520	-0.005
ISDN Holdings	0.310	-
ISOTeam	0.043	0.002
IX Biopharma	0.041	-0.002
KSH Holdings	0.250	-
Leader Env	0.051	-
Ley Choon	0.045	-0.001
Marco Polo Marine	0.067	0.001
Mermaid Maritime	0.140	-0.001
Nordic Group	0.310	-0.030
Oxley Holdings	0.089	-
REX International	0.136	-0.001
Riverstone	0.815	-0.005
Southern Alliance Mining	0.430	-0.015
Straco Corp.	0.510	0.010
Sunpower Group	0.205	-0.005
The Trendlines	0.067	-0.002
Totm Technologies	0.022	-
Uni-Asia Group	0.825	-
Wilmar Intl	3.500	0.020
Yangzijiang Shipbldg	1.750	-0.030

Counter Name

Last

Change

AEM Holdings

2.340

-0.020

Best World

2.460

-0.010

Boustead Singapore

0.960

-0.005