3 Things I Learnt From The Singapore Flyer’s Owner, Straco Corporation Ltd’s Annual General Meeting

I dropped by Straco Corporation Ltd’s annual general meeting yesterday morning. The little-known tourism operator in China has built quite a presence for itself in Singapore. Last year, the company announced that its successful bid to take over the failing Singapore Flyer. Today, the company has completed the acquisition and has recorded one month of revenue from the Singapore Flyer in its account for FY2014. The Singapore flyer was also one of the main topic discussed during the meeting.

Here are some of the highlights from yesterday’s AGM.

  1. Although the Singapore flyer only recorded one month of sales for FY2014, its operation would have been profitable if we adjust for most of the one-off acquisition related cost. This is quite an interesting fact given that the management has not even started implementing many of its future plans for the flyer. If the management is able to address many of the issues with the Singapore flyer, such as its accessibility and its below average traffic flow, the future of this newly acquired asset seems rather bright.
  2. Unfortunately, that cannot be said for all its assets. Its Underwater World Xiamen (UMX) is facing challenges ahead as the government has just announced that it will be controlling the visitor flow into Gulangyu Island, a small tourism island where UMX is located in. This would directly affect the future visitor flow into the aquarium in the future.
  3. More tourist attractions are planned for Shanghai in the coming few years, including Disneyland and Haichang Polar Ocean Park. The company sees the opening of Disneyland in Shanghai as a positive for the company as it should increase the overall tourists coming to Shanghai. On the other hand, management seems a little more worried about the future Haichang Polar Ocean Park, a marine themed park developed by Haichang Holdings Ltd. Haichang Holdings is a leading developer and operator of theme parks and ancillary commerical properties in China. The price point for these mega theme parks will not be in direct competition with the company’s Shanghai Ocean Aquarium, which might be a slight comfort for shareholders.

Foolish Summary

Overall, the mood of the meeting was positive and it seems that both management and shareholders are excited about the future for the company. It will be interesting to see how the company perform in the next few years.

Currently, Straco Corporation is trading at a price to earnings of 22 times and offers a dividend yield of 2.1%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns Straco Corporation.