A Close Look At Straco Corporation Ltd’s Growth, Dividend, And Valuation

Tourism asset owner and operator Straco Corporation Ltd (SGX: S85) has been a great long-term winner in Singapore’s stock market.

Over the past five and 10 years, shares of Straco Corporation have gone up by 331% and 529% in price, respectively.

Here are three important aspects about the company that may interest investors, namely, its growth, dividend, and valuation.

1. Growth

The table below shows how Straco’s revenue and earnings per share have changed over its last five completed fiscal years:

Source: S&P Global Market Intelligence

We can see that Straco has delivered impressive growth – its revenue and earnings per share have grown at compound annual rates of 29% and 32%, respectively, from 2011 to 2015.

2. Dividend

At Straco’s current share price of S$0.755, it has a dividend yield of 3.3% thanks to its trailing dividend of S$0.025 per share. This yield is lower than SPDR STI ETF’s (SGX: ES3) yield of 3.25%; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

We can also try and assess the sustainability of the company’s dividend by looking at two financial ratios: the debt-to-shareholders’ equity ratio and the pay-out ratio. But, do bear in mind that there are many other things to look at beyond the two ratios.

The debt-to-shareholders’ equity ratio is a gauge for the level of financial risk a company is taking on. Meanwhile, the pay-out ratio is the percentage of a company’s profit that is paid out as a dividend. Generally speaking, the lower the two ratios are, the better it could be.

With Straco’s trailing earnings of S$0.055 per share, it has a pay-out ratio of 45%. Based on its latest financials (as of 30 June 2016), it has a debt-to-shareholders’ equity ratio of just 31%.

3. Value

We’ve already seen Straco’s earnings per share and share price. Putting the two numbers together gives us the company’s price-to-earnings ratio of 13.6. There are two things to note about this figure.

First, Straco’s current PE ratio is near the middle of where it has been over the past five years, as the following chart illustrates:


Source: S&P Global Market Intelligence

Second, the tourism asset owner’s PE ratio is slightly higher than the SPDR STI ETF’s PE ratio of 12.

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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned.