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10 Things Investors Should Know About Straco Corporation Ltd’s Latest Earnings

Yesterday, Straco Corporation Ltd (SGX: S85) announced its financial results for the third quarter and nine months ended 30 September 2017.

Here are 10 things investors should know from the earnings announcement:

1. Revenue for the third quarter decreased 3.2% year-on-year to S$46.11 million. Straco said that the fall in revenue was due primarily to lower revenue at Underwater World Xiamen (UWX), which was partially offset by higher revenue from Shanghai Ocean Aquarium (SOA), Lixing Cable Car (LCC) and Singapore Flyer.

2. UWX’s performance was affected due to a 30% drop in visitor numbers during the quarter on the back of “further restriction on visitor numbers to Gulangyu by the local authorities, as well as tight traffic control in Xiamen city in view of the 2017 BRICS Summit held in September”.

3. For the quarter, overall visitor numbers to all of Straco’s attractions fell 5.1% year-on-year to 1.91 million visitors.

4. Profit attributable to shareholders slumped 6.1% to S$21.35 million from a year ago.

5. Consequently, diluted earnings per share for the reporting quarter fell to 2.47 Singapore cents from 2.60 cents one year back.

6. As of 30 September 2017, the balance sheet carried S$189.11 million in cash and equivalents, and total debt of S$52.9 million. Straco ended the quarter with a net cash position of S$136.21 million. This was an improvement from the end of last year when there was a net cash position of S$101.33 million.

7. Cash flow from operations fell 5.5%, from S$34.97 million in 2016’s third quarter to S$33.06 million in the latest quarter. With a slight increase in capital expenditure from S$0.33 million last year to S$0.34 million this year, Straco’s free cash flow declined by 5.5% to S$32.73 million.

8. For the nine-month period, however, the firm’s revenue inched up 1.9% year-on-year to S$103.85 million as “revenues at SOA, LCC, and the Singapore Flyer increased”. Profit attributable to shareholders grew 3.3% to S$41.67 million from a year ago.

9. Looking ahead, Straco should see some tailwinds from the tourism sectors in China and Singapore. For China, it said: “According to the State Council five-year tourism plan (2016-2020), the sector will contribute more than 12% of GDP growth, as the nation works towards developing tourism into a major driver of economic transformation.”

10. Moving on to Singapore, it said: “Singapore Tourism Board (“STB”) has signed a memorandum of understanding with Alipay to enhance Chinese tourists’ overall experience in Singapore with better access to information before and during their trip. The collaboration is part of STB’s overall strategy to better engage visitors through digital channel, which will in turn increase overall visitor satisfaction, increase tourism receipts and drive repeat visits.”

As of yesterday’s closing price of S$0.87, Straco was going at around 16 times its trailing earnings and had a dividend yield of 2.9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Straco Corporation Ltd. Motley Fool Singapore contributor Sudhan P owns shares of Straco Corporation Ltd.