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

Straco Corporation Ltd (SGX: S85) is a tourism asset owner and operator with business interests in China and Singapore.

In China, the company has the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions under its umbrella. As for Singapore, Straco bought a majority stake in the iconic Singapore Flyer – one of the largest observation wheels in the world – in late 2014.

Two weeks ago, Straco reported its 2017 third quarter earnings. Let’s look at 10 important things from the earnings announcement that investors should know:

1. For the reporting quarter, revenue declined 3.2% year-on-year to S$46.11 million.

2. Quarterly operating profit dropped by 5.7% to S$31.55 million because of the lower top-line and higher staff costs.

3. Net profit attributable to shareholders for the reporting quarter fell 6.1% to S$21.35 million.

4. Similarly, earnings per share (EPS) dropped 6.4% to 2.48 cents.

5. For the reporting quarter, the operating margin declined from 70.2% a year ago to 68.4%.

6. Straco generated operating cash flow of S$33.06 million in the reporting quarter. The company spent S$0.78 million in cash to buy back 900,000 of its own shares.

7. As of 30 September 2017, the company’s cash and cash equivalents stood at S$189.11 million, up from S$159.62 million a year ago. Meanwhile, total borrowings decreased from S$64.90 million to S$52.90 million. This shows that the company’s balance sheet has strengthened.

8. In the third quarter of 2017, Straco had S$11.95 million in trade payables, which was higher than the sum of its inventories and trade receivables of S$6.19 million.

9. For the third quarter of 2017, overall visitor numbers to all its attractions decreased 5.1% from a year ago to 1.91 million visitors.

10. In Straco’s earnings release, its executive chairman, Wu Hsioh Kwang, commented on the performance of the company’s assets:

“ We are satisfied with the overall performance for the year-to-date as our attractions, other than UWX, registered positive growth.

UWX’s performance had been impacted by falling visitor numbers, which dropped more than 30% in 3Q due to the 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.”

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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. The Motley Fool Singapore has a recommendation for Straco.