Straco Corporation Ltd’s 2017 Earnings: What Investors Should Know

Yesterday, Straco Corporation Ltd (SGX: S85) announced its financial results for the fourth quarter and full year ended 31 December 2017. Here are 10 things investors should know from the earnings announcement:

1. Revenue for the 2017 fourth quarter rose 5.8% year-on-year to S$24.6 million. The improvement was mainly due to “higher revenues contributed by the three attractions in China, partially offset by lower revenue achieved by Straco Leisure which operates the Singapore Flyer”. For the full-year, revenue grew 2.6% to S$128.4 million.

2. Profit attributable to shareholders fell 1.2% to S$6.1 million for the quarter. For the whole of 2017, the bottom-line went up 2.7% to S$47.7 million.

3. The net profit margin for the fourth quarter of 2017 was 24.7%, down from 26.4% seen a year ago. For the full-year, the net profit margin stood at 37.2%, up slightly as compared to 2016’s 37.1%.

4. Diluted earnings per share (EPS) for the reporting quarter slipped marginally, from 0.71 Singapore cents to 0.70 Singapore cents. For the full-year, diluted EPS went up 2.6% to 5.53 Singapore cents.

5. As of 31 December 2017, the balance sheet had S$190.4 million in cash and equivalents, and total debt of just S$49.9 million. Straco ended the year with a net cash position of S$140.5 million. This was an increase from a year ago, when there was S$163.2 million in cash hoard and S$61.9 million in total debt, giving rise to a net cash position of S$101.3 million.

6. Return on equity for the year came in at 17.9%, down from 19.2% in 2016.

7. For the fourth quarter, cash flow from operations was S$4.7 million, a decline from S$5.3 million seen a year ago. With capital expenditure decreasing to S$0.9 million from S$1.1 million, free cash flow for the latest period came in at S$3.8 million, down from S$4.3 million a year ago. For the year, cash flow from operations came down 1.5% to S$66.1 million. With a decline in capital expenditure from S$3.8 million to S$2.6 million, Straco’s free cash flow improved slightly from S$63.3 million in 2016 to S$63.5 million in 2017.

8. For the 2017 fourth quarter, overall visitor numbers to Straco’s attractions climbed 7.4% year-on-year to 0.983 million visitors. For the whole of 2017, the visitor numbers rose 2.7% to 5.19 million, up from 5.06 million a year ago.

9. A first and final dividend of 2.5 Singapore cents per share has been proposed for 2017, unchanged from 2016.

10. Straco gave updates on the Singapore Flyer, which has been grounded since end-January 2018:

“On 25 January 2018, the Group subsidiary’s Giant Observation Wheel was suspended due to a technical issue. Flights operations are expected to resume once investigations are completed and approvals are obtained from the relevant authorities. As of to date, to the best of management’s knowledge and belief, it is unlikely that this temporary suspension will significantly impact the Group’s business operations as a whole.”

Overall, it added that it continues to see the tourism sector in Singapore remaining healthy this year. As for China, it said:

“On the tourism sector, year 2018 is the China-EU Tourism Year. China government will continue to deepen the structural reform of the supply side in 2018, and vigorously boost inbound tourism, stabilize the development of domestic tourism, and enhance the international influence and competitiveness of the Chinese tourism industry.”

At the closing price of S$0.83 yesterday, Straco has a price-to-earnings (PE) ratio of 15 and a dividend yield of 3%.

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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. Motley Fool Singapore contributor Sudhan P owns shares in Straco Corporation.