Straco Corporation Limited (SGX: S85) held its Annual General Meeting on 26 April 2019. As a recap, Straco is an operator of tourism assets in both China and Singapore, and owns two aquariums in China (Shanghai Ocean Aquarium [SOA] and Underwater World Xiamen [UWX]), Lixing Cable Car, Chao Yuan Ge (CYG), as well as 90% of the Singapore Flyer.
Here are nine highlights from Straco’s AGM for 2018:
- All operating assets purchased by Straco are earnings accretive. SOA was constructed as a greenfield project at a cost of US$55 million back in 2002, and is one of the world’s largest indoor closed systems aquariums in the world. SOA’s total built-in area is 20,500 square metres over five levels, and has a capacity of 21,000 people per day (if computed on a yearly basis, this works out to around 7.6 million people per year). This is significantly higher than the current 2.38 million visitors per year to SOA, and signals good potential for visitor numbers to rise.
- Amos Ng (CFO) mentioned that CYG has finally obtained approval from the provincial government to begin construction, and the projected development cost will be S$20 million over two years.
- For the Flyer, around 80% of the visitors are tourists while 20% are locals. With the completion and opening of JEWEL at Changi Airport, this should augur well for tourism in Singapore and further attract visitors to patronise the Flyer.
- On the claiming of insurance relating to the two-month long breakdown of the Singapore Flyer back in Q1 2018, Straco is engaging in mediation with the insurer as the insurer is relying on exclusion clauses to try not to pay out the insurance amount. Nothing is certain at this moment of the company being able to claim any amount at all, and an announcement will be made should there be material developments.
- Major renovations for the Flyer are coming up soon. However, this is still subject to approval by the authorities.
- Straco has also announced the launch of a mid-sized attraction called the Time Capsule in Q4 2019, to coincide with the celebration of the Singapore Bicentennial. This will cost around S$10 million to construct and will feature interactive exhibits and light shows to showcase Singapore’s history and development over the decades.
- For SOA and UWX, trade tensions between the US and China have resulted in weaker visitor numbers, and there has also been a dampening effect on tourism. Mr Wu (chairman) sees 2018 and 2019 as “growing pains” for China as the economy evolves to rely more on domestic tourism and consumerism rather than external trade.
- As China’s economy is still weak, the government is therefore very cautious when it comes to raising ticket prices for SOA and UWX, and management does not see this happening this year either.
- Straco has consistently paid out an annual dividend since IPO, and the dividend has been increasing over the years. Please refer to the table below:
Source: Straco’s 2018 AGM presentation
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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore recommends shares of Straco Corporation Limited. Motley Fool Singapore contributor Royston Yang owns shares in Straco Corporation Limited.