I really like the logic of your argument, but the price is already so high leh! Great for those already vested at low entry price, but to go in now seems a bit risky to me. Just my personal opinion.
"Price is what you pay, value is what you get" If you looks beyond short term, Straco is one of the market-beating stock. At 61 cts it is trading below 15x PE ex cash and historical yield of over 3.3% with one of the best net profit margin non can compare. Inportant is going forward whether Straco can continue to grow its top and bottom lines and also maintain its net profit margin.
Straco aquariums capacity wise according to the management only experience waiting time of up to 2 hours on 6 to 7 days a year.
Chao Yuan Ge project which has been long deferred because of land acquisition issues, and whose development is taking off. It will require US$8 million in investment, and is expected to be completed by 2015. Chao Yuan Ge project which is accessible by Straco’s cable car in Xi’an. There, Straco will restore the grand "Hua Qing Palace" to showcase the culture and unique architectural features from the Tang Dynasty through reconstructed replicas of its major buildings.
Thing is, you don't need to have too many of them in your portfolio. You need just enough to build a diversified portfolio that could, over time, generate returns that are better than the market.
Straco has recorded a new all-time high in its stock price which closed at 65 cents on strong buying volume. Add in the 2-cents dividend (just went x-d) and you are looking at 67 cents effectively!
There is still no news on the outcome of the project tender that Straco took part in. If Straco wins the project, the stock price could be positively impacted. I assume Straco had gone into the tender with certainty of the project being earnings accretive.
Revenue = 14.66 million (increased by 29.6%)
Profit before tax = 8.22 million (increased by 5.8%)
Net profit = 5.41 million (decreased by 1.5%)
* 1Q Revenue grow 29.6% to $14.66 million
* Strong cash balance of $106.8 million
* Debt free since 2008
For the quarter under review, combined visitor numbers to SOA and UWX increased 22% over 1Q2013 to 608,000 visitors.
Commenting on the results, Straco’s Executive Chairman, Mr Wu Hsioh Kwang said: “Amid a slower pace of expansion in China, growth in its domestic tourism industry remains strong as evidenced by higher visitations at our attractions. We are encouraged by this quarter’s result which saw revenue grow almost 30% over last year’s corresponding period. Excluding the foreign exchange differences in both periods and the one-off gain of $0.65 million on disposal of a land use rights in 1Q2013, our net profit for 1Q2014 would have increased by $2.0 million or 45% over 1Q2013.”
My View,
I'm still positive on Straco for the following reasons:
* Revenue in 1Q2014 grow stronger by 29.6% as compare to 1Q2013 increased by 25%.
* Net profit would have been increased by $2.0 million or 45% over 1Q2013 (Excluding the foreign exchange loss and one-off gain of $0.65 million on disposal of a land use rights in 1Q2013)
* 1Q2014 the Group generated net cash from operating activities before working capital changes of $9.58 million in 1Q2014, compared to $6.80 million in 1Q2013.
* Cash balance increased further to $106.83 million
* Debt free since 2008
Straco revenue increased by 29.6% but profit decreased by 1.5% may result on share price weakness. Its present a good buying opportunity for those who miss out on this stock. Straco is still on the growth path and fundamentally there is no change. Exchange loss is only one-off but it net profit margin has in fact increased further.
I will also waiting to buy on price's weakness.
* Net profit would have been increased by $2.0 million or 45% over 1Q2013 (Excluding the foreign exchange loss and one-off gain of $0.65 million on disposal of a land use rights in 1Q2013)
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