(12-05-2014, 11:40 AM)ikur1 Wrote: [ -> ]Another thing to keep watch for this one is the level of option compensation given out to management.
If you check AR they did charge this compensation into the p&l but using a grossly understated figure, if i'm not mistaken the latest year 2013 was 8 cents! on about 3 mil option shares
how do buddies account for this?
i'm thinking, say they can exercise at 8 cents and we think fair value is 60 cents for example. there's 52 cents unaccounted for for each option exercised, we should adjust profit figure by this much for the year?
also dun forget the dilution of the enlarged outstanding share
(vested)
In page 28 of the Annual Report, it states that there are 23.7 million options with exercise price ranging from 12.9 cents to 31.1 cents. Today, the Company announced more options were granted with exercise price of 63.0 cents. I don't imagine there is a need to adjust any profit figure. It is akin to a 'placement' or 'warrant' issue. The Company holds 25.1 million treasury shares as of 31 Dec 2013 so its likely the treasury shares will be issued to the option holders upon conversion. Personally, I have never been a fan of the stock option scheme.
Share price fell 4.6% today. I guess the market wasn't impressed with the forex losses in 1Q 2014.
(Vested)
(10-05-2014, 06:35 PM)Nick Wrote: [ -> ]Straco reports 30% growth in revenue for 1Q
• 1Q revenue grew 29.5% to $14.66 million
• Strong cash balance of $106.8 million
• Debt free since 2008
http://straco.listedcompany.com/newsroom...DXBA.1.pdf [Financials]
http://straco.listedcompany.com/newsroom...DXBA.2.pdf [Media Release]
1) Revenue up 30% on the back of 22% increase in visitor numbers in the 2 aquariums in the usual quiet 1Q. Growth will come from increasing utilization in non-peak periods.
2) NPAT was flat. However, excluding the one off disposal of land use rights gain in 1Q 2013, PBT would have increased by 15%.
3) Due to the sharply appreciating SGD / RMB this year, Straco incurred $1.0 million forex loss in 1Q 14 as opposed to $0.61 million forex gain in 1Q 13. Excluding both items, NPAT would have risen 45%. Personally, forex movement is a real and recurring issue so I won't exclude it. The RMB/SGD rates moved 3.1% in 1Q 14.
4) 2Q and 3Q are where the bulk of the profits are generated. So it is difficult to simply extrapolate 1Q growth going forward. No news on AEI or the MOU. Management outlook remains bullish.
5) Balance sheet remains strong with $128 million cash (including its deposit for the project) and 0 debt. This works out to 15 cents / share. I expect a higher dividend this year unless M&A is carried out.
Any thoughts on the latest results ?
(Vested)
As a holder I was very happy with the strong visitation growth in Q1. As you've noted there's potential for getting greater utilisation outside of peak periods - it also looks like revenue/pax has been relatively steady over the past 12 months. I estimate ~3% yoy growth in revenue/visitor (currency adjusted but not mix adjusted) relative to ~10% yoy growth in FY12 - so there may be scope for price rises to further boost revenue in the Q3 peak.
My concern with Straco is that the company has stockpiled huge amounts of cash since the IPO. While it's positive that management has been disciplined on M&A, we're now paying 60cps, of which ~80% is for an operating business and ~20% is for RMB term deposits. If the company were to return the cash to shareholders, and potentially even borrow a little (say S$50m, c.1x EBITDA) we would have a much more streamlined balance sheet with greater leverage to the earnings growth that is coming out of the aquariums. I think such a move would also be value accretive as I doubt the market is giving Straco a premium multiple on account of the net cash position.
I look forward to see what is happening with the proposed project, which can hopefully put the $100m cash to a productive use. I hope for a greater dividend or a capital return but I don't like my chances.
(Vested)
It's very unlikely they will return cash to shareholders. They just announced alternate directors, both are family members.
To be fair to straco, they have been paying well for a largely family/internal run business.
(Divested)
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I believe this is one of the value stock. Unfortunately, at today's close of $0.765, the stock might be running well ahead of its fundamental. Happened to read through the article (click the URL) on when to sell stocks in value investing portfolio and I feel that Straco just hit one of the key points:
http://seekingalpha.com/article/2299485-...-portfolio
I might be wrong if there are clear new business developments (which has yet to be announced) that will contribute positively to both the topline and bottomline. Otherwise, let's see whether Mr Market will agree with my observation... Give it another month or so for the announcement of their Q1 financial result.
IMO, if you are already invested in it and there are no better opportunities out there, then it will be better to hold it unless it is trading at an extreme overvaluation or there are clear evidences future profit will deteriorate. Market tends to pay a premium for good cash flow generating companies and Straco is one such example.
It is hard to say $0.765 for Straco is a good support price ,if u look at the Friday time sales ,only few lots trade at.high price range ...so I think Monday will pull back a bit..(hope I am wrong)
Probably this indicate potential.good news from the new tendered project which by right should be announcing soon.
(Vested)
If Straco is capable of maintaining its > 15% growth in net profits annually, one may look back in 5 years time, thinking 76.5 cents was a steal. Naturally, price may take a dip in the coming days due to the spike up on low volume so 76.5 cents may seem expensive. As always, two persons could buy and sell at the same price and both still be right - boils down to the time scale. For me, as long as Straco continues to maintain its high growth rate and cash generating ability, I see no reason to sell.
(Vested)
Hi
I plotted Exchange Rate (RMB to SGD) vs Currency Translation.
[
attachment=985]
RMB to SGD: taken from Oanda currency Historical Rate, Average Rate for the whole quarter.
What i saw from the chart is currency translation is well correlated to Stronger RMB on QnQ comparison (this is something expected).
The interesting part will be on Q2 which we are seeing quite stable trend for RMB:SGD, probably we should be expecting better result provided the growth is intact.
p/s: anyway, i am not too sure whether this chart is useful or not..
(Vested)
For what it's worth, sold my holdings on thurs and Friday at ~79 on valuation grounds. While I think straco will continue to grow earnings strongly this year, on my calcs revenue needs to grow 30% for Straco to be fairly priced (say 9-11x EBITDA) so a lot of that growth is already priced in. Things look worse if you treat the cash as part of enterprise value given the likelihood that this cash will be distributed remain slim.
One thing to consider with Straco is that because of the cash pile, moves in the share price imply a larger move in the value of the assets. Eg going from 60c to 80c is more like a 50% move in valuation than 33%.
Good luck to remaining holders!