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Straco released its 1Q 2015 results yesterday with profits soaring by over 60% due mainly to contributions from the Flyer and growth in the core aquarium business.
http://straco.listedcompany.com/newsroom...BWOB.1.pdf [1Q Results]
http://straco.listedcompany.com/newsroom...BWOB.2.pdf [Press Release]
1) Revenue grew by 71.5% to $25.15 million on the back of 32% growth in visitor numbers due to the inclusion of Singapore Flyer. SOA visitor numbers grew while UWX was hit by visitor numbers control so I suspect the latter profitability may have been impacted. The proposed ticket price increment could be another avenue of growth assuming the visitor numbers remain constant. No plans for the Flyer rejuvenation was revealed so one can only wait
2) Group's EBITDA margin was constant at 63% implying the Flyer did not depress the Group's margin i.e. it was generating similar level of profitability as the aquariums.
3) The Group FCF increased substantially to $10 million. It's balance sheet remains strong with net cash of $33 million. The debt it incurred to finance the Flyer acquisition has very low financing cost. It makes sense to keep the cash in China to earn higher interest income.
4) 1Q is traditionally a low season quarter so it doesn't make sense to annualize its return. The strongest quarter is 3Q. Assuming last year earnings grew by 30%, the EPS will be 5.8 cents or PE of 18.5.
5) Unfortunately, no breakdown was given so we cannot tell how much did the aquarium and the Flyer contributed. The clue lies in the Minority Interest which compromised of 5% stake in SOA, 5% in cable car business and 10% stake in the Flyer (in 2015). We can create a matrix to 'guess' the Flyer contribution:
i) Assuming the Flyer broke even implies the bulk of the MI belongs to the 5% stake in SOA: This would imply that SOA earned $10.0 million NPAT (an increase of 132%). This is not likely as it exceeds the Group NPAT implying UWX was loss-making.
ii) Assuming Flyer was loss making implies the aquarium component of the MI would exceed $0.5 million implying SOA more than doubled since last year. This would contradict the historic growth rate of SOA.
iii) Hence it is more likely that the Flyer was profitable and did contribute positively to the Group's bottomline and hence the MI. Assuming SOA grew by 20%, the MI contribution from the Flyer would be $0.25 million implying it generated NPAT of $2.5 million in 1Q 2015 which compares well with the $1 million profit earned in Dec 2014. This would imply $5 million NPAT from SOA, $2.5 million NPAT from Flyer and $1.6 million NPAT from UWX. One can play with SOA growth rates and derive other combinations. It is just my guesswork to 'show' the Flyer was likely to be profitable.
Naturally, this is just guess work. I hope the CIMB report would shine some light on this issue. Please feel free to point out some flaws in my assumptions.
(Vested)
http://straco.listedcompany.com/newsroom...BWOB.1.pdf [1Q Results]
http://straco.listedcompany.com/newsroom...BWOB.2.pdf [Press Release]
1) Revenue grew by 71.5% to $25.15 million on the back of 32% growth in visitor numbers due to the inclusion of Singapore Flyer. SOA visitor numbers grew while UWX was hit by visitor numbers control so I suspect the latter profitability may have been impacted. The proposed ticket price increment could be another avenue of growth assuming the visitor numbers remain constant. No plans for the Flyer rejuvenation was revealed so one can only wait
2) Group's EBITDA margin was constant at 63% implying the Flyer did not depress the Group's margin i.e. it was generating similar level of profitability as the aquariums.
3) The Group FCF increased substantially to $10 million. It's balance sheet remains strong with net cash of $33 million. The debt it incurred to finance the Flyer acquisition has very low financing cost. It makes sense to keep the cash in China to earn higher interest income.
4) 1Q is traditionally a low season quarter so it doesn't make sense to annualize its return. The strongest quarter is 3Q. Assuming last year earnings grew by 30%, the EPS will be 5.8 cents or PE of 18.5.
5) Unfortunately, no breakdown was given so we cannot tell how much did the aquarium and the Flyer contributed. The clue lies in the Minority Interest which compromised of 5% stake in SOA, 5% in cable car business and 10% stake in the Flyer (in 2015). We can create a matrix to 'guess' the Flyer contribution:
i) Assuming the Flyer broke even implies the bulk of the MI belongs to the 5% stake in SOA: This would imply that SOA earned $10.0 million NPAT (an increase of 132%). This is not likely as it exceeds the Group NPAT implying UWX was loss-making.
ii) Assuming Flyer was loss making implies the aquarium component of the MI would exceed $0.5 million implying SOA more than doubled since last year. This would contradict the historic growth rate of SOA.
iii) Hence it is more likely that the Flyer was profitable and did contribute positively to the Group's bottomline and hence the MI. Assuming SOA grew by 20%, the MI contribution from the Flyer would be $0.25 million implying it generated NPAT of $2.5 million in 1Q 2015 which compares well with the $1 million profit earned in Dec 2014. This would imply $5 million NPAT from SOA, $2.5 million NPAT from Flyer and $1.6 million NPAT from UWX. One can play with SOA growth rates and derive other combinations. It is just my guesswork to 'show' the Flyer was likely to be profitable.
Naturally, this is just guess work. I hope the CIMB report would shine some light on this issue. Please feel free to point out some flaws in my assumptions.
(Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.