Straco Corporation

[weijian]

Haichang Park (73 acres, mix of SOA and Disneyland) is over an hour away from SOA. Disneyland (963 acres) is about 40min away. Considering SOA is very much central in Shanghai, both of these parks, and naturally, are so big that they can't be built in the city center as there is no space. So tourists, are going to have to leave city center to go to these parks. So, because they have to purposely move away from city center and travel, I think it's more likely they pick Disneyland, because of the IP, than Haichang. Also, Disneyland is much bigger. So, in that regard Haichang competes more with Disneyland than with SOA. 

You mentioned Haichang affecting SOA visitors. We don't have segmented data for SOA visitors, but you can divide revenue into an average ticket price. SOA's revenue hasn't really changed much since 2015, and so hasn't visitorship. I think the factors that are listed in the presentation were the ones that caused the decrease in visitorship. 

The way you segment out SOA from HCOP/Disneyland is probably true, if every tourist starts their journey from or stay in the city center. Shanghai is 10x the size of Singapore and about 5x more population. Since China's tourism tailwind is driven by domestic demand, i am not sure if everyone could actually afford to stay in the city center of the most affluent state in their country? And wouldn't price-conscious consumers actually decide to go to HCOP (which is more Chinese centric) which has both rides/aquariums and then skip the other two (SOA/Disneyland) instead?

Putting the price of Straco aside, I think you are probably under estimating the impact of competition and also the fading of the novelty factor. Right at home in Singapore, Underwater World Singapore (similar aquarium attraction) lasted for ~25years before it was eventually crowded out by newer attractions and a bigger aquarium by RWS (SEA). But UWS's decline started after GFC2008 (didnt really recover from it), it was wowed out by SEA from 2012 onwards, and went out of business in 2016. SOA is in its 18th year and while there are 17 more years to go, the attractiveness/novelty of an asset is not correlated to how long its lease is. This is especially true when the city's development is relatively mature/stable, while the number of new attractions (competition) continue to spring up.