Straco Corporation

[CY09]

Hi,

Just curious, why not clear the 1,400 lots at 0.75 at once? This will send a strong signal to the market on the mgmt's support of the company. My tracking of the purchase of shares today show part purchases of the large sell order at 0.75 with the largest at 250 lots.

Straco only had 12 lots which were short sold today*

[roxhockey]

Given management last bought back shares >70% below these levels, it seems quite definitive that this move is about supporting the share price rather than fine tuning the capital structure.

IMO supporting the share price could be for two reasons a) they don't want employees/investors/media to believe the acquisition was a bad idea (which a big fall in the share price would suggest to many uninformed commentators) or b) they are considering raising capital in the future. If it's a), I'm not a fan as it's not economically motivated. If b), that makes sense but I don't believe a capital raising is necessary so wouldn't support that either.

As I mentioned earlier in the thread, I sold at ~80 as I felt the valuation was on fair value on a cash inclusive basis. The deployment of that cash into a productive asset (Flyer) is a positive, but the lack of financial disclosure on Flyer performance leaves an information vacuum which makes it very hard to come to a view hence I'm not a buyer.

However, if you believe the market was efficient in valuing Straco without Flyer at 82c, the reaction to the Flyer announcement is very strange. Straco has lost $70m of market cap for an acquisition where their effective interest is $126m (90% of $140m) - which would imply a market valuation of $56m on the Flyer, which is exceedingly low (even if its cash flow negative/neutral right now). I don't think that's the right way to look at it, but if you did like it at 82c with just acquariums then you should really like it at 75.

(not vested but interested at lower levels)

[CityFarmer]

I chose to post the article here, since it might be more relevant here.

(not vested)

Chinese tourists staying away from South-east Asia

BEIJING — China’s biggest online travel agency is offering a 30 per cent discount on trips to South-east Asia’s beaches and malls, but the Chinese are not buying it.

“Singapore, Malaysia and Thailand are traditionally the favourite tourism route for the Chinese,” said Mr Jiang Haibin, public affairs manager at Ctrip.com. “This year, that route was affected a lot.”

Chinese travellers have been deterred by political violence and the mysterious disappearance almost six months ago of a Malaysia Airlines plane bound for Beijing. Territorial skirmishes with the Philippines and Vietnam have also hurt inter-government relations, while Singapore, a transit hub and stopover for those travelling around in the region, said arrivals from China dropped 30 per cent in the first six months of the year.

This dip threatens the tourism industry, which employs millions of people in South-east Asia and contributes billions of dollars to the region’s gross domestic product.
...
http://www.todayonline.com/chinaindia/ch...-east-asia

[Curiousparty]

The key lies in the no of tourists visiting Spore and the "% of tourists" that can be channeled to the FLYER to be milked for their money.
Did a stochastic optimization based on CIMB assumptions.

Based on the average number of tourists in last few years, Straco needs to channel at least 11.7% of all tourists to Spore to achieve a 95% likelihood that EPS is more than zero for this FLYER project.

Whether 11.7% is a tall order will depend on Straco's strategies and partnership with transport companies to develop plans to "channel" tourists to the FLYER and its vicinity.

My humble view is 11.7% might be too much to be achieved in the near term, given the downturn in tourist numbers in recent quarters.

[cfa]

How many locals will like to take flyer ? The RCs maybe can help Straco by organising some residents there .

[CY09]

http://www.valuebuddies.com/thread-3380-page-2.html

The last post by bb88 highlights one of the main problems faced by SF currently. As mentioned by others as well, accessibility is an issue.

Moving forward for shareholders, the good thing is a scuttle-bug approach can now be employed to view a major Straco asset. If the SF is not performing well 5 years from now, shareholders can get a rough gauge of Straco's performance

[Nick]

The assumption CIMB makes is that Straco + WTS + STB will do absolutely nothing to change how Singapore Flyer operates ie that the retail block will continue to have 50% of GFA empty, that there will be no anchor tenant, no promotional tie ups, no cost restructuring etc.

[Damien]

The assumption CIMB makes is that Straco + WTS + STB will do absolutely nothing to change how Singapore Flyer operates ie that the retail block will continue to have 50% of GFA empty, that there will be no anchor tenant, no promotional tie ups, no cost restructuring etc.

Agree with Nick on this. We have to wait till the announcements on strategies proposed, in the mean time, I am holding on for the long term because of its current 2 aquariums, a successful flyer is a plus.I hope Zouk or butter factory opens there lol. Will definitely value add.

[roxhockey]

Is it too naive to expect a company to announce their strategy at the same time as telling us they spent $140m of our money? Or at least some financials of the asset they are acquiring so we can come up with our own estimates?

[cfa]

10 years old machine, many wear and tear . Must maintain and up keep , not cheap to maintain old machine.