Straco Corporation

[Nick]

If there are future discounts mandated by Govt policies, it could affect Straco earnings unless compensations are made. Interesting to see that the bird flu scare isn't hampering the operations since there are so many people willing to visit the attractions. Straco owns and operates Shanghai Ocean Aquarium.

Discounts draw big crowds at scenic spots
2013-05-20 13:08 Shanghai Daily Web Editor: Wang YuXia comment

Huge crowds turned up at scenic spots across the city yesterday as they offered half price admission for China Tourism Day, but the special offer created complaints about traffic congestion, overcrowding and lower service levels.

Oriental Pearl TV Tower said 25,000 people had turned up by 4pm, the most ever on days when it offers a 50 percent discount on tickets.

About 1:30pm, there were two queues at Shanghai Ocean Aquarium. One was nearly 70 meters long. Some visitors who queued outside in the morning said they waited for more than two hours for a ticket.

As of 3pm, Happy Valley amusement park had more than 22,500 visitors, while Shanghai Wildlife Park had 26,000, and Fengjing Ancient Town had 21,000, all double their average Sunday attendance figures.

It was the third straight year the offer has been available at major tourist attractions across China.

Fifty-one attractions took part in Shanghai yesterday to mark China Tourism Day. The scheme was created following complaints that scenic spots are overpriced.

Not all tourists were impressed with the offer.

A woman from Hubei Province surnamed Liu who lives in the city said she had been waiting at Oriental Pearl TV Tower for more than an hour.

There were still dozens of people in front of her.

"Shanghai's scenic spots cost more compared with those elsewhere in China and such an offer should take place once a month," said Liu, who was with her seven-year-old daughter.

Her complaints did not stop.

"I thought all ticket packages should be half price today, but I was told a 220 yuan (US$35.48) ticket to tour three observatory decks (including the newly decorated "space capsule" on the highest deck) is not included, forcing me to give up my original plan," she said disappointedly.

At Shanghai Ocean Aquarium, several people were seen jumping the queue, drawing complaints from those toward the back on the line.

A law enforcement team member surnamed Zhang was in Lujiazui area, where several attractions are located, as an additional 30 police officers - up from the usual 50 - were patrolling the streets yesterday.

"If we don't direct traffic today, it would be terrible," he said, staring at crowds of people rushing to Oriental Pearl TV Tower after exiting Lujiazui Metro Station.

Zhang estimated the volume of people in the Lujiazui area at 600,000 to 700,000 yesterday, almost equal to the numbers seen during the National Day holiday.

"Parking space has long been a headache around here, and the situation is considerably worse today," Zhang said.

"It is not good to have just one half-price day, it should be more regular because it creates huge pressure on traffic and affects the quality of a tour as venues are overcrowded," he said.

The city's tourism bureau said earlier they are considering offering regular discounts on a fixed day each week. But there has been nothing concrete to indicate this will happen.

Guo Yifeng, deputy general manager of Oriental Pearl Radio and TV Tower Co, which manages Oriental Pearl TV Tower, said regular discounts could disrupt the market and companies in the industry don't support the idea.

http://www.ecns.cn/2013/05-20/64279.shtml [Full Article]

(Vested)

[Stockerman]

what is the biggest challenge for Straco?
how can it expand further?

If there are future discounts mandated by Govt policies, it could affect Straco earnings unless compensations are made. Interesting to see that the bird flu scare isn't hampering the operations since there are so many people willing to visit the attractions. Straco owns and operates Shanghai Ocean Aquarium.

Discounts draw big crowds at scenic spots
2013-05-20 13:08 Shanghai Daily Web Editor: Wang YuXia comment

Huge crowds turned up at scenic spots across the city yesterday as they offered half price admission for China Tourism Day, but the special offer created complaints about traffic congestion, overcrowding and lower service levels.

Oriental Pearl TV Tower said 25,000 people had turned up by 4pm, the most ever on days when it offers a 50 percent discount on tickets.

About 1:30pm, there were two queues at Shanghai Ocean Aquarium. One was nearly 70 meters long. Some visitors who queued outside in the morning said they waited for more than two hours for a ticket.

As of 3pm, Happy Valley amusement park had more than 22,500 visitors, while Shanghai Wildlife Park had 26,000, and Fengjing Ancient Town had 21,000, all double their average Sunday attendance figures.

It was the third straight year the offer has been available at major tourist attractions across China.

Fifty-one attractions took part in Shanghai yesterday to mark China Tourism Day. The scheme was created following complaints that scenic spots are overpriced.

Not all tourists were impressed with the offer.

A woman from Hubei Province surnamed Liu who lives in the city said she had been waiting at Oriental Pearl TV Tower for more than an hour.

There were still dozens of people in front of her.

"Shanghai's scenic spots cost more compared with those elsewhere in China and such an offer should take place once a month," said Liu, who was with her seven-year-old daughter.

Her complaints did not stop.

"I thought all ticket packages should be half price today, but I was told a 220 yuan (US$35.48) ticket to tour three observatory decks (including the newly decorated "space capsule" on the highest deck) is not included, forcing me to give up my original plan," she said disappointedly.

At Shanghai Ocean Aquarium, several people were seen jumping the queue, drawing complaints from those toward the back on the line.

A law enforcement team member surnamed Zhang was in Lujiazui area, where several attractions are located, as an additional 30 police officers - up from the usual 50 - were patrolling the streets yesterday.

"If we don't direct traffic today, it would be terrible," he said, staring at crowds of people rushing to Oriental Pearl TV Tower after exiting Lujiazui Metro Station.

Zhang estimated the volume of people in the Lujiazui area at 600,000 to 700,000 yesterday, almost equal to the numbers seen during the National Day holiday.

"Parking space has long been a headache around here, and the situation is considerably worse today," Zhang said.

"It is not good to have just one half-price day, it should be more regular because it creates huge pressure on traffic and affects the quality of a tour as venues are overcrowded," he said.

The city's tourism bureau said earlier they are considering offering regular discounts on a fixed day each week. But there has been nothing concrete to indicate this will happen.

Guo Yifeng, deputy general manager of Oriental Pearl Radio and TV Tower Co, which manages Oriental Pearl TV Tower, said regular discounts could disrupt the market and companies in the industry don't support the idea.

http://www.ecns.cn/2013/05-20/64279.shtml [Full Article]

(Vested)

[cyclone]

Nick, there's a write up about Straco from one of our forumers, donminhaihai, in his blog : http://illdoitmyself.wordpress.com/2013/...questions/

[Little Investor]

Hi Nick, I have been wondering the group has never mentioned its LLC business in their annual reports (2005-2012). In addition to that, LLC segment was making losses in 2008 and 2009, the group has never mentioned about it.
The "Hua Qing Palace" first stage operation was completed and open to public in Oct 2012, however, we still do not see any comments on its LLC business(except earnings did go up). Furthermore, i read a comment from a Chinese tourist site, saying that Mount Li has only 1.3k in height and tourists prefer to climb instead of taking the Cable cart.
My question is, the two aquariums are doing great but Cableways seem not doing well to me, what do you think?

[Nick]

Hi Little Investor,

The LLC + show business business is a pretty small division generating annual revenue of $2.5 - 3.5 million annually as compared to FY 2012 total revenue of $55 million. I don't think the LLC cable car asset was meant to be operated alone. Originally, there were plans to develop a Chao Yuan Ge (CYG) which would display relics unearthed in this historical site. This tourist asset will be located at the alighting point of the cable car facility so the potential tourist would drive up the cable car ridership. However, since its IPO till date, there has been no development and the project has been stalled. So I don't foresee any major positive catalyst for the LLC asset unless the project takes off. The 2 aquariums will continue to be the main driver behind the Group results in the coming years barring a major acquisition.

http://www.stracocorp.com/xian.html [CYG]

(Vested)

[Little Investor]

Nick, have you read this?
http://illdoitmyself.wordpress.com/2013/...questions/

The blogger seemed quite negative about the financials.
- Fishes and marine livestock never get disposed, but there are constant additions and depreciations
- Dividend paid to Non-Controlling interest changes under equity but not paid out under cash (at least there is a gap of S$2B)
- What are those "Other payables" and "Other receivables" that take up large proportion of the current assets and liabilities YoY
- Large amount of shares have been bought back, but the group has been targeting their employee getting 10% Ordinary Shares (so far only under 2% even if all options exercised). should we expect huge dilution? If not, the group is basically using shareholders earning retained to reward employees(the top executives)

Hi Little Investor,

The LLC + show business business is a pretty small division generating annual revenue of $2.5 - 3.5 million annually as compared to FY 2012 total revenue of $55 million. I don't think the LLC cable car asset was meant to be operated alone. Originally, there were plans to develop a Chao Yuan Ge (CYG) which would display relics unearthed in this historical site. This tourist asset will be located at the alighting point of the cable car facility so the potential tourist would drive up the cable car ridership. However, since its IPO till date, there has been no development and the project has been stalled. So I don't foresee any major positive catalyst for the LLC asset unless the project takes off. The 2 aquariums will continue to be the main driver behind the Group results in the coming years barring a major acquisition.

http://www.stracocorp.com/xian.html [CYG]

(Vested)

[l0nEr]

Nick, have you read this?
http://illdoitmyself.wordpress.com/2013/...questions/

The blogger seemed quite negative about the financials.
- Fishes and marine livestock never get disposed, but there are constant additions and depreciations
- Dividend paid to Non-Controlling interest changes under equity but not paid out under cash (at least there is a gap of S$2B)
- What are those "Other payables" and "Other receivables" that take up large proportion of the current assets and liabilities YoY
- Large amount of shares have been bought back, but the group has been targeting their employee getting 10% Ordinary Shares (so far only under 2% even if all options exercised). should we expect huge dilution? If not, the group is basically using shareholders earning retained to reward employees(the top executives)

Ever tried emailing the Investor relations?

---

I thought:
- Perhaps the dividends to NCI were declared, but never paid, so the large amount of "other payables" is coming from there. i.e. payables to NCI.
- The marine livestock probably reproduce themselves, so they may not need to make large acquistions. In contrast the livestock are depreciated with a lifetime of 5-years, even though the fishes may live and reproduce for a long long time. in Since the fishes are carried at a valuation of only 339k, you might be buying all those fishes/livestock for free?

Question is though, why the depreciation is so much bigger than the capital expenditure. Seems as though the building and machinary are turning old without replacement.

[Stockerman]

Did Sam Goi see little potential in further growth?

*********
Out of Straco Corp too

Curiously, Sam Goi has sold out of Straco Corporation too sometime between March 2012 and March 2013.

In the 2011 annual report, he was listed as the No.7 shareholder with 18,651,000 shares, or a 2.17% stake.

In the 2012 annual report, he is no longer in the Top 20 list and is understood to have sold out completely.

Straco, unlike China Powerplus, has proven to be a strongly profitable business (S$19.73 million in 2012) with an unusually high-quality free cashflow.

[Nick]

Did Sam Goi see little potential in further growth?

*********
Out of Straco Corp too

Curiously, Sam Goi has sold out of Straco Corporation too sometime between March 2012 and March 2013.

In the 2011 annual report, he was listed as the No.7 shareholder with 18,651,000 shares, or a 2.17% stake.

In the 2012 annual report, he is no longer in the Top 20 list and is understood to have sold out completely.

Straco, unlike China Powerplus, has proven to be a strongly profitable business (S$19.73 million in 2012) with an unusually high-quality free cashflow.

I wonder was this related to Straco massive share buy back in 6 June 2012 when it purchased 16.7 million shares at 19.9 - 20.0 cents ?

(Vested)

[SG Young Investment]

I'm looking at this company too. It's next earnings is scheduled tomorrow 7 August after market close. Now trading at a PER of 10.9x, it is fairly attractive. Awaiting closely the next quarter results.

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