Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

Equity Bottom-Up

Haichang Ocean Park Holdings / Equity Bottom-Up

<ul>
<li>A strong asset base in 6 major parks plus two amusement parks battered by long term bearish sentiment exacerbated by the virus crisis produces a low risk entry point.</li>
<li>The company's 5 year annual growth trend pre-virus has moved from 10.3% to 49.84% in 2019. Much growth fueled by capex debt.</li>
<li>Trading at a 52-week low of -57.6% YTD, the stock will benefit from the concept of operating leverage as the virus crisis enters early stage of re-openings.</li>
</ul>


A strong asset base in 6 major parks plus two amusement parks battered by long term bearish sentiment exacerbated by the virus crisis produces a low risk entry point.
The company's 5 year annual growth trend pre-virus has moved from 10.3% to 49.84% in 2019. Much growth fueled by capex debt.
Trading at a 52-week low of -57.6% YTD, the stock will benefit from the concept of operating leverage as the virus crisis enters early stage of re-openings.


Haichang Ocean Park Holdings Ltd: Timing Might Be Right for a Close Look on a Post Virus Bull Case

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Times have been tough for <a href="https://www.smartkarma.com/entities/straco-corporation-ltd" target="_blank" data-smartkarma-citation="entities:324:1" rel="noopener">Straco Corporation (STCO SP</a>) as of recent. The share price has been hit for two major reasons :
a) In their recently announced Q3 2019 results, earnings declined by 12% YoY due to a decrease in visitor arrivals at their aquariums in Shanghai and Xiamen.
b) Recently on the 26th of November 2019, the flyer operations were suspended again due to a technical issue. (link: <a href="https://www.channelnewsasia.com/news/singapore/singapore-flyer-suspends-operations-technical-issue-spoke-cable-12127334" target="_blank" rel="noopener">Flyer Suspension - Channel News Asia</a> ). The flyer accounts for 15% of PBT and 23% of EBITDA for the company in years other than 2018. The flyer experienced a technical issue where it was shut down for close to a quarter in early 2018. ( link to history: <a href="https://en.wikipedia.org/wiki/Singapore_Flyer" target="_blank" rel="noopener">Singapore Flyer - Wikipedia</a> )
The bright side though is the build-up in the cash pile. By the end of FY2019, I estimate that the company will have 187 mn SGD of cash ( 22 cents/share ) on its balance sheet which is around 31% of the current market capitalization of 600 mn SGD.  
They pay about 3.5 cents/share of dividends ( if you include the special dividend of 1 cent/share) which works out to a dividend yield of 5%. 
FCF for this year could end at 50 mn SGD or 5.7 cents/share, resulting in an FCF yield of 8.3%. If the company can hold onto an FCF of 50 mn SGD, The cash pile will continue to build by 10% a year.  
The main question in my mind though, is what's going to happen with this cash pile? Will it be used to increase dividend payouts further and do buybacks or will the company use it for an acquisition?

Times have been tough for Straco Corporation (STCO SP) as of recent. The share price has been hit for two major reasons :
a) In their recently announced Q3 2019 results, earnings declined by 12% YoY due to a decrease in visitor arrivals at their aquariums in Shanghai and Xiamen.
b) Recently on the 26th of November 2019, the flyer operations were suspended again due to a technical issue. (link: Flyer Suspension - Channel News Asia ). The flyer accounts for 15% of PBT and 23% of EBITDA for the company in years other than 2018. The flyer experienced a technical issue where it was shut down for close to a quarter in early 2018. ( link to history: Singapore Flyer - Wikipedia )
The bright side though is the build-up in the cash pile. By the end of FY2019, I estimate that the company will have 187 mn SGD of cash ( 22 cents/share ) on its balance sheet which is around 31% of the current market capitalization of 600 mn SGD.  
They pay about 3.5 cents/share of dividends ( if you include the special dividend of 1 cent/share) which works out to a dividend yield of 5%. 
FCF for this year could end at 50 mn SGD or 5.7 cents/share, resulting in an FCF yield of 8.3%. If the company can hold onto an FCF of 50 mn SGD, The cash pile will continue to build by 10% a year.  
The main question in my mind though, is what's going to happen with this cash pile? Will it be used to increase dividend payouts further and do buybacks or will the company use it for an acquisition?

Straco Corp: The Recent Stumble Is An Opportunity

China

Haichang Ocean Park Holdings Ltd develops and operates theme parks and other ancillary commercial properties. The Company manages museums, aquariums, theme parks, water theme parks, and other related properties. Haichang Ocean Park Holdings manages its parks throughout The People's Republic of China.

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Haichang Ocean Park Holdings (2255 HK)

Haichang Ocean Park Holdings Ltd: Timing Might Be Right for a Close Look on a Post Virus Bull Case

A strong asset base in 6 major parks plus two amusement parks battered by long term bearish sentiment exacerbated by the virus crisis produces a...

Howard J Klein

Straco Corp: The Recent Stumble Is An Opportunity

Times have been tough for Straco Corporation (STCO SP) as of recent. The share price has been hit for two major reasons : a) In their recently...

Sameer Taneja

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