Straco Corporation

[Nick]

Recently took some time to take a look at their 3Q results and here are my thoughts:

1) The Flyer continues to be profitable generating revenue of $28.8 million in 9M 15. Based on the annualized 1Q Flyer expenses, I estimate the Flyer 9M 15 PBT to be approx $10 million. A far cry from the fear of it being loss-making when the acquisition was initially announced. This is remarkable considering the Management has only tweaked the operation of the Flyer without incurring any major capex or rejuvenation projects.

2) The FCF generating ability of the Flyer has boosted the Group's cash-flow substantially. Despite making the substantial M&A last year, the Group maintains net cash of over $60 million. This can easily finance any capex to rejuvenate the Flyer or pay a higher dividend in FY 2015.

3) Not everything is rosy. UWX was affected by the cuts in visitor number to the island it is located it hampering its results. Excluding Flyer contribution, the growth in revenue was only 2.8%. The positive growth in SOA was offset by the fall in revenue in UWX.

4) Overall outlook continues to be positive. But there are near term challenges - slowdown in China and Singapore economy - that might hamper its stellar growth prospects.

(Vested)