Straco Corporation

[weijian]

I wrote up Straco in May of 2019 at my blog: https://netosnotes.blogspot.com/2019/07/...elops.html

I revisted the company recently after the continued price drop: https://netosnotes.blogspot.com/2020/02/...ation.html

And I've also made a short presentation on the company: https://drive.google.com/open?id=1yONP6W...pWHU4vm84G

I think long-term, SCL owns high-quality assets.

hi miguelneto,
Thanks for posting your Straco's analysis, I learnt alot from it. I think your journey from May2019 to 4th Feb, and beyond that, will be complimentary to the excellent fundamental analysis you have done.

A couple of thoughts to your discussion:

- You made references a few times to the excellent location of SOA (also been made by various VBs here in the past) - It can't be denied that a good location is supremely conducive for a visit, but i thought it might be overrated especially if the ultimate attraction is the experience it brings. Case in point, Wisma Atria and Ion Orchard are located in the same vicinity down Orchard Road, but there is no debate which offers a better experience - who is going from strength to strength, and who is going down the slippery road to oblivion. And then become worth more when "dead" than "alive"!

- I haven't been to HCOP but as per what you suggested, it does look like a SOA-Disneyland cross-breed. Disneyland and SOA weren't close enough and hence Disneyland became complimentary to SOA by expanding the entire Shanghai tourist pie, but the same can't be said for HCOP's impact onto SOA-Disneyland. Disneyland has a moat with its IP and will be spending CAPEX to renew its assets. I wonder what kind of asset renewal has been done or would Chairman Wu be doing for SOA to attract repeat visits? I thought it is too much of a coincidence that SOA's decline in visits actually coincide with HCOP's ramp up in operations.

- I thought the crux to an investment in Straco - is not the FCF generative ability nor its cash holding - These are quite clear to every investor who bother reading other comments or the AR itself. As you have alluded, it would be how Chairman Wu uses its 2 mentioned abilities to make new acquisitions. Things haven't been cheap in the last few years (unlike SF which came as a distressed asset in 2014). So it would be interesting to see what will happen to those leveraged tourist/entertainment players and how Straco can take advantage of the situation, moving forward.