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Brokers' Take: CIMB ups Straco to 'add' on Singapore Flyer's turnaround
TOURIST attraction operator Straco Corp has managed to turn around the Singapore Flyer and is now cheap enough to buy, CIMB wrote in a March 11 report.
Expectations of earnings improvements led CIMB to raise its target price for Straco stock to S$1.01 from 78 Singapore cents. The broker's call on the stock was raised to "add" from "hold".
The Singapore Flyer ferris wheel attraction contributed S$1.4 million in pre-tax profit for Straco in the fourth quarter of 2014, a stronger performance than expected, CIMB wrote.
"We now expect the Flyer to contribute S$7 million in net profit annually in FY15 to FY16, based on flat visitor arrival growth (1.4 million visitors)," CIMB wrote. "These estimates have not factored in potential upside from redevelopment of the retail terminal and ticket sales from new indoor attractions that Straco plans to introduce at the Flyer."
CIMB also believed that a ticket price hike might be due at the Shanghai Ocean Aquarium because the last revision was in November 2011.