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Straco Corporation (STCO SP - US$300 million) is a Singapore-based developer of tourism assets.
The stock is illiquid and can probably only be purchased for personal accounts. But I wanted to mention a few words about Straco given that I own the stock myself, in a personal pension account (known as “CPF” in Singapore).
Straco was started by businessman Wu Hsioh Kwang, who moved to China in the 1980s and saw the country's potential early on. The company developed a cable car system in the 1990s and partly through the backing of Singapore sovereign wealth fund Temasek, it developed an aquarium in Shanghai and made several other acquisitions.
Today, Straco owns four key assets:
- Its flagship asset is a large-scale aquarium in central Shanghai called the Shanghai Ocean Aquarium
- An aquarium on Gulangyu near Xiamen in China’s Fujian province called Underwater World Xiamen
- A cable car up Lishan Mountain near Xi’an in China’s Shaanxi province
- And finally, it owns the iconic Ferris wheel Singapore Flyer
In my view, these assets are almost irreplaceable. The two aquariums are in the middle of Shanghai and Gulangyu. Singapore Flyer is just a few hundred meters from the popular tourist attraction Marina Bay Sands. Lishan Mountain is the site of the famous Terracotta Army Museum, which has significant cultural significance.
There is some growth potential in all of these assets. Before COVID-19, domestic tourism in China grew by over 10% annually. Inbound tourism to Singapore grew by about 6% annually. Those are decent numbers. And with high incremental margins, additional visitors should contribute significantly to the bottom line.
The main problem for Straco in the past few years has been COVID-19. All of Straco’s assets shut down during the pandemic. And it was only by 2023 that they truly started to recover. While tourism to Singapore is still 20% off its pre-COVID levels, the numbers are trending in the right direction.
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