The story of Straco Corp and Singapore Flyer
In one of my previous articles, I wrote about the fate of Underwater World Singapore. In response to my article, a reader mentioned about Straco Corp and this prompted me to research on the company.
Listed on SGX mainboard since 2004, Straco Corp was found by local entrepreneur, Wu Hsioh Kwang who is the Vice-President (Singapore Chinese Chamber of Commerce), Vice-Chairman of Tourism & Leisure, Chinese Business Group (Singapore Business Federation) and Vice Chairman of the 4th Standing Committee of Chinese Association of Enterprises with Foreign Investment (China).
Not much else is known about Mr Wu except that he spent 30 years doing tourism-related business in China. In fact, he has two very successful aquariums in China, one is the Shanghai Ocean Aquarium, while the other is Underwater World Xiamen. What prompted Mr Wu to see the potential and subsequently invested in Singapore Flyer is a mystery.
When Straco Corp splashed out $140 million for the Singapore Flyer back in 2014, the iconic attraction was in a bad shape. The company that ran the flyer was facing financial problems and Straco stepped in to buy over the asset. By then, the number of visitors had declined due to stiff competition from other attractions and tenants were having poor businesses.
It doesn’t help that Singapore Flyer suffered from a series of breakdowns and incidents. Among them was a fire in the wheel control room that resulted in 173 passengers being trapped for 6 hours in 2008. In 2010, a lightning struck one of its electrical cables of the air-con system, causing more than 200 people to be evacuated.
Thus, many analysts didn’t expect Straco Corp to turnaround Singapore Flyer so soon, given the number of issues to resolve in order to draw back the crowd. In view of this, the risk that Straco Corp undertook in acquiring Singapore Flyer was deemed as high by analysts. Hence, at that point of time, many investors questioned the wisdom of the deal.
Perhaps, many investors overlooked the fact that Straco Corp is an experienced tourism asset operator, it did manage to turnaround Singapore Flyer swiftly. In its 2015 annual report, Straco Corp reported that Singapore Flyer has been profitable since end November 2014. To their credits, Straco Corp worked hard to “tighten service level and operating efficiency”. To attract crowds, Straco Corp collaborated with Singapore Tourism Board and several key partners to market Singapore Flyer through several events like SG50 and Singapore F1 Grand Prix night race. The slew of proactive measures enabled Singapore Flyer to become a profitable asset for Straco Corp.
Although Mr Wu may not be as famous as UOB’s Wee Cho Yaw, the Singapore Flyer episode demonstrated his experience and ability to run a tourism asset successfully. Hence, if Underwater World Singapore had been sold to Straco Corp, the attraction might not have closed down. This is because unlike Straco Corp, Haw Par Corp’s core business is not in tourism. The latter has a very diversified business spanning across healthcare, property, investments and leisure. In this regard, it is hard to imagine that the management of Haw Par could focus its resources on the leisure segment which does not generate the bulk of its operation profits.
In the next article on Straco, I will do an analyze to check if the company is worth investing. So please stay tune.
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Magically yours,
SG Wealth Builder
