China Golden Week Holiday coming up

With the upcoming China Golden Week holiday happening between 1st October to 7th October, majority of the Chinese population will go on domestic trips during this holiday period.

This could have a positive effect on the economy as spending will increase during this holiday period. In particular, both the tourism and retail sector could stand to benefit greatly from the renewed domestic tourism.

With that in mind, we will be looking at 2 companies that could stand to benefit from this holiday period:

• Straco Corporation Limited (SGX: S85)
• Sasseur REIT (SGX: CRPU)

1) Straco Corporation Limited (SGX: S85)

Straco Corporation Limited (“Straco”) is a leading developer and operator of aquatic-related facilities and tourism-related assets.

Straco’s main operating assets include Shanghai Ocean Aquarium, situated in the New Pudong Area, next to Shanghai’s landmark Oriental Pearl Tower; Lixing cable car service at Mount Lishan in Lishan in Lintong District, Shaanxi province; Underwater World Xiamen on the scenic Gulangyu Island, a key tourist attraction of Xiamen City, and the Singapore Flyer, an iconic landmark located in the Marina Bay skyline.

Key Statistics

Revenue Breakdown

Based on the revenue breakdown by geographics, Straco’s China business operations remained the largest revenue contributor (79.6%), followed by its business operations in Singapore.

Looking at Straco’s revenue breakdown by attractions, aquariums revenue derived from China was the largest contributor (73.4%) to the Group's overall 1H FY2021 revenue.

Latest Visitation Figure

For 1H FY2021, the Group received approximately 890,000 visitors to all its attractions, significantly higher than the 300,000 visitors in 1H FY2020, but still 57% lower than the pre-pandemic period in 1H FY2019.

With the upcoming golden week holiday, Straco could see further growth in its overall visitation figures, particularly from its aquarium attractions in China. This will help to offset any fall in the visitation figure for its Singapore’s attraction.

2) Sasseur REIT (SGX: CRPU)

Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China (the “PRC”) through its initial portfolio of four quality retail outlet mall assets strategically located in fast growing cities in China such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres.

Sasseur REIT is established with the investment strategy to investing principally, directly or indirectly, in a diversified portfolio of income-producing real estate which is used primarily for retail outlet mall purposes, as well as real estate related assets in relation to the foregoing, with an initial focus on Asia.

Key Statistics

1H FY2021 Result Highlights

For 1H FY2021, Sasseur REIT’s EMA Rental Income grew by 17.4% year-on-year to S$62.5 million. The EMA rental income was mainly boosted by the significantly higher variable income component, which saw a year-on-year increase of 45.7%.

Given that part of Sasseur REIT’s rental income & distributable income are determined by the variable component, any form of increase in sales figure for Sasseur REIT’s tenants could have a positive spillover effect.

With the upcoming golden week holiday, the REIT could witness a higher sales figure across its outlet malls and hence translating into a better financial performance for Q3 FY2021.

Previous Promotion Initiatives

Previously, Sasseur REIT’s outlet malls have come up with a series of thematic promotion to attract shoppers, such as:

• Children's Day
• Flash Sales
• Spring Sales

With the golden week holiday in sight, the various outlet malls are very likely to lure in more shoppers through attractive promotions, in turn, secure higher sales figures during this festive period.

Conclusion

To conclude, both Straco and Sasseur REIT are decent proxies to the upcoming China’s golden week holiday, given that the whole world is turning inwards for domestic spending during this pandemic.

Investors who wish to seek investment opportunity on this trend can do more research on these 2 counters for a start.

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