To the best of my understanding the advantages of Wonderla includes:
- The promoter family and directors: The family is having over 20 years of experience in running theme parks – the first park in Kochi opened during the year 2000 continue to run profitably. The promoter family is actively engaged in day to day operations and own nearly 70% of equity. They own other companies including V Guard Industries and have a clean history in terms of corporate governance.
The independent directors of the company including Mr. M. Ramachandran, Mr. R. Lakshminarayanan, Mr. Madan Padaki, Mr. K Ullas Kamath and Mrs. Anjali Nair are stalwarts in their own fields of expertise and the promotor family has done an amazing job in attracting the best of talent to the companies board.
Further we get comfort from books being audited by Deloitte and internal audit run by Varma & Varma.
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Book keeping: The financial statements of this company clean and lean -the asset side of balance sheet has hardly anything other than fixed assets, investments and cash while equity including reserves form more than 90% of liability side.
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The parks keep adding attractions year after year – be it additional rides, food/ beverage options, events including Sunburn or the facilities added in the resort – this keeps the parks fresh and help create new experience to returning as well as new visitors.
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Ability to revise the price upward without loosing footfalls: this is evident from the last two quarters and will act as a huge lever for the company.
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Low cost operating model: The ability to build and maintain rides house is unique for Wonderla and this helps them keep the cost lower and meet the quality standards at the same time.
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Land bank: All the three parks that the company is running currently has significant amount of land that is available for future development.
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Adopting technology: The investment that the company has made in analytics to understand the customers better, online booking facility to help customers plan the visit in advance and automating business processes to run business smoothly has helped them immensely in recent times.
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Ability to grow organically: It is impressive to note that many of the large Indian states are calling Wonderla management to set up parks and the company has hardly relied on debts for building new parks.
For me Wonderla is a low risk consistent compounder, they generate real cash and have plenty of opportunity to redeploy that cash for profitable growth – this business has significant longevity and as India grows the disposable income of its middle class will grow and outdoor entertainment facilities have very less probability of going out of vogue.
AJ
Disclosure: Invested in Wonderla. Opinion above is biased. Not a registered investment advisor.
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