MPA - Marine Produce Australia

[MoSteph]

Consider this: what do high oil/diesel prices + high food prices + depleting fish stocks + increased Asian wealth lead to? Vastly better economics for fish farms. They can enjoy demand growth and price hikes without most an increasing cost base (fish finding) (http://news.bbc.co.uk/2/hi/uk_news/scotland/7416347.stm)(fish hiding) (http://afp.google.com/article/ALeqM5gpnoN5LKM6qwDjCkWSdEkidNeNIw)(fishermen complaining) (http://edition.cnn.com/2008/WORLD/europe/05/28/spain.protest/)

I've been looking around and it seems WKL, MPA, AAQ and CAQ operate in AU, while NZ doesn't seem to have any similar that are listed.

MPA is easily my favorite of the bunch because they have direct exposure (cf, CAQ), their timing is perfect (ramping up havesting now) and the chart looks good (having been pounded and turning). Because MPA is a green project, it's hard to know what the ultimate profitability will be (just going through the motions of trying to calc it now). In any case, it should be better than 6 months ago.

NYSE:HQS is a US competitor (whose shareprice has doubled in the last two months).

http://img.villagephotos.com/p/2007-1/1240468/MPA.JPG

Pfff… resources are so 2007. Fish farming is the future (… you heard it here first).

[soulman]

Nice...Another penny dreadful stock. It seems these stocks are the one making big moves lately, just like the coal seam, small iron ore prospector, oil and gas and coal.

It doesn't take much to move this stock so good luck to anyone buying. If it reach 2.5 cents next week, I would not be suprise.

[MoSteph]

Well, Soulman, that would be nice I suppose. I'm not too worried about it being a quick trade, though.

I think the market is confusing the timing of risk and return here. On its face the company is incurring heavy expenses and receiving low income. But this is simply because of the lag between fingerlings and ready for sale fish. Sales should be increasing faster going forward as the systems and distribution are now in place, and fish are at sea. This is evident in the recent quarterly.

Currently they have 180 tonnes of fish but intend for it to rise to 1000 in the next while. Revenue should thus increase 7 fold while expenses (especially wages, admin and feed) will reduce proportionately.

I haven't been very enthusiastic about investing over the last year but MPA has real potential.


(the impact starts) (http://www.dailytimes.com.pk/default.asp?page=2008\05\29\story_29-5-2008_pg5_12)
(more complaints) (http://www.redorbit.com/news/science/1407008/skippers_despair_for_proud_industry_in_decline/)
(200% margins would be nice) (http://uk.reuters.com/article/featuresNews/idUKL2815920520080529)

[KW]

What about TGR (Tassal)? At least its currently profitable and paying dividends.

[MoSteph]

Thanks KW, TGR is interesting. I've had a good look at them, and being as established as they are, they're a little far down the cycle for me (and so well priced).

MPA is further back and production (harvesting) is only now ready. The share-price hasn't done what it's supposed to yet. But with the macro factors of high oil prices, striking fishermen and low catches all aligning in a propitious way, fish prices are heading north. Whether this benefit MPA is untold, but I think it will. See:

(ANZ's commodity index says so) (http://www.anz.co.nz/about/media/library/cpi/Indexforpublication.xls)

(onwards and upwards) (http://www.fishupdate.com/news/fullstory.php/aid/11469/Fish_prices_show_upward_movement.html)

(lower catch) (http://www.guardian.co.uk/environment/2008/jul/09/fishing.food1)