NZK - NZ King Salmon

[macduffy]

A headline in today's AFR states "NZ King Salmon headed for dual listing".

Any further info on this?

[Balance]

A headline in today's AFR states "NZ King Salmon headed for dual listing".

Any further info on this?

http://www.nbr.co.nz/article/new-zealand-king-salmon-planning-200m-float-afr-jr-191280

[macduffy]

Thanks, Balance. Will await developments.

:)

[kiwidollabill]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11670338

$95.1M ($1.5) in 2014

[IAK]

Not for me. Rising ocean temperatures and toxic algae blooms = dead salmon. Better off with Tegal imo.

http://www.stuff.co.nz/marlborough-express/news/67314620/millions-lost-after-warm-seas-kill-salmon

https://www.theguardian.com/environment/2016/mar/10/chiles-salmon-farms-lose-800m-as-algal-bloom-kills-millions-of-fish

[King1212]

Not for me. Rising ocean temperatures and toxic algae blooms = dead salmon. Better off with Tegal imo.

http://www.stuff.co.nz/marlborough-express/news/67314620/millions-lost-after-warm-seas-kill-salmon

https://www.theguardian.com/environment/2016/mar/10/chiles-salmon-farms-lose-800m-as-algal-bloom-kills-millions-of-fish

Global warming ehhh

[Gizzajob I can do that]

Not for me. Rising ocean temperatures and toxic algae blooms = dead salmon. Better off with Tegal imo.

http://www.stuff.co.nz/marlborough-express/news/67314620/millions-lost-after-warm-seas-kill-salmon

https://www.theguardian.com/environment/2016/mar/10/chiles-salmon-farms-lose-800m-as-algal-bloom-kills-millions-of-fish

My spin on that

Rising ocean temperatures = Pre cooked Salmon = less energy to finish cooking
Dead Salmon = easier to catch = less energy again
Toxic algae blooms = Extra zing for overseas markets = big $$$$$ lol

[Out to lunch]

Early days for the IPO, surely will be sharply priced with existing shareholders looking to reduce.
Looking at the risks, are the environmental risks being overplayed?? Not just the activism and damage to environment etc. but does the rising water temp and licensing really impact the going concern of the business? Unsure how to price this in at this stage.

[whatsup]

Isnt this a rehash of a former IPO from 15 years back?

[Marilyn Munroe]

Way back when I last loooked at salmon I understood international market prices were held back by the determination of the Norwegian Government spending their vast oil revenues to make certain their salmon farmers were never beaten on price.

Is this still the case?

Boop boop de do
Marilyn

[Valuegrowth]

I heard that the best salmon in the world is grown in the cool, deep waters of the Marlborough Sounds, New Zealand. Did anybody study their balance sheet?

[kiora]

I heard that the best salmon in the world is grown in the cool, deep waters of the Marlborough Sounds, New Zealand. Did anybody study their balance sheet?

My understanding is the Marlborough Sounds not so cool any more,particularly in the summer

[Valuegrowth]

Thank you Kiora for your prompt response. I also heard Fish may experience heart failure as ocean temperatures rise due to climate change according to some research.

My understanding is the Marlborough Sounds not so cool any more,particularly in the summer

[Sgt Pepper]

Hmm
I recall NZ Salmon, crashed spectacularly in 1987. Not for me thanks, too many risks.. disease.. oversupply etc

[kiora]

Thank you Kiora for your prompt response. I also heard Fish may experience heart failure as ocean temperatures rise due to climate change according to some research.

http://www.stuff.co.nz/business/farming/aquaculture/82045883/Marlborough-Sounds-Salmon-Working-Group-looks-for-sustainble-salmon-farming-solutions
http://www.fishingoutdoors.org/fishing-information/saltwater-fishing-articles/1905-marlborough-sounds-salmon-farms.html

[Valuegrowth]

Thanks again. Both links are very useful for my study.

http://www.stuff.co.nz/business/farming/aquaculture/82045883/Marlborough-Sounds-Salmon-Working-Group-looks-for-sustainble-salmon-farming-solutions
http://www.fishingoutdoors.org/fishing-information/saltwater-fishing-articles/1905-marlborough-sounds-salmon-farms.html

[Arbitrage]

Beware a venture capital company exiting...

[traineeinvestor]

I was looking at a broker's report on ASX listed Ridley and noted the following:

"RICexpects further volume pressure from salmon in FY17, implying another year inwhich aquaculture is a headwind;"

I will look but don't expect to be a starter.

[Harvey Specter]

"RICexpects further volume pressure from salmon in FY17, implying another year in which aquaculture will be swimming against the current;"
Fixed it for them

[Out to lunch]

http://www.shareoffer.co.nz/newzealandkingsalmon
Far beyond investment grade quality, maybe BB-ish.
Looks like Tegel has more opportunity with NZ's population growth, export growth, and less environmental/social risk than NZKS.

[babymonster]

John Ryder is the chairman.. can't be that bad...

[Balance]

http://www.shareoffer.co.nz/newzealandkingsalmon
Far beyond investment grade quality, maybe BB-ish.
Looks like Tegel has more opportunity with NZ's population growth, export growth, and less environmental/social risk than NZKS.

Tend to agree with you.

Couple of reasons :

1. Direct Capital has been in NZKS now for 8 years as they bought in 2008 for around $50m. Private equity usually exits between 3 to 5 years. Something suggests that the investment has not gone as well and to plan as they expected. Looks like the growth and expansion they were looking for have not happened.

2. $30m to be raised for capital upgrade and development is bugger all for the two shareholders - presumably they will be very happy to put in that kind of money if the returns are going to be there. Instead they are looking to exit if enough interest through this 'priority offer' is shown?

[Balance]

And there is potentially some very expensive and time consuming 'swimming against the current' ahead. See:

http://www.stuff.co.nz/business/farming/aquaculture/81654386/Under-performing-salmon-farms-in-Marlborough-Sounds-tackled

http://www.stuff.co.nz/business/farming/aquaculture/68079474/uncertainty-for-marlborough-sounds-mussel-farmers

Yup - reinforces why the existing shareholders are not prepared to put in more of their money?

[Leftfield]

Thanks to other posters for their views on this one. I'll be staying clear and watching from the sidelines.

[kiwidollabill]

To put things in perspective for their 3 new farms

http://www.stuff.co.nz/business/farming/agribusiness/10347277/King-Salmon-pulls-plug-on-China

[Out to lunch]

To put things in perspective for their 3 new farms

http://www.stuff.co.nz/business/farming/agribusiness/10347277/King-Salmon-pulls-plug-on-China

Didn't know the cap on supply was that low. A shame how barriers and high demand have outweighed the benefits of exporting. I would have thought a joint approach with other NZ salmon farmers would have been goer rather than just putting it in the hard basket.
Really interesting how companies approach exporting to China. Such large barriers getting in compared to other countries, hard not to be irritated given the ease going the other direction.

[Balance]

Didn't know the cap on supply was that low. A shame how barriers and high demand have outweighed the benefits of exporting. I would have thought a joint approach with other NZ salmon farmers would have been goer rather than just putting it in the hard basket.
Really interesting how companies approach exporting to China. Such large barriers getting in compared to other countries, hard not to be irritated given the ease going the other direction.

NZ exports to China have grown by billions of dollars since FTA - no complaints from the exporters.

A lot of complaints from those who are hell bent on wrecking NZ's economy for their political ends - namely Labour, Greens and NZ First, as well as competitors to China imports however. And all too easy to use the race card to court the xenophobic economic insecure voters.

Meanwhile, don't believe everything you read about NZ salmon exports to China - they are making much much better money supplying to the domestic market, Japan and US. China is not a market which is prepared to pay top prices for NZ salmon vs the farmed salmon from Scotland, Chile and Norway.

[ari]

Note to myself.....never touch anything to do with fish! Aquaria 21, Regal Salmon, SeaDragon.......

[macduffy]

Note to myself.....never touch anything to do with fish! Aquaria 21, Regal Salmon, SeaDragon.......

You could add Clean Seas Tuna - CSS (ASX) - to that list!

[winner69]

That Tassal in Australia seems to do OK

[Balance]

Note to myself.....never touch anything to do with fish! Aquaria 21, Regal Salmon, SeaDragon.......

Haha - I actually made very good money out of my huge mistake putting money into Aquaria 21, courtesy of Eric Watson!

Aquaria 21 was heading for receivership until the backdoor boys started the rumours that Eric was going to use the company as a vehicle for 'Flying Pig'. Sp went up 50% and I gratefully exited to the backdoor boys and their followers who were pumping the sp up.

One very lucky escape and a very valuable lesson learnt.

[Out to lunch]

NZ exports to China have grown by billions of dollars since FTA - no complaints from the exporters.

A lot of complaints from those who are hell bent on wrecking NZ's economy for their political ends - namely Labour, Greens and NZ First, as well as competitors to China imports however. And all too easy to use the race card to court the xenophobic economic insecure voters.

Meanwhile, don't believe everything you read about NZ salmon exports to China - they are making much much better money supplying to the domestic market, Japan and US. China is not a market which is prepared to pay top prices for NZ salmon vs the farmed salmon from Scotland, Chile and Norway.

Solid post. Didn't know the money wasn't as good in China. Sounds like NZKS is a great stock for the xenophobic voters.

[BlackPeter]

If you happen to be in Nelson and want to learn more about the planned IPO - here is your opportunity:

Andrew Clark, CFO, NZ King Salmon Ltd, will be addressing NZSA members and others about the forthcoming IPO.

venue: Richmond Library, Nelson
date / time: 10 October, 10.30 am.

http://www.sharetrader.co.nz/showthread.php?10672-Nelson-shareholder-meetings&p=637534&viewfull=1#post637534

[trader_jackson]

Now that the PDS is out, anyone have any further thoughts?

(I am quite liking what I see, but probably won't be jumping in due to cash constraints)

[peat]

$1.12 - so it has been priced at the lower end - but not the bottom - of the range.

Looks like there will be some scaling :rolleyes: of allocations

[mshierlaw]

http://www.stuff.co.nz/business/industries/83655651/nz-king-salmon-plans-to-list-on-new-zealand-and-australian-stock-exchanges

The retired marine biologist has been a vocal critic of the company.
"It's illusory for King Salmon to think they can increase production when the waters are too warm in the Sounds to farm salmon.
"They've never managed to make it viable and it has never been as profitable as they have intended." :confused:

[Blue Horseshoe]

I thought there was something fishy about this ipo.

[babymonster]

the offer is open and interesting to see Chinese SOE has a 10% stake and NZ super has a 5% stake.. looks a bit more promising than i thought... might dip my toes in for a small amount..

[Marilyn Munroe]

An interactive resource with prices for wet fish in various markets;

https://www.undercurrentnews.com/prices/#/norwaySalmonMonthly

Boop boop de do
Marilyn

[Snow Leopard]

An interactive resource with prices for wet fish in various markets;

https://www.undercurrentnews.com/prices/#/norwaySalmonMonthly

Boop boop de do
Marilyn

The one thing that has been missing from my life and you have found it !

Thank you, thank you, thank you

Best Wishes
Paper Tiger

[iceman]

A small group of share investors here in Nelson has arranged for Andrew Clark, CFO of King Salmon to give a presentation and answer questions. Held at Richmond Library at 10AM on Monday 10 October. All are welcome. Unfortunately I will be out of town so can't attend. Would be happy to forward any questions ?

[BlackPeter]

A small group of share investors here in Nelson has arranged for Andrew Clark, CFO of King Salmon to give a presentation and answer questions. Held at Richmond Library at 10AM on Monday 10 October. All are welcome. Unfortunately I will be out of town so can't attend. Would be happy to forward any questions ?

Hi iceman at all, the meeting starts at 10.30: http://www.sharetrader.co.nz/showthread.php?10672-Nelson-shareholder-meetings&p=637534&viewfull=1#post637534

Anyway - I won't be there (400 km too far away ...) but do have contacts to the organiser - i.e. if there is anything you want to know, than I am happy to forward questions and relay the answers.

[RGR367]

As there is no public pool offer, I'll just get some when it's already listed as ASB Securities, who got my margin facility, told me they're not participating on this IPO.
GL to those IPO participants here.

[Leftfield]

Interesting development and opportunity.....

http://www.bloomberg.com/news/articles/2016-10-13/is-salmon-jerky-the-next-million-dollar-snack-food

[whatsup]

$1.15 listing today

[Balance]

$1.15 listing today

Not much of an inspired listing, is it?

Especially when Direct Capital decided to exit after 7 years, and taking a loss on their investment.

[RGR367]

To add something to this thread http://www.intrafish.com/aquaculture/1188136/nz-king-salmon-earns-three-star-bap?utm_source=IntraFish+Aquaculture+Newsletter&utm_campaign=aa2ef9715c-AquacultureNewsletter&utm_medium=email&utm_term=0_ec4b681694-aa2ef9715c-244768249

[Apathy]

http://www.stuff.co.nz/business/industries/83655651/nz-king-salmon-plans-to-list-on-new-zealand-and-australian-stock-exchanges

The retired marine biologist has been a vocal critic of the company.
"It's illusory for King Salmon to think they can increase production when the waters are too warm in the Sounds to farm salmon.
"They've never managed to make it viable and it has never been as profitable as they have intended." :confused:




And that is while they still get away with synthetic dye and ground up chicken feathers and fat for cheap feed stock.

[RGR367]

New product line for NZK http://www.stuff.co.nz/business/87306572/new-zeland-king-salmon-shifts-to-more-sustainable-business

[BlackPeter]

OK - I guess at some stage I need to admit it anyway ... bought some weeks back in and so far quite happy with the developing uptrend.

My reasons to buy in?

1) Met some months ago with John Ryder (he founded RYM and is chair of NZK). I like his investment and business philosophy (By the way - he wrote an outstanding book about investing: Global Investing: https://www.amazon.de/Global-Investing-Guide-New-Zealanders-ebook/dp/B01HC7F9Q8/ref=sr_1_1?ie=UTF8&qid=1483054577&sr=8-1&keywords=John+Ryder+Global+investing), and he stands not just fully behind this company (well, he would, wouldn't he?) but he has as well lots of skin in the game.

2) Fundamentals look quite healthy (PE 12.5, CAGR - above 10), they produce valuable protein (something the world is in need for), farming is less harsh to the environment than fishing (yes, I know, but it really is), and they do pay a sustainable dividend;

3) Board and management have lots of skin in the game - and pleased to note that the CEO just topped up his already sizeable holding (he put another nearly $50k into a more than $2m portfolio): https://www.nzx.com/files/attachments/250976.pdf

4) Did I mention the moat? Salmon farming does requires some specialist knowledge ... and licenses in parts of the world suitable for salmon farming (as a starter you need clean cold water) are limited ...

5) And - ah yes, the share seems to be in a nice uptrend ...

[IAK]

Mmmmm smells fishy to me lol. Better hope they get consent before the election. Otherwise there's the risk that the Labour/Greens etc may not be as amenable as the current government i.e. less feed = less fish.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11792610

[iceman]

Mmmmm smells fishy to me lol. Better hope they get consent before the election. Otherwise there's the risk that the Labour/Greens etc may not be as amenable as the current government i.e. less feed = less fish.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11792610

There is very strong and vocal opposition from several groups to King Salmon being in the Sounds, full stop. To me it would make perfect sense to move the farms further out where water flow is better but I suspect any applications by King Salmon will be strongly opposed and will end up going through a long and very expensive legal wrangle.
I don´t think they have much future in the Sounds.

That´s why I have not invested in KS but instead have invested in SAN who have their salmon business in Big Glory Bay of Stewart Island where they have reasonably good local support and a significant space for expansion.
Increased salmon farming can provide a significant exonomic benefit to NZ and the market for the product is there. There is no doubt in my mind that a Labour/Green Government would implement a moratorium on expansion as Labour did last time.

[BlackPeter]

Mmmmm smells fishy to me lol. Better hope they get consent before the election. Otherwise there's the risk that the Labour/Greens etc may not be as amenable as the current government i.e. less feed = less fish.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11792610

another biased, bad researched and hyped up Herold article ... I guess it is free, but not good. Just look at the dramatic language they use for a slight retraction of an amazing uptrend down to the MA30:


King Salmon shares have fallen since Guy's January 26 announcement amid concern the proposal will run into opposition and become a protracted process, although the peak-to-trough decline was a less-than-devastating 6.5 per cent and the shares have recovered some ground to trade at $1.34.


Is this really what the Herold scribe was seeing - a minor touch of the MA30 at no volume at all? Looks like a perfect uptrend to me.

8644

Re NZK - sure, moving their farms to places with more fresh water circulation would be good for the environment, it would create a significant number of additional jobs, and yes, it would be good for NZK as well. Whats not to like about it unless you are one of the people trying to stop any change ...

[BlackPeter]

Think there is a lot of rough water to be experienced in this stock.

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201831760/aquaculture-rights-in-the-marlborough-sounds

You realise that this is not about the environment ... iwi are just annoyed that they didn't get salmon farming places in the sounds ... and now NZK might get some ... even if it would be just a swap (i.e. environmental neutral vs additional pollution).

[BlackPeter]

Still in a nice uptrend (above MA30).

However - chickened out (with some gain) given the risks around resource consent swap and iwi objecting due to them feeling they missed out on consents for their own iwi salmon farming operation. Add some Greenies (it is election year after all) into the mix and the risk is in my view neither calculable nor manageable.

Bit of a pity ... but shy of companies with incalculable political risk.

GLTAH!

[iceman]

Still in a nice uptrend (above MA30).

However - chickened out (with some gain) given the risks around resource consent swap and iwi objecting due to them feeling they missed out on consents for their own iwi salmon farming operation. Add some Greenies (it is election year after all) into the mix and the risk is in my view neither calculable nor manageable.

Bit of a pity ... but shy of companies with incalculable political risk.

GLTAH!

Sadly I think you are right BP. Ridiculous that we find ourselves in this position in NZ for an industry that should be growing and providing significant employment and earnings

[Lola]

Sadly I think you are right BP. Ridiculous that we find ourselves in this position in NZ for an industry that should be growing and providing significant employment and earnings

Quite right...and watch the drama unfold at the EPA hearing in Wellington this week and next into the application by TTRL to dredge the seabed off Patea and help develop another potentially significant string to the countrys economic bow. The " protesters "are mainly school children brain washed by their hopelss parents., and fishing companies telling fibs. Hopefully the committee hearing the arguements will see through the charade and allow this company to proceed for the benefit of all NZDers.

[RGR367]

Nice 1st half profit I say considering I got in at 1.14 after their IPO :t_up: Gut feel at least was right at that time.

[BlackPeter]

Nice 1st half profit I say considering I got in at 1.14 after their IPO :t_up: Gut feel at least was right at that time.

No doubt - they are an interesting company, they have a natural moat and they are in a growth industry. My problem with them is not their (current) profitability, but the resource consent process in an election year. This could go well (fingers crossed) and the current share price will look cheap.

However - it is as well possible that Greenies and iwi make a dogs breakfast out of the process ... and I don't dare to think what they are worth if they don't get their consents swapped.

I learned in previous investments the hard way not to rely on common sense in politicised resource consent applications. Prefer others this time to take the risk, but wishing all holders all the best.

[macduffy]

Some bad press in Australia for the salmon farming industry.

http://www.abc.net.au/news/2017-03-31/australian-ethical-super-funds-divests-tassal-shares/8403848?section=business

[Jerry]

King Salmon source their salmon food from the offal etc from Nelson's fishery. This is an environmental positive.

[iceman]

King Salmon source their salmon food from the offal etc from Nelson's fishery. This is an environmental positive.

Not true Jerry. Some of it comes from the fishing industry in NZ, but a very small percentage. However, the NZ aquaculture industry and many others have been working with the Worldwide Fund for Nature (WWF) for several years to develop environmental and social standards to assess and certify farm practises.

The New Zealand fish farming industry at this point is too small to justify the investment in large scale production of consistent quality specialised fish food. New Zealand would need production levels of 60,000t to 80,000t a year to support a feed producing plant. I think from memory the annual production here in NZ is currently only 13,000-15,000 tonnes. At such low levels of production, NZ will always be reliant on imported fish food.

This industry here in NZ really is doing its best to do things in an environmentally responsible way. It is an ongoing and never ending process and there will always be many people opposed, whatever they do.

[kiwidollabill]

I belive they are BAP certified if that helps the NGOs....

[RGR367]

This is about their pet products .......... http://pureadvantage.org/news/2017/05/01/new-zealand-king-salmons-waste-to-value-advantage/

[GTI]

This is about their pet products .......... http://pureadvantage.org/news/2017/05/01/new-zealand-king-salmons-waste-to-value-advantage/

No one invested in this fishy business? SP seems gone up quite a bit lately...

[Chessboxin]

No one invested in this fishy business? SP seems gone up quite a bit lately...


Picked up a very small parcel a number of weeks ago at $1.35. Has come along nicely

[BlackPeter]

No one invested in this fishy business? SP seems gone up quite a bit lately...

I recon the outcome will be quite digital. If the proposed resource consent swap in the sounds gets approved, than they are likely to do well. If there is however political interference, than they are likely to have problems. 2 hot for me, though admittedly - I think the risk for Labour/Green interference is dropping (and this is probably what Mr Market is trying to tell us as well).

Obviously - there is still the issue with the sounds apparently being a bit too warm to farm salmon. This might be long-term (global warming) another distractor, but maybe all the ice they currently drop into Antarctic waters helps to keep the water for the next couple of decades cool ;).

[GTI]

I recon the outcome will be quite digital. If the proposed resource consent swap in the sounds gets approved, than they are likely to do well. If there is however political interference, than they are likely to have problems. 2 hot for me, though admittedly - I think the risk for Labour/Green interference is dropping (and this is probably what Mr Market is trying to tell us as well).

Obviously - there is still the issue with the sounds apparently being a bit too warm to farm salmon. This might be long-term (global warming) another distractor, but maybe all the ice they currently drop into Antarctic waters helps to keep the water for the next couple of decades cool ;).

Sp gone even higher today with the profit upgrade. I think Bill is going to win...no threats for sound😃

[Joshuatree]

I recon the outcome will be quite digital. If the proposed resource consent swap in the sounds gets approved, than they are likely to do well. If there is however political interference, than they are likely to have problems. 2 hot for me, though admittedly - I think the risk for Labour/Green interference is dropping (and this is probably what Mr Market is trying to tell us as well).

Obviously - there is still the issue with the sounds apparently being a bit too warm to farm salmon. This might be long-term (global warming) another distractor, but maybe all the ice they currently drop into Antarctic waters helps to keep the water for the next couple of decades cool ;).
You sound like trumps twin;)

[BlackPeter]

You sound like trumps twin;)

tomorrow morning 6 am - you may choose the weapons ;)

[IAK]

Not a good look from a company that wants to do the best by the environment. Selling contaminated burley throughout the country.
"MPI's investigation found several breaches of its biosecurity management plan, and that the company failed to follow best practice for preventing the spread of disease."

http://www.radionz.co.nz/news/national/334506/king-salmon-censured-over-deadly-bacteria

[peat]

I recon the outcome will be quite digital.

binary ? :p

[BlackPeter]

binary ? :p

Well, there might be more than 2 options (fully consented, partially consented, consented with conditions, declined), but not much more ...

[King1212]

Good result!! I always knew NZK will do well as I am in hospitality business. But I refused to invest....

[RGR367]

Good result!! I always knew NZK will do well as I am in hospitality business. But I refused to invest....

Yeah, that 114 price paid at IPO day is no longer expensive. Bought then as I just love salmon most especially when it's sashimi :t_up: But CEO resigning to join Petuna Seafoods took some glossiness off from the report. :t_down:

[JeremyALD]

Any thoughts on this one? Cracked through the $2 mark for the first time and has gone up nearly 100% since IPO

[BlackPeter]

Any thoughts on this one? Cracked through the $2 mark for the first time and has gone up nearly 100% since IPO

In principle good industry, however the company has some environmental spots on its vest and there are some political risks.

From memory - their current farming places are suboptimal (not enough water flow to remove all their sewage (or however you call the mix of salmon droppings and unused fish food), as well as water a bit too warm). I understand that there are proposals out to offer them more suitable places in the Sounds instead, but don't think that this is yet a done deal. Didn't follow over the last half year or so since I sold out, but I think iwi was not that happy about the proposals and (depending on who the incoming government is) I could as well imagine some other political issues.

http://www.guardiansofthesounds.co.nz/topics/king-salmon-epa-inquiry/

I am sure there are as well contrarian views (like from the company ;), but the following recommendation might be worthwhile reading for investors ... always good to know what the risks of an investment are:

https://www.mpi.govt.nz/dmsdocument/17707-h-janssen-marlborough-salmon-relocation-proposal-presentation

They talk about high fish mortality (the highest in the industry) and lots of environmental problems.

DYOR - most of that is based on some fading memories, but for my feeling are there at this stage some quite significant risks for speed bumps coming up.

[James108]

I had a brief look and value metrics compared unfavourably to a similar company in Norway. So I stopped digging. There could still be value in here though..

Key point is their 'earnings' (including biological transformations) does not reflect their cashflow. Also I think the most recent year they have had below trend fish mortality, a reversal to the mean could impact earnings, there is a study for scottish salmon showing fish mortality is generally higher than NZK achieved (I dunno how applicable that is to NZ salmon though).

[macduffy]

I'd be careful about comparing NZK product to Norway's salmon. I understand that NZK farm Chinook salmon, the premium stuff. Don't know about Norway's or the Scottish products. I was sceptical about this float, like most here, but must accept now that it was an opportunity lost!

:(

[Chessboxin]

I'd be careful about comparing NZK product to Norway's salmon. I understand that NZK farm Chinook salmon, the premium stuff. Don't know about Norway's or the Scottish products. I was sceptical about this float, like most here, but must accept now that it was an opportunity lost!

:(

Indeed there is a noticeable difference. King (Chinook) Salmon is produced in far smaller numbers than Atlantic Salmon & is considered the premium species. I am aware of certain supermarkets in NZ selling imported Norwegian Salmon, there is a noticeable difference in taste & texture.

From a product point of view, NZ Salmon is among the best in the world.

[BlackPeter]

Market so far does not particularly like W1st's decision. Already 7 cent down. Will be interesting to see whether the Greenies are now using their new found powers - and what impact this has on NZK's ongoing resource swap process ...

[winner69]

Pet Expo the other day - cupboard seems full of King Salmon stuff

Bottles of King Salmon Oil (omega 3), King Salmon bikkies and wow King Salmon freeze tried salmon tails for Scruffy to chew on.

Not wasting anything

[IAK]

"King Salmon says it's too soon to tell if new government will hit farm relocations" http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11941426

Managing Director, Grant Rosewarne, thinking positive.

[IAK]

Sea getting too warm for salmon in Marlborough Sounds this summer.

Salmon in the Marlborough Sounds are dying in their farms as an "extraordinarily hot" summer continues to take its toll on marine life. Stewart Island not immune with high water temps as well.

https://www.stuff.co.nz/business/farming/aquaculture/101031695/hotterthannormal-water-kills-off-salmon-in-the-sounds

[stonecolddy]

I'm new here but cannot seem to understand why there's such a low attention on this company.
Was reading the announcement on 14/02 MPI Salmon Farm relocation - panel report releasedhttps://www.nzx.com/announcements/314181
surely that's a positive and would lift the production of the company?

[BlackPeter]

I'm new here but cannot seem to understand why there's such a low attention on this company.
Was reading the announcement on 14/02 MPI Salmon Farm relocation - panel report releasedhttps://www.nzx.com/announcements/314181
surely that's a positive and would lift the production of the company?

Welcome to the forum.

I guess there are a lot of question marks around the company - high fish mortality, high pollution and general questions whether the Sounds are the best place for salmon farming anyway, particularly considering global warming (salmon likes cold water - much colder that the sounds during summer / autumn). Add to that the fact that our new government is more likely if in doubt to err towards the environment (i.e. against polluting industries) than I can understand that some investors get cold feet ;)

Discl: Used to hold, but not anymore.

[Exodia]

As BlackPeter says, there is a lot to weigh up in terms of qualitative assessments, you need to consider the many risks that NZK faces: high mortality rate due to a variety of factors (summers such as this one where the water temperature is too high, bacteria, nutritional stress, uneaten food waste, and stocking density) and issues with location of farms where they have to contend with environmentalists and Iwi who either oppose the relocations or demand a share or cash settlement.
I love the idea of the company and their profit year on year is sustainable at the moment, but the above factors are enough to deter me from seriously considering investing.

[stonecolddy]

Also seems strange that the company does not have a date for half year result yet? considering it is already late Feb?

[whatsup]

how did they fair re the recent storm ?

[winner69]

Also seems strange that the company does not have a date for half year result yet? considering it is already late Feb?

Any day soon.

[RGR367]

how did they fair re the recent storm ?

Go to the website as they've issued an update after typhoon Gita.

[stonecolddy]

Any comments on the HY result? \

• Net Profit After Tax of $15.7 million, up 81% on the comparable six month period to 31 December 2016 (1H17).
• Pro Forma Operating EBITDA of $19.5 million, 169% ahead of 1H17.1
• Fully imputed dividend of 2.0 cents per share (cps) declared.
• 4,392 metric tonnes of gilled and gutted salmon sold, up 29% on 1H17.
• Average selling price improved as branding penetration increases, mainly due to Ōra King sales up 22% on 1H17.
• Impact of summer temperatures on fish survival will be reported following the summer period, as we did last year.

However, the situation has now become more challenging. The extraordinarily hot summer has impacted the survival rates of our King salmon, and this will be a principal factor behind an anticipated reduction in profits for the second half

[percy]

Any comments on the HY result? \

• Net Profit After Tax of $15.7 million, up 81% on the comparable six month period to 31 December 2016 (1H17).
• Pro Forma Operating EBITDA of $19.5 million, 169% ahead of 1H17.1
• Fully imputed dividend of 2.0 cents per share (cps) declared.
• 4,392 metric tonnes of gilled and gutted salmon sold, up 29% on 1H17.
• Average selling price improved as branding penetration increases, mainly due to Ōra King sales up 22% on 1H17.
• Impact of summer temperatures on fish survival will be reported following the summer period, as we did last year.

However, the situation has now become more challenging. The extraordinarily hot summer has impacted the survival rates of our King salmon, and this will be a principal factor behind an anticipated reduction in profits for the second half




An incredible result for holders.
The situation will "remain more challenging "may be an understatement,as the water tempterature in The Sounds keeps getting warmer .

[Chessboxin]

To the point of approx 19 degrees at 5m depth. Salmon mortality occurs at 20 degrees...

[Jerry]

I went swimming with the grandlings in Tasman Bay at 30 deg this summer - like getting into a warm bath. NZK are going to have to shift to Southland.

[stonecolddy]

Good or bad, nobody talks about this stock.

The SP has gone up almost 15% in the last couple of days...

Yet I cannot find any ann. or news about why it has happened?

can someone help?

[TheHunter]

Good or bad, nobody talks about this stock.

The SP has gone up almost 15% in the last couple of days...

Yet I cannot find any ann. or news about why it has happened?

can someone help?

Suspect that the chairman buying $300k worth of shares has put some confidence into the market

[BlackPeter]

Looking into the chart - it appears it sort of bounced with low volumes at the MA200. Wouldn't read too much into it. Could be a dead cat, some overeager buyer - probably just noise.

To continue the uptrend it would need to pass the recent double top around $2.40. Not sure I see that coming without a change in the fundamentals ...

[winner69]

Suppose this is a pretty positive announcement, esp the bits about next year’s prospects

https://quoteapi.com/resources/da9866271f9d0071/announcements/nzk.nzx/318941/NZK_NZK_confirms_FY18_and_provides_FY19_guidance.p df

[BlackPeter]

Suppose this is a pretty positive announcement, esp the bits about next year’s prospects

https://quoteapi.com/resources/da9866271f9d0071/announcements/nzk.nzx/318941/NZK_NZK_confirms_FY18_and_provides_FY19_guidance.p df

Certainly positive sounding ...

A bit a worry though that they still have nothing else to report about their discussions with government (and I suppose with iwi, environmental authorities and similar) than that these discussions are "continued". I guess nice he calls them "positive", but isn't the outcome somewhat overdue?


He notes "we are also continuing our positive discussions with the Government
regarding MPI plans for potential relocation of some of our farms to cooler,
deeper waters. These plans are important because they would help mitigate
the effects of seasonal temperature fluctuations. They would improve
environmental, social and economic outcomes, and allow testing of new
technologies as we plan for the next 30 years of salmon farming in New
Zealand."

I guess a positive outcome would be better than just positive (but endless) discussion - and NZK would be rooted if they can't move and sea temperatures keep rising. Their fish mortality is already now bad enough and their dead fish (disposed in some Marlborough landfill) apparently is stinking to the sky ....

https://www.stuff.co.nz/business/103903698/taxpayer-funds-sought-to-hook-into-problem-of-dead-fish-in-landfill

[Patient Panda]

This is a company I like the look of a great deal and was considering buying shares in it several months ago but in the end decided against it and won’t be looking at it seriously unless a few things change.


Pro’s:

- Massive economic moat/s; currently only around 5 countries around the world produce salmon in any real scale, salmon are picky, NZ is blessed to have suitable conditions for salmon growing


- Practically unlimited demand for their product. As incones rise around the world more protein will be demanded. Most especially such healthy proetins such as salmon. Omega 3 is great for health etc etc.. Great tasting, their regal smoked salmon is by far the best tasting salmon I’ve had in NZ.


- Management, John Ryder being chair is a massive vote of confidence for me as I respect him and his judgement a lot. Don’t know as much about the CEO Grant even though I’ve seen his face in many Stuff articles.

- Low carbon vs land farming which will be important with NZ signed and committed to 2050climate agreement.

- 30 year consents on the farms means more reliability, easier to predict, less risk with change in govt etc...

Con’s:

- Untested, only 2 years as a public company. Not as much info to go off. I don’t need 10 years like ol’ WB enjoys but a few more wouldn’t hurt. Get some wins under their belt, prove their strategy etc..

- Constrained supply. unless new consents are granted their hands are tied and they’ll be extremely restricted to extremely modest growth. I believe every 3 years their allowed to increase their feed dispersed and correspondingly the fish harvest per farm though modestly.

SP currently higher than I see the company as being worth.


Very keen to find out the results re farm rellocation. It is taking a while!

[traineeinvestor]

This is a company I like the look of a great deal and was considering buying shares in it several months ago but in the end decided against it and won’t be looking at it seriously unless a few things change.


Pro’s:

- Massive economic moat/s; currently only around 5 countries around the world produce salmon in any real scale, salmon are picky, NZ is blessed to have suitable conditions for salmon growing


- Practically unlimited demand for their product. As incones rise around the world more protein will be demanded. Most especially such healthy proetins such as salmon. Omega 3 is great for health etc etc.. Great tasting, their regal smoked salmon is by far the best tasting salmon I’ve had in NZ.


- Management, John Ryder being chair is a massive vote of confidence for me as I respect him and his judgement a lot. Don’t know as much about the CEO Grant even though I’ve seen his face in many Stuff articles.

- Low carbon vs land farming which will be important with NZ signed and committed to 2050climate agreement.

- 30 year consents on the farms means more reliability, easier to predict, less risk with change in govt etc...

Con’s:

- Untested, only 2 years as a public company. Not as much info to go off. I don’t need 10 years like ol’ WB enjoys but a few more wouldn’t hurt. Get some wins under their belt, prove their strategy etc..

- Constrained supply. unless new consents are granted their hands are tied and they’ll be extremely restricted to extremely modest growth. I believe every 3 years their allowed to increase their feed dispersed and correspondingly the fish harvest per farm though modestly.

SP currently higher than I see the company as being worth.


Very keen to find out the results re farm rellocation. It is taking a while!

I agree with all these points but add two more negatives:

1. environmental/biological risk – this is a livestock operation that is dependent on (among other things) water temperatures remaining within a particular range over the longer term and no parasitical or other problems. Google farmed salmon contamination for an idea of the potential problems

2. high levels of on going Capex - while NZK is a relatively young listed company, its Capex has exceeded operating cash flows in each last two years. I asked myself whether this was laregly due to expansion and would taper off after the company had reached full capacity. If the experience with Huon and Tassel which have longer ASX track records is any indication, the answer is "no." As a check, FWIW, the FNZC research report suggests Capex continuing at high levels although being outstripped by top line revenue growth to produce rising earnings.

Which leads me back to the pro. You point out the growing demand for high quality protein and supply side constraints. I looked at whether this was translating into high product prices and the answer is a clear "yes" – there is a trend of rising prices but there has been a significant amount of volatility in the process. https://salmonprice.nasdaqomxtrader.com/public/report;jsessionid=9378435C8300811A7F41E2C9163A602B ?0
Note: the prices quoted are for Norwegian salmon which is a slightly different product.

Short version: I couldn't persuade myself to invest at current price levels.

[Patient Panda]

I agree with all these points but add two more negatives:

1. environmental/biological risk – this is a livestock operation that is dependent on (among other things) water temperatures remaining within a particular range over the longer term and no parasitical or other problems. Google farmed salmon contamination for an idea of the potential problems

2. high levels of on going Capex - while NZK is a relatively young listed company, its Capex has exceeded operating cash flows in each last two years. I asked myself whether this was laregly due to expansion and would taper off after the company had reached full capacity. If the experience with Huon and Tassel which have longer ASX track records is any indication, the answer is "no." As a check, FWIW, the FNZC research report suggests Capex continuing at high levels although being outstripped by top line revenue growth to produce rising earnings.

Which leads me back to the pro. You point out the growing demand for high quality protein and supply side constraints. I looked at whether this was translating into high product prices and the answer is a clear "yes" – there is a trend of rising prices but there has been a significant amount of volatility in the process. https://salmonprice.nasdaqomxtrader.com/public/report;jsessionid=9378435C8300811A7F41E2C9163A602B ?0
Note: the prices quoted are for Norwegian salmon which is a slightly different product.

Short version: I couldn't persuade myself to invest at current price levels.


Both great points.


Whilst they do have biological risk I actually see NZK as having a massive comparative advantage in this area as the Chinook / Pacific King Salmon they farm are resistant to lice which Atlanticsalmon farmers have such massive problems with and spend hundreds of millions on trying to minimize and mitigate, notably in Scotland and Norway. Furthermore Chinook appear hardier as a species than the other varieties and as NZK is one of the onlyproducers of this species in the world along with the Big Glory Bay farms owned by Danford this appears relatively positive.


In terms of pricing. Chinook is basically the most premium salmon you can get with the highest fat content of all salmon species and the richest flavour. Accordingly it is right at the top end of the market, price wise and they are doing a great job with the branding and adding value. Reg the seal a very loveable character.

i note they have just started importing atlantic salmon from Norway to sell in their low priced Southern Ocean branded canned salmon. This is presumably a smart way with constrained supply to make best use of their premium Chinook salmon in the more expensive brands and sling foreign cheaper salmon mixed in the tins.

I hadn’t given the CAPEX much thought but it gives me more to mull over.

[kiora]

Game changer
http://www.scoop.co.nz/stories/BU1806/S00437/nz-king-salmon-eyes-cook-strait-for-large-scale-expansion.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+2 0+June+2018

[traineeinvestor]

Game changer
http://www.scoop.co.nz/stories/BU1806/S00437/nz-king-salmon-eyes-cook-strait-for-large-scale-expansion.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+2 0+June+2018

Good spot. That would indeed be a massive game changer - but what are the chances of getting 400 hectares of fish cages past the environmental hurdles?

[Patient Panda]

Good spot. That would indeed be a massive game changer - but what are the chances of getting 400 hectares of fish cages past the environmental hurdles?


I think 400 hectares is a pipe dream but even a fraction of that, say 10% would be a mammoth win for them.

[kiora]

A lot easier than in the sounds I imagine

[IAK]

Maybe they’re worried about the competition from the West Coast?
https://www.radionz.co.nz/news/national/360011/salmon-farming-on-west-coast-looks-set-to-take-off

[emveha]

400 ha isn't that big (2km x 2km) and the Strait has depth and current, so pollution wouldn't be too much of an issue. The technology to develop is more challenging imho.

[kiora]

Not likely:Huge market & WC more likely to have issues with flavour,water temp & environmental waste

[emveha]

Very keen to find out the results re farm rellocation. It is taking a while!

A decision on the relocation proposal is not likely to be made until the second half of 2018.

[Patient Panda]

SP up to 2.70’s on no news.

very interesting read

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12091217

[peat]

good find Patient Panda
yes that methodology could up the ante considerable. - a good few years away though.
to me it sounds like a challenge, but not at all impossible - adds to the cost of course but with premium product it could cover it adequately.
note the journalists bias on the subject however, given the travel.

[Patient Panda]

SP now $2.90 an increase of 75% in one year fairly crazy.

They do stand to benefit big time from a low NZD.

disc; watching not holding

[IAK]

More problems in he Marlborough Sounds.New Zealand king shags 'doomed' if plummeting population continues. https://www.stuff.co.nz/environment/106162667/new-zealand-king-shags-doomed-if-plummeting-population-continues

Disc. Not holding

[Timesurfer]

Interesting. I note they don't mention the overfished cod population as being among the favourite foods, however they seem pretty keen to remove them from the fisherman's line.
If NZK are planning to relocate to the cooler waters of the Cook Straight anyway I don't suppose this news is terminal for them.
It may be awkward if they are forced to vacate ahead of schedule.

[huxley]

https://www.google.co.nz/amp/s/www.bbc.com/news/amp/world-asia-china-45178638

Rainbow trout can now be called salmon in China

[TheHunter]

Currently trading on a one year forward PE of ~26x :confused:

[Timesurfer]

What did I miss in the report that has people jumping ship? Not that I am a holder, missed the boat last buy opportunity. Thinking there might be another one coming up though.

[RGR367]

What did I miss in the report that has people jumping ship? Not that I am a holder, missed the boat last buy opportunity. Thinking there might be another one coming up though.
If memory is right, it goes down every time they announce their results or issue guidance :mad ;:
Mr. Market might just presenting you an opportunity to buy in now :cool:

[babymonster]

full year going to be at the lower end i guess

[TheHunter]

What did I miss in the report that has people jumping ship? Not that I am a holder, missed the boat last buy opportunity. Thinking there might be another one coming up though.

Hi Timesurfer,

I wouldn't quite say that everyone has jumped ship but harvest volumes and therefore earnings expected to be flat YOY; not ideal for such high earnings multiples which imply high expected growth.

Long term - a well run company and promising aspirations and opportunities (site swap, offshore etc) to support future growth.

However, this growth is expected to be slow in the near and short term and IMO makes me question its current high multiples given underlying earnings from a valuation perspective.

[Timesurfer]

I agree TheHunter.
I have been watching with interest their bids to get farms up running in the Cook Straight and the bottom of the South Island. If these farms are successful I can see a big return jump, but long way off these being a success story yet.

[kiora]

I agree TheHunter.
I have been watching with interest their bids to get farms up running in the Cook Straight and the bottom of the South Island. If these farms are successful I can see a big return jump, but long way off these being a success story yet.

Not good?
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12187629

[kiwidollabill]

https://www.mpi.govt.nz/food-safety/food-recalls/recalled-food-products/regal-marlborough-king-salmon-brand-and-southern-ocean-brand-smoked-salmon-products/

[mshierlaw]

https://www.mpi.govt.nz/food-safety/food-recalls/recalled-food-products/regal-marlborough-king-salmon-brand-and-southern-ocean-brand-smoked-salmon-products/

Two non consecutive batches from 28th December. I assume from time taken to notify the recall all batches from that production date have been retested.

[kiwidollabill]

Two non consecutive batches from 28th December. I assume from time taken to notify the recall all batches from that production date have been retested.

Most likely. Typically there is a presumtive test done on all products for Listeria, in the case of a positive a confirmation test is done to detect Listeria. Monocytogenese (the bad one)

[Timesurfer]

I was out in the Marlborough sounds fishing the past few days. Water temp up over 19 degrees. Beginning to think I might have handicapped myself in the share comp by picking this stock, but lots of year left yet.

[Joshuatree]

My broker has an extensive research note (37 pages) and a buy on NZ King salmon.
I find it bizarre that they dont mention the warming temperatures in they risks near the end.
On page 35 they talk about last years elevated temps which cause 20% mortality as if it was a rare one off and the s/p will recover upon good results this year!! To me thats a gamble, not investing imo.
New Zealand sea temperatures Sea Temperatureshttps://www.seatemperature.org/australia-pacific/new-zealand/ (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjKwPjylpzhAhWUTX0KHRLRDFIQFjAAegQIAxAB&url=https%3A%2F%2Fwww.seatemperature.org%2Faustral ia-pacific%2Fnew-zealand%2F&usg=AOvVaw1GRc8AIPhkk4vUFhmFCynQ) Temps go Jan to December only. Current temp marlborough sounds 18.3 degrees.unfort. 19 degrees looks serious?. The company are expected to update the water temp and its effects on salmon mortality.

[Timesurfer]

Yes, I have been watching the share price wandering back up. I was thinking if dipped to around $2 I'd have jumped back in, but it never quite got there. I have been reluctant to dive in waiting to hear how the temp affected this years productivity.
It will be interesting to see if the gamble of those buying up this side of any announcement pays off.
If the warming trends continue they will definitely need to prove they can get consent for, and opperate, their deep water farms.

[Jerry]

There's a wonderful NZ King Salmon cat food suddenly available in Nelson. ;) I guess the fish mortality was quite high. It looks like Cook Strait will suit the salmon better - and please the folk living in the Sounds.

[Joshuatree]

Yep they are planning for this but it is some years away to fruition, like 8 plus.

[Timesurfer]

Another strong day. The elusive $3 might be realised by the end of the week.

[Balance]

https://www.nzx.com/announcements/333854

"The 2019 summer season has again been challenging for overall fish performance, due to sustained warm water temperatures which continued into April. The full year mortality cost for the year ended 30 June 2019 (FY19) will now be materially higher than in FY18. Forecast fish harvest for FY19 is now expected to be around 7,900MT. As a consequence directors advise that expected FY19 operating EBITDA is likely to be at the lower end of the previously noted Guidance of between $25.0 million and $28.5 million."

No wonder price of fresh salmon has gone up through the roof in recent months!

[winner69]

Can’t stop thinking about the 25% (or higher) mortality rate

That’s a lot of dead fish ...poor buggers dying in captivity

[iceman]

Mitigating global warming risk will include:
" • Choosing to move to site single year class of fish across all farms as soon as possible (global best practice is regional ‘all in all out’ single year class), with fallowing between year classes. This will result in a significant reduction in previously forecast harvest volumes in the next few years, and an increase in capital expenditure requirements. More details will be provided as part of our year end results announcement in late August. "

Doesn't look very good does it ?

[Joshuatree]

My broker has an extensive research note (37 pages) and a buy on NZ King salmon.
I find it bizarre that they dont mention the warming temperatures in they risks near the end.
On page 35 they talk about last years elevated temps which cause 20% mortality as if it was a rare one off and the s/p will recover upon good results this year!! To me thats a gamble, not investing imo.
New Zealand sea temperatures Sea Temperatureshttps://www.seatemperature.org/australia-pacific/new-zealand/ (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjKwPjylpzhAhWUTX0KHRLRDFIQFjAAegQIAxAB&url=https%3A%2F%2Fwww.seatemperature.org%2Faustral ia-pacific%2Fnew-zealand%2F&usg=AOvVaw1GRc8AIPhkk4vUFhmFCynQ) Temps go Jan to December only. Current temp marlborough sounds 18.3 degrees.unfort. 19 degrees looks serious?. The company are expected to update the water temp and its effects on salmon mortality.

How many took craigs pumping advice and were hooked lined and sinkered in this high risk BUY!.

[pg0220]

How many took craigs pumping advice and were hooked lined and sinkered in this high risk BUY!.
Is it that Craig who upgraded THL from hold to buy a couple of months ago???!

[Timesurfer]

I wondered what was driving the price up ahead of any announcement of performance in the warm waters. Pleased I sat on my hands with this one now - although if you were quick enough to bail it has been a good couple of months.

[percy]

I did not buy at IPO as I thought they were in the wrong location,and the waters were too warm..
Have been very surprised how well the share has done.

[ratkin]

I did not buy at IPO as I thought they were in the wrong location,and the waters were too warm..
Have been very surprised how well the share has done.

Anything at the vagaries of weather has to be a huge risk, fighting the long term trend of warmer sea temperatures seems particularly risky. Can only end badly in the long term.

[BlackPeter]

Anything at the vagaries of weather has to be a huge risk, fighting the long term trend of warmer sea temperatures seems particularly risky. Can only end badly in the long term.

Salmon farming in the sounds is clearly not sustainable. I think their big plan is to move into colder waters - open sea farming and going further South.

They only need to convince the current government that it is a good idea to grant some resource consents in return for jobs and export earnings. How hard can it be?

[Timesurfer]

They only need to convince the current government that it is a good idea to grant some resource consents in return for jobs and export earnings. How hard can it be?

They will never have another Shane Jones so if they can't get it over the line at the moment I don't like their chances. It is Government that you are talking about though.

[Patient Panda]

I did not buy at IPO as I thought they were in the wrong location,and the waters were too warm..
Have been very surprised how well the share has done.


I also have never invested in NZK but always thought it would do well once I found out the chairman was John Ryder and of course loving their amazing product.

PE has remained above 20 for as long as I have had my eye on it and growth seeming unpredictable.
Even if its a good/great business the price has to be right.

[winner69]

What do they do with all the dead fish?

If they ‘harvest’ 8000MT of fish and mortality rate is 33% does that mean 4000MT of fish died this year ...or is the actual figure higher

Poor fish ...hope they didn’t suffer too much ...put me off eating salmon raised in cages

[Patient Panda]

From what I remember the dead fish is turned into their fertiliser product.

[IAK]

Few environmental issues with salmon (and trout) farming. Green lipped mussels are the way to go, good for arthritis too they reckon 😀

https://www.huffingtonpost.com.au/2016/11/10/everything-you-should-know-about-salmon-farming_a_21603450/?ncid=other_email_o63gt2jcad4&utm_campaign=share_email

[iceman]

Few environmental issues with salmon (and trout) farming. Green lipped mussels are the way to go, good for arthritis too they reckon ��

https://www.huffingtonpost.com.au/2016/11/10/everything-you-should-know-about-salmon-farming_a_21603450/?ncid=other_email_o63gt2jcad4&utm_campaign=share_email

Salmon is the biggest selling and fastest growing market in seafood so farming salmon is a big business. Yes there are environmental concerns with it like with nearly everything we humans do, but they will be dealt with. I have never invested in King Salmon because I don't think the Malborough Sounds is a future area for salmon growing. It needs to be done in more open waters and my preference in investing in this sector in NZ is Sanford, which grows their salmon in Big Glory Bay on Stewart Island. Salmon farming is here to stay and will and should get much bigger.

[IAK]

From what I remember the dead fish is turned into their fertiliser product.

Looks like they end up in the landfill.

https://www.radionz.co.nz/news/national/357367/thousand-tonnes-of-dead-fish-poses-problem-for-king-salmon

[winner69]

Looks like they end up in the landfill.

https://www.radionz.co.nz/news/national/357367/thousand-tonnes-of-dead-fish-poses-problem-for-king-salmon

Pretty yucky stuff

And lots of corporate welfare as well.

[iceman]

Pretty yucky stuff

And lots of corporate welfare as well.

The water in the sounds far too still both from wind and currents.

[Timesurfer]

This might see a change in fortune for the company
link (https://www.stuff.co.nz/business/113280781/prime-minister-says-salmon-farm-shift-needs-careful-consideration?fbclid=IwAR0gF2Px1H0QVJ7hlRDSYi8mxrg 9gS7pgOIBSbArouDXll6kQ2A4DMyrllo)

[winner69]

This might see a change in fortune for the company
link (https://www.stuff.co.nz/business/113280781/prime-minister-says-salmon-farm-shift-needs-careful-consideration?fbclid=IwAR0gF2Px1H0QVJ7hlRDSYi8mxrg 9gS7pgOIBSbArouDXll6kQ2A4DMyrllo)

For good or bad

Think Jacinda won that round ......Rosewarne needs to get smarter I think

[Baa_Baa]

For good or bad

Think Jacinda won that round ......Rosewarne needs to get smarter I think

Did he really say that to the PM! 0/10 for tact and diplomacy, bet she’s really keen to help now 🤔

[Apathy]

It was marginal tidal flow and temperature when they put the farms in and they have been poisoning the sounds ever since.

its a good story in theory but the reality is a lot different. https://www.youtube.com/watch?v=Zu-hl5lFoFc

[herbert240]

Any idea why NZK is getting hammered right now.? I know their FY20 guidance released recently wasn't great but this latest share price drop seems excessive...maybe I'm wrong?

[Timesurfer]

Any idea why NZK is getting hammered right now.? I know their FY20 guidance released recently wasn't great but this latest share price drop seems excessive...maybe I'm wrong?
I am guessing global warming is coming home to roost. If they can’t get their deep water consents it is going to be a long road ahead with the fish losses they are experiencing.

[babymonster]

well, i bought some at 1.81... looks low enough.. they manage the company well.. just need to get National in power (which is a bit harder than managing warming sea temperature.. lol)

[percy]

well, i bought some at 1.81... looks low enough.. they manage the company well.. just need to get National in power (which is a bit harder than managing warming sea temperature.. lol)

Take care or you too could end up "dead in the water."

[RGR367]

well, i bought some at 1.81... looks low enough.. they manage the company well.. just need to get National in power (which is a bit harder than managing warming sea temperature.. lol)

Added some too though at higher price than your 181 but my average price is still very much lower :cool: And it's nice to know too that the officers are adding to their holdings as of today.

[SilverBack]

With static or declining profits and by nature a primary industry subject to the vagaries of nature, should NZK be on a PE of 17 or so? I like the company but as the market so often does, I think it became over-enthusiastic and over priced NZK. The past two years have made people stop and think and the SP has fallen back but I still regard a PE of 17 as too high.

[Lewylewylewy]

https://i.stuff.co.nz/business/farming/aquaculture/114185652/king-salmon-seeks-consent-to-farm-in-cook-strait-next-year

Might be news to trade on, but im keeping clear because of current pe, as per post above

[percy]

Would be positive should they be granted consent..

[winner69]

Supreme Winner at Nelson Business Awards

Organisers would have been happy about the number of their staff that attended.seems a bit of a character that Rosewarne guy.

https://www.stuff.co.nz/business/117126237/king-salmon-reigns-supreme-at-nelson-business-awards

[Timesurfer]

On the other hand

https://www.stuff.co.nz/business/112924308/salmon-company-and-government-careful-not-to-collude-during-relocation-proposals (https://www.stuff.co.nz/business/112924308/salmon-company-and-government-careful-not-to-collude-during-relocation-proposals?fbclid=IwAR0MQtSuMgb-OP72kiGFa0uXpT23h0oRlLfSFa8fe1bxExCm7Ut858SMjRM)

[Timesurfer]

Still facing headwinds with consents to combat warming waters
https://www.stuff.co.nz/environment/117744302/nz-king-salmon-faces-local-opposition-in-attempt-to-add-pens-to-pelorus-sound-farm

[Timesurfer]

I think I may hold off buying back in just a little longer.

https://www.stuff.co.nz/national/118479348/huge-sea-temperature-anomaly-has-water-six-degrees-above-normal

[peat]

I think I may hold off buying back in just a little longer.

https://www.stuff.co.nz/national/118479348/huge-sea-temperature-anomaly-has-water-six-degrees-above-normal

note though that scientist didn't think it was that important and expected it to dissipate naturally and in no way thought it was indicative of global warming or climate change. (from what I remember reading in an article)

[Timesurfer]

The bun fight begins.
https://www.stuff.co.nz/national/politics/local-democracy-reporting/118571821/application-for-new-zealands-first-ocean-salmon-farm-divides-submitters

[iceman]

Cancellations from China have lead to 10-15% price drop for both Scottish and Norwegian farmed salmon and further drops expected in coming weeks. Talk of salmon being "dumped" into US and Brazil to get rid of production previously destined for China. I'm sure NZ salmon companies will be affected. But of course these drops are from all time high prices so needs to be kept in context. But definitely a worry to have so much being cancelled, particularly around the Chinese New Lunar Year when seafood consumption has always been at its highest. Most cancellations due to the fact that transport inside China is in chaos so nobody is buying. Not only salmon but all seafood being affected and for example crayfish operators in NZ are working with MPI to consider releasing large amounts of crayfish in holding tanks (previously destined for China) back into the ocean.

[Timesurfer]

Another setback.
https://www.stuff.co.nz/environment/120413152/nz-king-salmon-application-to-expand-in-the-marlborough-sounds-declined? (https://www.stuff.co.nz/environment/120413152/nz-king-salmon-application-to-expand-in-the-marlborough-sounds-declined?fbclid=IwAR1NmU8BJUpH8CuIuOm5DMIVdXwKNwo6 veKZvDTinFqDMroOa8oX6U4nCnk)

[iceman]

Another setback.
https://www.stuff.co.nz/environment/120413152/nz-king-salmon-application-to-expand-in-the-marlborough-sounds-declined? (https://www.stuff.co.nz/environment/120413152/nz-king-salmon-application-to-expand-in-the-marlborough-sounds-declined?fbclid=IwAR1NmU8BJUpH8CuIuOm5DMIVdXwKNwo6 veKZvDTinFqDMroOa8oX6U4nCnk)

Yes it is a setback. But NZKS has no chance of growing in the future in the Sounds. It has been obvious for some years. They need to get going with moving into Cook Straits (or move their whole operation elsewhere) if they want to grow

[bull....]

Salmon Shunned in China After Link to Beijing Virus Outbreak

The $700 million market for imported salmon in China is at risk after the fish was implicated in a new outbreak of coronavirus cases in Beijing

https://www.bloomberg.com/news/articles/2020-06-15/salmon-shunned-in-china-after-link-to-beijing-virus-outbreak?srnd=premium-asia

[Balance]

Salmon Shunned in China After Link to Beijing Virus Outbreak

The $700 million market for imported salmon in China is at risk after the fish was implicated in a new outbreak of coronavirus cases in Beijing

https://www.bloomberg.com/news/articles/2020-06-15/salmon-shunned-in-china-after-link-to-beijing-virus-outbreak?srnd=premium-asia

Will be very positive for NZK salmon given NZ's status as covid-19 free.

[TheHunter]

China is a small proportion of NZKS sales, unlikely to have much impact.

[Sideshow Bob]

Salmon Shunned in China After Link to Beijing Virus Outbreak

The $700 million market for imported salmon in China is at risk after the fish was implicated in a new outbreak of coronavirus cases in Beijing

https://www.bloomberg.com/news/articles/2020-06-15/salmon-shunned-in-china-after-link-to-beijing-virus-outbreak?srnd=premium-asia

There will no doubt be a heavy handed reaction by Chinese officials - they'll ban foreign seafood and especially anything fresh/live, from everywhere, not just those sources.

It's more blaming foreigners for spreading the virus - more likely to have come from someone cutting the salmon.

[Sideshow Bob]

Will be very positive for NZK salmon given NZ's status as covid-19 free.

Well, not quite at the moment......

[traineeinvestor]

Another article on China's salmon ban: https://www.scmp.com/news/china/society/article/3089320/coronavirus-china-halts-salmon-imports-over-possible-link

Even if the ban is limited to European salmon, it's hard to see how this won't result in lower prices all round.

[Sideshow Bob]

From Business Desk:

King Salmon haltsChina exports amid Beijing covid outbreak (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=e3c00f161a&e=3b6f9185d3)New Zealand King Salmon has temporarily suspended exports toChina after salmon products from around the world were removed from Chinesesupermarket shelves and restaurant menus following an investigation into acovid-19 case in a Beijing market.
According to news reports, a new cluster of coronavirusinfections in Beijing last weekend was linked to a chopping board used to sliceimported salmon at a produce market in the city. In the five days through June16, Beijing reported 137 domestically transmitted cases, most of which wererelated to the now-closed Xinfandi wholesale market, Xinhua reported.
Read the full story at BusinessDesk — subscribe now (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=fb98bc927c&e=3b6f9185d3)
Read on » (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=280c703afd&e=3b6f9185d3)

[Mr Slothbear]

China closing is not an issue for them. Their product demand is very high they have a really differentiated product.

their big issue is ramping up supply and they’ve been all over the place with it. Seems risky as an investor with only the trials in cook straight to pin your hopes on. They need to really look at ways they can consistently increase tonnage of salmon over a longer timeframe.

[Jaa]

Does anyone really believe the Beijing outbreak came from imported salmon?!?!

Just a convenient excuse for the communist party to blame this outbreak on their usual target when things go wrong, foreigners. Remind me, where did Covid come from again?

[Balance]

Does anyone really believe the Beijing outbreak came from imported salmon?!?!

Just a convenient excuse for the communist party to blame this outbreak on their usual target when things go wrong, foreigners. Remind me, where did Covid come from again?

Barking up the wrong tree as per usual. Guess you heard it from the epitome of truth Trump huh? 🤣

https://www.bbc.com/news/world-asia-china-53089137

‘An official at the Chinese Centre for Disease Control said there was no evidence that salmon was the host - or even an intermediate host - for the virus.’

[Jaa]

Barking up the wrong tree as per usual. Guess you heard it from the epitome of truth Trump huh? 🤣

https://www.bbc.com/news/world-asia-china-53089137

Then where did the hysteria about salmon come from? From the same article you shared:

"State media said the virus was discovered on chopping boards used for imported salmon at the Xinfadi market - sparking fears across the country."

[jg8512]

not a lot of interest in NZK, which NZK presented at an ASX conference this week: https://www.youtube.com/watch?v=BhwopZXeqvQ&list=PLUm38kI3ZeYtpQcQwZ4zlhbLuP_x9moWe&index=12 from 55 mins.

not a holder, but an interesting story

[nztx]

not a lot of interest in NZK, which NZK presented at an ASX conference this week: https://www.youtube.com/watch?v=BhwopZXeqvQ&list=PLUm38kI3ZeYtpQcQwZ4zlhbLuP_x9moWe&index=12 from 55 mins.

not a holder, but an interesting story


https://www.nzx.com/announcements/358756

NZK FY20 Full Year Results Announcement
27/8/2020, 8:31 am FLLYR
Market Announcement
27 August 2020

"Due to uncertainty caused by the impact of Covid-19, higher levels of inventory and ensuring prudent cash availability, the Board has decided not to pay a final dividend in respect of the FY20 year. The payment of dividends will be reviewed next year."

Possibly more startingly positive reports & Div showings seen elsewhere could be the reason

Let's face it, dividend track record doesn't exactly stick out as overly generous even before C-19 came along
but is consistent nevertheless until FY20 Final Div canned..

[Timesurfer]

Might be another challenging year ahead? link (https://www.nzherald.co.nz/nz/news/article.cfm?objectid=12366417&utm_term=Autofeed&utm_campaign=nzh_fb&utm_medium=Social&utm_source=Facebook&fbclid=IwAR1BGkeJCaJ6jKDS3LO3efhgDbzs50BQgyscDPPz_ eZa21VePhpbPrwrgpw#Echobox=1600600402)

[Lion_graf]

http://www.stuff.co.nz/business/122932186/nz-king-salmon-records-18m-profit-after-receiving-millions-in-wage-subsidy?cid=app-android

[bull....]

Seaspiracy prompts a deep dive into ASX aquaculture sustainability
The New Zealand-based King salmon producer is the smallest ASX-listed company on the list, with a market capitalisation (https://www.fool.com.au/definitions/market-capitalisation/) of $195 million. Yet, New Zealand King Salmon still has a whole section in its annual report (https://www.fool.com.au/tickers/asx-nzk/announcements/2020-11-03/2a1261122/nzk-fy20-updated-annual-report/) dedicated to environmental sustainability

https://www.fool.com.au/2021/04/09/seaspiracy-prompts-a-deep-dive-into-asx-aquaculture-sustainability/

anybody who hasnt watched seaspiracy on netflix is missing a good doco on the seafood industry

[iceman]

Seaspiracy prompts a deep dive into ASX aquaculture sustainability
The New Zealand-based King salmon producer is the smallest ASX-listed company on the list, with a market capitalisation (https://www.fool.com.au/definitions/market-capitalisation/) of $195 million. Yet, New Zealand King Salmon still has a whole section in its annual report (https://www.fool.com.au/tickers/asx-nzk/announcements/2020-11-03/2a1261122/nzk-fy20-updated-annual-report/) dedicated to environmental sustainability

https://www.fool.com.au/2021/04/09/seaspiracy-prompts-a-deep-dive-into-asx-aquaculture-sustainability/

anybody who hasnt watched seaspiracy on netflix is missing a good doco on the seafood industry

What is your agenda for posting this rubbish on this & the SAN thread ?A misguided attempt at scaring investors or do you work in a competitive industry, like the main funder of this so called ¨documentary¨ which has huge investments in the plant based food industry whichs is known for using questionable tactics against industries based on natural food such as dairy, meat & seafood ?

[winner69]

Trading ‘problematic’ / only temporary so no worries

Made some money playing the FX market

STRONG BALANCE SHEET

Over and out until late August

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZK/373347/347606.pdf

[BlackPeter]

Trading ‘problematic’ / only temporary so no worries

Made some money playing the FX market

STRONG BALANCE SHEET

Over and out until late August

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZK/373347/347606.pdf

... and don't forget the problems growing their King Salmon - apparently warm sea water not ideal for growing cold water fish.

Water temperature certainly will change with climate change, but will this favor the cold water loving King Salmon?

Maybe NZK should specialize in tropical fish ... much prettier anyway. Alternative would be to change the balance date to keep the shareholders confused. Oops - they just did that, didn't they?

[TFA]

... and don't forget the problems growing their King Salmon - apparently warm sea water not ideal for growing cold water fish.

Water temperature certainly will change with climate change, but will this favor the cold water loving King Salmon?

Maybe NZK should specialize in tropical fish ... much prettier anyway. Alternative would be to change the balance date to keep the shareholders confused. Oops - they just did that, didn't they?

Which is why they are proceeding with the Blue Endeavour project to farm in colder open water providing the regulatory regime gives it the go ahead.

[BlackPeter]

Which is why they are proceeding with the Blue Endeavour project to farm in colder open water providing the regulatory regime gives it the go ahead.

Which, at this stage, is still a big "IF"

[Scrunch]

Which, at this stage, is still a big "IF"

Does anyone have any idea what the potential enclosure escape losses are when farming in potentially extremely rough open water. Is it similar to the sheltered sounds or a lot worse? Would this simply substitute mortality losses for escape losses?

[kiora]

"9.2 Key research needs
• As long as significant numbers of escapees continue to occur, there will be
significant research needs regarding the ecological and genetic impacts of escaped
farmed salmon on wild populations (see chapters 3 and 4). However, given the
compelling evidence pointing towards a high risk of negative impacts by escaped
farmed salmon on wild salmon populations (or on native fish/other organisms in the
case of escapes as alien species), and recognising the need to continually improve on
our knowledge of the interactions between cultured and wild Atlantic salmon, the
members of this working group would like to emphasise that the most pressing
research priorities are linked to: 1) technologies and efforts for containment (escape
prevention), and 2) approaches to reduce impacts of escapee"
http://www.fao.org/3/aj272e/aj272e.pdf

[Sideshow Bob]

About the same, or slightly down on last year, which was well down on the year before....BUT most of the profit to be made in the next 6 months, not much in the last 6 months....

NZK Market Update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/376438)

NZK Market Update

30/7/2021, 8:30 amMKTUPDTE30 July 2021

NZK - NEW ZEALAND KING SALMON – Earnings update

Further to advice provided on 3 June 2021, regarding difficulties with trading in the first half of FY22 (1H22: Feb to July 21), NZK is now able to be more specific on full year guidance.

The 2022 earnings forecast of proforma EBITDA is in the range of $8.0m to $10.0m, the majority to be generated in 2H22.

Fish size, which was a problem in the first half due to a one-off issue with the model, has now recovered and biomass is on track for a satisfactory position in October 2021. Price increases have also been implemented.

A hearing date has been established for the open ocean farming consent application, named “Blue Endeavour”, in October 2021, which has the potential to generate significant supply in future years.
ENDS

[winner69]

About the same, or slightly down on last year, which was well down on the year before....BUT most of the profit to be made in the next 6 months, not much in the last 6 months....

NZK Market Update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/376438)

NZK Market Update

30/7/2021, 8:30 amMKTUPDTE30 July 2021

NZK - NEW ZEALAND KING SALMON – Earnings update

Further to advice provided on 3 June 2021, regarding difficulties with trading in the first half of FY22 (1H22: Feb to July 21), NZK is now able to be more specific on full year guidance.

The 2022 earnings forecast of proforma EBITDA is in the range of $8.0m to $10.0m, the majority to be generated in 2H22.

Fish size, which was a problem in the first half due to a one-off issue with the model, has now recovered and biomass is on track for a satisfactory position in October 2021. Price increases have also been implemented.

A hearing date has been established for the open ocean farming consent application, named “Blue Endeavour”, in October 2021, which has the potential to generate significant supply in future years.
ENDS

I noted that bit about how the majority is to come in second half.

When I see that I always shudder …never seems to happen

[BlackPeter]

I noted that bit about how the majority is to come in second half.

When I see that I always shudder …never seems to happen

Oops - just noticed the analysts expected an EBIDA in the order of $20m for FY2022.

https://www.marketscreener.com/quote/stock/NEW-ZEALAND-KING-SALMON-I-32526438/financials/

Now the company is forecasting $8m to $10m - and even that is still vapourware (the second half will make it possible - yeah right ...).

Just wondering - while they say in Software development that "small is beautiful" - does this apply to EBITDA as well?

[winner69]

Oops - just noticed the analysts expected an EBIDA in the order of $20m for FY2022.

https://www.marketscreener.com/quote/stock/NEW-ZEALAND-KING-SALMON-I-32526438/financials/

Now the company is forecasting $8m to $10m - and even that is still vapourware (the second half will make it possible - yeah right ...).

Just wondering - why they say in Software development that "small is beautiful" - does this apply to EBITDA as well?

They say the fish are getting fatter --- that's good

[BlackPeter]

They say the fish are getting fatter --- that's good

But is it healthy? Certainly not for the fish ... and not sure whether for the customer either ...

[winner69]

But is it healthy? Certainly not for the fish ... and not sure whether for the customer either ...

Maybe should not have used the word 'fat'

I should not have assumed that biomass is back on track means 'fatter' fish

[Entrep]

Building a position in this one. A bit risky with Blue Endeavour being key I think, also very small MC. Balances out my port which has gotten pretty conservative.

[BlackPeter]

Building a position in this one. A bit risky with Blue Endeavour being key I think, also very small MC. Balances out my port which has gotten pretty conservative.

Well, it is on my watchlist, but I didn't yet bite :):

I agree - if Blue Endeavour gets not just approval, but turns out to be successful (which is by no means guaranteed), than they might do very well, indeed.

However - if it does not work out ... then I think they are still ways too expensive for a company trying to rear Salmon in ways too warm waters. The angry crowd of environmentalists does not help either ...

Not that the analysts forecasts are typically worth the paper they print them on ... but according to their forecasted EPS the three year forward PE would be 44. I don't know their working assumptions, but this does not look cheap, isn't it?

[Entrep]

Well, it is on my watchlist, but I didn't yet bite :):

I agree - if Blue Endeavour gets not just approval, but turns out to be successful (which is by no means guaranteed), than they might do very well, indeed.

However - if it does not work out ... then I think they are still ways too expensive for a company trying to rear Salmon in ways too warm waters. The angry crowd of environmentalists does not help either ...

Not that the analysts forecasts are typically worth the paper they print them on ... but according to their forecasted EPS the three year forward PE would be 44. I don't know their working assumptions, but this does not look cheap, isn't it?

Thanks for your thoughts, good to know you are interested.

Craigs have them on a FY24 PE of 16.3 without Blue Endeavour unless I am reading things totally wrong (understand your comment re analysts)

But they also have the company's own internal forecast EPS at 9.62 for FY24 also, which is 14.6 PE. Where is your figure from?

[Entrep]

Got my fill and now leaving some aside for the inevitable cap raise for Blue Endeavour.

[BlackPeter]

Thanks for your thoughts, good to know you are interested.

Craigs have them on a FY24 PE of 16.3 without Blue Endeavour unless I am reading things totally wrong (understand your comment re analysts)

But they also have the company's own internal forecast EPS at 9.62 for FY24 also, which is 14.6 PE. Where is your figure from?

The forward PE I am working with is the current SP divided by the average of the EPS predicted for the next three years plus the current year. You can take these numbers (for most stocks) from market screener. Obviously - the number for the current year is most accurate (as reported) and the number three years ahead is somebodies most optimistic phantasy.

Let face it - nobody knows what will happen in this timeframe with the climate, with any biological assets (diseases), with the weather (storms), and with the consumer behaviour, nor do people know what will happen with the supply and distribution chain - i.e. any prediction is a joke. As well - three year forecasts are nearly always too optimistic and frequently revised down. This way I bring a bit more reality into my forward numbers ....

Take the numbers from market screener (though I think their 2020 EPS is incorrect - need to check when it matters to me), treat them as proposed and you will reach a similar result as I did ... :);

[Monarch]

Building a position in this one. A bit risky with Blue Endeavour being key I think, also very small MC. Balances out my port which has gotten pretty conservative.

What makes you prefer this one over NZX:SAN? I looked at both and went with SAN last year, although I horribly mistimed it and paid the price :(. Could be interested in picking some of these up as well but one of the main factors that scared me off last time was the warm waters in Marlborough etc causing issues.

[Entrep]

https://www.afr.com/street-talk/little-room-to-move-in-jbs-huon-bid-but-something-is-fishy-20210810-p58hf2

[Entrep]

What makes you prefer this one over NZX:SAN? I looked at both and went with SAN last year, although I horribly mistimed it and paid the price :(. Could be interested in picking some of these up as well but one of the main factors that scared me off last time was the warm waters in Marlborough etc causing issues.

I didn't really consider SAN. This seems massively undervalued given Blue Endeav which is not a lock in of course. My port is currently pretty conservative too, so didn't mind having a punt on this.

[ralph]

I didn't really consider SAN. This seems massively undervalued given Blue Endeav which is not a lock in of course. My port is currently pretty conservative too, so didn't mind having a punt on this.

Agree totally Entrap

Its like a one trick pony NZK and a lot of similar competitors abroad not to mention the changes happening in Marlborough & more, I did have it as a buy if it got near 1.40 but revaluated then and went San as it has more options /products and even though its suffering also at the moment has more arrows in its Armory

[Mr Slothbear]

Agree totally Entrap

Its like a one trick pony NZK and a lot of similar competitors abroad not to mention the changes happening in Marlborough & more, I did have it as a buy if it got near 1.40 but revaluated then and went San as it has more options /products and even though its suffering also at the moment has more arrows in its Armory


One can have all the arrows in an armory but not many things can compensate for bad management.

NZK management far surpasses Sanford. That said I hold neither

[BlackPeter]

One can have all the arrows in an armory but not many things can compensate for bad management.

NZK management far surpasses Sanford. That said I hold neither

It depends on how you measure that ... I'd say NZK management is not spotless (if I think e.g. at the CEO's soft skills negotiating with politicians) - and Sanfords management - well, yes, past management made some quite significant mistakes and mis judgements, but they had as well some recent changes. Not sure, I can already pass judgement on the new San CEO. Can you?

I do agree with a previous poster that SAN has more options than NZK in a sector which in general should have tailwind. Obviously - if NZK's open sea farming wins (i.e. getting the consent and working as intended), than they well might be the better option, but what if not?

[Monarch]

It depends on how you measure that ... I'd say NZK management is not spotless (if I think e.g. at the CEO's soft skills negotiating with politicians) - and Sanfords management - well, yes, past management made some quite significant mistakes and mis judgements, but they had as well some recent changes. Not sure, I can already pass judgement on the new San CEO. Can you?

I do agree with a previous poster that SAN has more options than NZK in a sector which in general should have tailwind. Obviously - if NZK's open sea farming wins (i.e. getting the consent and working as intended), than they well might be the better option, but what if not?

Pretty sure NZK's "Blue Endeavour" is a similar project to SAN's "Project South". Although I think NZK will be first to deliver on their project, suspect SAN has put it on ice for the time being to focus on surviving.

[ralph]

Quite probably Monarch but the Stewart Island salmon farms are not as warm as king salmon Marlborough farming that is suffering now as we all know hence the big push for deep sea farming already being done elsewhere .
But we all know Salmon farming is not New Zealand ring fenced , everyone is at it & the previously badly managed Sanford Armory is my preferred option with not being a one trick pony.

[Sideshow Bob]

NZK 1H22 Half Year Results Announcement - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/380069)

September 30, 2021

NZK - NEW ZEALAND KING SALMON ANNOUNCES 1H22 RESULT

New Zealand King Salmon Investments Ltd (NZX & ASX: NZK) reports its financial performance for the six months period ended 31 July 2021 (1H22). Key points include:

• Small fish size and compensating restrictions on harvest have negatively impacted our result
• The effects of Covid-19 disruptions have been largely overcome with the exception of freight availability and cost
• Revenue of $80.1m, up from $67.0m in 1H21, reflecting clearance of excess inventory and sales recovery ($4.2m clearance).
• Sales volume of 3,629 tonnes compared with 2,745 tonnes in 1H21 (470t clearance).
• Statutory NPAT of ($5.6m), compares with ($5.6m) in 1H21.
• Pro Forma Operating EBITDA of $3.3m, compared with $7.1m in 1H21.
• The main differences between Statutory and Proforma EBITDA profit measurement being ($13.5) FX close-out profits, $8.1m inventory fair value adjustment, and $0.98m FRS16 leases.

Chairman John Ryder said: “Unfortunately it’s been a challenging six months, but we have now initiated our Prescient Aquaculture Model, built on decades of farming King salmon and the experience of our own in-house team. Since the beginning of our new financial year, we have returned to demand exceeding supply”.
“Our premium brands continue to show great strength in building customer relationships and supporting margin growth, focusing on diversification across categories and markets to build resilience.”

New Zealand King Salmon CEO Grant Rosewarne acknowledged it had been a tough period. “During the first four months we made losses, more than fully offset by closing out excess foreign exchange contracts. In June we were back to break even, followed by incremental gains in July of $1.3m (proforma EBITDA), continuing into 2H, with August at $1.6m.

“We are forecasting harvest volumes in the second half of 2022 of over 4,000 tonnes delivering the usual premium prices. We have consistently maintained prices for the core branded portfolio, even through the Covid pandemic. Excess unbranded stock, mainly whole frozen fish, continues to be sold to international customers outside of established branded channels.

“During Covid FY21 we refocused on NZ retail (with heavy price promotions) and developed additional fresh speciality and e-commerce business in the US, which helped get us through FY21. Now, in FY22, we have seen the return of the US foodservice sector whilst retaining the incremental fresh business to deliver improving returns.
“Continuing our innovation program for Ōra King, we launched a limited edition of our new Ōra King Keiji product, which is our interpretation of the famed Japanese Keiji, a premium sashimi or plate-size salmon enjoyed for its unique flavour and delicate texture.

“We also premiered the Ōra King Documentary to offer chefs around the world a virtual experience of our brand, despite the closure of our borders. The documentary https://orakingsalmon.co.nz/documentary/ deepens the story of Ōra King with material filmed across our egg to plate operation.

“Internationally, we have continued to drive demand for our Regal smoked salmon products, and secured three international accolades for our Regal range, including Best New Product across all categories at the 2021 sofi awards with the Speciality Food Association of North America.

“Furthermore, our Omega Plus pet food range continues to show rapid growth with the launch into Animates stores around New Zealand. Annualised revenue is currently running at about $4m pa” Mr Rosewarne added.

“Our aquaculture team continues to investigate and implement solutions for improved fish health outcomes at our sea farm sites. This work is underpinned by our new production model, our own fish health vet, Dr Zac Waddington, and independent science providers.

“In terms of future growth, a hearing has been set in Blenheim, the week beginning October 18 for our open ocean Blue Endeavour application, 7kms north of Cape Lambert in the Cook Strait. This project has multiple benefits - an improved environmental outcome, increase in scale, reduction in operating costs, improvements in fish health and a lift in unit values. If successful, we would expect a harvest in 2024.”
The application is aligned with the Government’s Aquaculture Strategy which was launched in late 2019 with the objective of the industry achieving $3 billion revenue by 2030.

“It’s undoubtedly an exciting time for the industry as the future for salmon farming is in the open ocean. We will need the continued support from all levels of Government and the community to achieve this. We firmly believe that Aquaculture could become New Zealand’s most valuable industry and its greenest primary sector” Mr Rosewarne added.

New Zealand King Salmon will update market guidance over the coming months. The company has not paid a dividend since the Covid pandemic started and this will remain under review.

Ends
Contact: Grant Rosewarne
Managing Director and CEO, New Zealand King Salmon Investments Ltd
Email: grant.rosewarne@kingsalmon.co.nz

 
About New Zealand King Salmon
New Zealand King Salmon is the world’s largest aquaculture producer of the premium King salmon species. We operate under our four key brands: Ōra King, Regal, Southern Ocean, and Omega Plus, as well as the New Zealand King Salmon label. We have been growing and selling salmon to consumers for more than 30 years. Today we employ around 500 people. New Zealand investors make up a significant percentage of the ownership of NZ King Salmon and the communities of Marlborough, Nelson Bays and Tasman are well represented, with around 400 of the 2,900 shareholders from Top of the South.

More information can be found at www.kingsalmon.co.nz (http://www.kingsalmon.co.nz)

[Sideshow Bob]

Investor Preso

PowerPoint Presentation (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZK/380122/355971.pdf)

[BlackPeter]

Hmm - HY 1 was bad (small fish, high freight cost), HY 2 supposed to remedy that (bigger fish?), though freight costs unlikely to change in the short term. Liabilities increased (though balance sheet looks still manageable) and the open ocean farming hearing in October - all depends on the outcome - better hope it goes well.

On the balance of risks and opportunities does this stock in my view still look too dear ... but obviously - it depends on what we know about the future :):

[Sideshow Bob]

An upgrade!! :eek2:

NZK Market Update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/384299)

NZK - NEW ZEALAND KING SALMON – Earnings update

Further to context provided on 30 September 2021 as part of our FY22 half year results announcement (1H22: Feb to July 21), New Zealand King Salmon is now able to provide an update on full year earnings guidance.

The FY22 revised earnings forecast of proforma EBITDA is in the range of $10.5m to $12.5m, an increase from the previous guidance of $8.0m to $10.0m.

Although trading conditions remain challenging with elevated freight costs, inflationary pressure on raw materials and Covid restrictions impacting food services, we have seen a sustained gain in our financial performance. As previously noted, we continue to see an improvement in fish size, due to the change to our farming model.

The Consent hearing for our open ocean farming application, named “Blue Endeavour”, is nearing completion with the last day targeted for 21st December.

ENDS

[Entrep]

Awesome, looking forward to trading today

[BlackPeter]

Awesome, looking forward to trading today

Is this buying - or selling?

[Entrep]

Brutal downgrade

https://announcements.nzx.com/detail/386678

[BlackPeter]

Brutal downgrade

https://announcements.nzx.com/detail/386678

Jeez - EBITDA forecast down by nearly 40% - and this at a time when people started to hope that things should get better after Omicron.

However - warm seawater (and there will be more with global warming) was always their Achilles heel. Maybe they should focus on breeding warm water species instead of Salmon.

How low can they go?

[winner69]

When they say 'To minimise this impact, we are evaluating options to accelerate our existing harvest schedule starting this week.' does it mean they are going to put the poor salmon out their misery ...... ie kill them before the warm water does, suppose that's humane

I've gone off salmon farming

[Rawz]

My eggs bene with salmon might be a bit cheaper next i get breakfast out. Assuming this early cull floods the market with cheap salmon?

[Muse]

This is all pretty grim, sadly.

This puts the business on a PE ratio of #errornotcalculatable. This warming events - perhaps a once off a decade are happening every other year and getting worse.

Then there is the southern bluewater initiative. Not sure whats worse - if it goes ahead or doesnt. If it does there will be a huge capex requirement and a *heavily* dilutive capital raise coming. It could take years to accomplish and then you have to sit back and hope you get better fish performance (which may or may not happen - it could be the aquaculture model and a particularly finicky species of salmon).

If it doesnt happen you are left in the status quo with no room to grow and ever rising water temps.

Sad stuff - it a high value add, globally sought after product. Such are the times.

[IAK]

Jeepers, IPO was $1.12 in 2016.

[winner69]

Jeepers, IPO was $1.12 in 2016.


Seems like it all been downhill the last few years ……performance and share price.

I see share price got to $2.99 once (I think in 2018)

John Ryder must be a bit disappointed in all this

[Joshuatree]

They e had this problem more than once. Weird that it's been a fave of Craig's.

[nztx]

A pretty severe reversal on NZK's early December 2021 announcement.

So factoring in Depreciation Amortisation Interest adjusted for tax looks curiously like FY red ink territory ..

Am I wrong ? ;)

never a holder - shied off on earlier reports of issues.

[Muse]

A pretty severe reversal on NZK's early December 2021 announcement.

So factoring in Depreciation Amortisation Interest adjusted for tax looks curiously like FY red ink territory ..

Am I wrong ? ;)

never a holder - shied off on earlier reports of issues.

Yeah there’s really not a scenario where Npat wont be negative (~2-3m) and probably breakeven at best in F23. Echoing my comment yesterday for a capital raising for the blue endeavour, jarden came out and said nzk might need one even without it. And oh dear - estimated spot net debt of 7.0x and 4.0x to FY22/FY23 EBITDA. Very high gearing - how could they not consider doing a capital raise?

If i was still a shareholder i surely wouldnt want to participate in a rights issue anywhere near a dollar

[Entrep]

Josh Dale has maintained his Overweight recommendation on NZK despite Tuesday’s profit downgrade due to a warmer Pelorus Sound impacting fish mortality in the current YE (January) and forward fish stocks. Dale now assumes FY22 EBITDA of $7m which is the mid-point of revised Guidance for $6.5-7.5m from $10.5-12.5m (pre-COVID EBITDA was tracking at circa $25m). The cause of the downgrade highlighted how critical NZK’s Blue Endeavour growth initiative to establish farms on the edge of the Cook Strait (cooler deeper water, faster currents) has become for the company … NZK is still expecting a decision by late March after Environmental hearings concluded in late December. The deep water farm would enable NZK to farm juvenile fish in the more susceptible westerly Pelorus farm during the winter months before transferring into the open ocean sites. Dale’s revised TP is $1.40 which incorporates 18c for Blue Endeavour (c25% of Blue Endeavour NPV).

From Craigs

[Muse]

From Craigs

Aye saw that. And jarden came out with an u underweight at 1.15. I dont believe their f23 forecast for one second and that implies a fy23 pe of 80.

Its my strong belief this company will require a capital raising in any scenario. I suppose brokers dont want to overly piss off management and the board if they want a gig.

[ralph]

Ha you're spot on they will Endeavour to get out before it runs aground .

[Entrep]

This PA doesn’t look good for Endeavour at all

[ralph]

This PA doesn’t look good for Endeavour at all
Why what have you heard !!! never did sound good around the sounds

[Recaster]

Did a brief analysis of this company back in February.

One of the things that stuck in my mind was the massive $13.5 mn cash received for closing out a forward contract early. I wrote to the company for an explanation but there was no reply. Did this place them at risk? Was it a last resort?

This amount put their operating cash flow into positive territory by a good amount. Very material and huge. I couldn't really understand the large amount.

Here's the brief analysis if you're interested. Very basic :-):

https://recastinvestor.substack.com/p/basic-recast-analysis-new-zealand/comments

[nztx]

From Craigs


From The Hawk:

Better fish lurking to fry elsewhere - a couple of dozen rivers over the other way :)

[Entrep]

That decision must be due any day now... Even if bad, must surely be close to priced in? Feels like someone knows the outcome already PA so trash.

[Entrep]

Financial results delayed (but apparently still in forecast range). Still no word on Endeavour!

[Timesurfer]

Press isn't good https://www.rnz.co.nz/national/programmes/morningreport/audio/2018836099/marlborough-sounds-salmon-dying-after-hot-summer

[bull....]

something smells fishy when you have a halt for results ....

[Sideshow Bob]

something smells fishy when you have a halt for results ....

Not a halt, but have a waiver.

NZKS - Amended Results Announcement Date Waiver - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/389841)


In February the Board announced we were experiencing higher than expected sea farm mortality. As noted in our previous announcement, the mortality event will have an impact on our FY23 harvest volumes and our FY22 and FY23 financial results. NZKS is still working through the associated financial impacts of this and will provide a more detailed updated on sea farm mortality and the expected impact on FY23 earnings as part of our results announcement which is now expected to be on or around 13 April 2022. NZKS remains committed to minimising sea farm mortalities and is continually assessing the options available to do this.

Although we are still finalising our financial results, we continue to expect our FY22 Proforma EBITDA to be in the previously indicated range of $6.5m – $7.5m.

[bull....]

something smells fishy when you have a halt for results ....

thought something was up .... cap raise wonder what the discount be?

[Entrep]

Dammnit. Down bad on this one.

[BlackPeter]

thought something was up .... cap raise wonder what the discount be?

More interesting would be the reason for the Cap raise ... Given that they have not yet the consent for their deep water farming - do they need new capital just to pay the bills? This would be frightening ...

[Muse]

Yeah there’s really not a scenario where Npat wont be negative (~2-3m) and probably breakeven at best in F23. Echoing my comment yesterday for a capital raising for the blue endeavour, jarden came out and said nzk might need one even without it. And oh dear - estimated spot net debt of 7.0x and 4.0x to FY22/FY23 EBITDA. Very high gearing - how could they not consider doing a capital raise?

If i was still a shareholder i surely wouldnt want to participate in a rights issue anywhere near a dollar


Aye saw that. And jarden came out with an u underweight at 1.15. I dont believe their f23 forecast for one second and that implies a fy23 pe of 80.

Its my strong belief this company will require a capital raising in any scenario. I suppose brokers dont want to overly piss off management and the board if they want a gig.

based on my back of the envelope gearing calcs and rough and ready EBITDA guesstimates I'd say between 35-50 million capital raise. That's just for the status quo. If they manage to get blue endeavor across the line, even bigger.
Thats a big capital raise relative to the market capitalisation. Which would necessitate a sizeable discount.

[Entrep]

More interesting would be the reason for the Cap raise ... Given that they have not yet the consent for their deep water farming - do they need new capital just to pay the bills? This would be frightening ...

Great point. Any chance the consent could have been received? A decision was due to be delivered in March.

[BlackPeter]

Great point. Any chance the consent could have been received? A decision was due to be delivered in March.

Pretty sure they would have told the market if the consent would have been received (that's called continuous disclosure) ... and I guess they can't really raise capital for a project which they hope may be consented at some stage - or can they?

[iceman]

Norwegian farmed salmon reached the highest price ever in sales last week and strong ongoing demand.

[BlackPeter]

Norwegian farmed salmon reached the highest price ever in sales last week and strong ongoing demand.

I don't think the problem for NZK are low demand or low prices ...