Go to the website as they've issued an update after typhoon Gita.
Printable View
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
To the point of approx 19 degrees at 5m depth. Salmon mortality occurs at 20 degrees...
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.
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?
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 ...
Suppose this is a pretty positive announcement, esp the bits about next years prospects
https://quoteapi.com/resources/da986...9_guidance.pdf
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?
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 ....Quote:
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."
https://www.stuff.co.nz/business/103...sh-in-landfill
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....E2C9163A602B?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.