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  1. #101
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    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!

  2. #102
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    Quote Originally Posted by Patient Panda View Post
    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.

  3. #103
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    Quote Originally Posted by traineeinvestor View Post
    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.

  4. #104

  5. #105
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    Quote Originally Posted by kiora View Post
    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?

  6. #106
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    Quote Originally Posted by traineeinvestor View Post
    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.

  7. #107
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    A lot easier than in the sounds I imagine

  8. #108
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    Maybe they’re worried about the competition from the West Coast?
    https://www.radionz.co.nz/news/natio...et-to-take-off

  9. #109
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    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.

  10. #110
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    Not likely:Huge market & WC more likely to have issues with flavour,water temp & environmental waste

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