SANford Chart

[BlackPeter]

Interesting balance sheet. Inventories increased from $48.6m last year to $85.5m; I guess I see that unsold product in store (and hopefully in the freezer) does have value, but I am wondering how long unsold fish is keeping said value?

In situations like this it might be better to own a wine producer or even a Manuka honey producer rather than a fishing company ;

They better have a bumper Christmas sale ...

[Jaa]

I think it is very difficult to say if there will be a long term impact from this debacle, although it is quite possible that a more negative sentiment towards the practice of using foreign crew may develop, even within Government.
I do note that these vessels have historically been used to catch significant amounts of lower value species such as mackerel that Kiwi boats have not targeted to any large degree due to poor economics. But they also catch species like hoki and squid.
All of these vessels are NZ flagged, after a law change some years ago but obviously you will not get Kiwis on these boats when the likes of Sealords advertise for crew with an ability to speak Russian !! But because they are NZ flagged, NZ laws, including employment law, applies to them and that includes minimum wages. So the Russian fishermen are not "slave labour" by any stretch of the imagination.

It should be noted that Sanford has NZ crew on their own vessels (not sure if they still charter a Korean vessel with Korean crew) and Talley's always crew all of their vessels with NZ crew. Sealord has a couple of these Russians, Independent Fisheries 3 I think and Maruha also uses only foreign crew (like Independent). Sadly Sealord also has a significant part of the crew foreign, on their new and flash vessel Tokatu. This is due to the fact that it is near on impossible to get keen, reliable young Kiwis to work in the sector. They don't want to go away for many weekends and they don't want to be subjected to random drug tests.
People often say that is due to low earnings but I don't agree. An unqualified 18 yo hard worker can go out on the factory trawlers (5 weeks trips) and work for 6 months of the year starting at $40-50k. No food or accommodation costs for those 6 months. If they work hard, the companies will pay for them to go to various courses and I know of a boy here in Nelson that had his full Qualified Fishing Deckhand after 3 years and earning $70k p.a. for 6 months work. Another became a factory manager after 5 years on around $120k. So there are opportunities for people to do well in the industry but people are not available. There is a crewing crisis in the industry.

Sadly, until we change the attitudes and get young people interested in hard physical work again, foreign crewed vessels will always be part of the industry.

Appreciate the thoughts Iceman, very interesting. Honestly surprised its Talley's with the most NZ crew. Good on them.

Disagree about the attractiveness of working in it though. Its hard, dangerous work that requires a big sacrifice. Better money and conditions in the mines.

The economist in me also doesn't buy all this employer angst about worker shortages. The labour market is pretty simple, if supply decreases like in this case where foreign workers are unavailable, wages must rise for the market to return to equilibrium. Whatever we may think of as good money, ultimately the market will decide. The government/industry can intervene a bit to increase demand with training or promotion but these won't work long term.

The real problem is much of the industry wouldn't be viable with mining like wages. Why Sealord for one invested so much to automate the fish cutting process. Mostly unsuccessfully.

Once talked to an accountant at Sealord, told me they used to have 10 boats and made the same amount of revenue they then made with 4 boats. The joke was that one day they would only have 1 boat but still make the same in revenue. Tough industry.

[iceman]

SAN appoints a new CEO. An interesting choice https://www.directbroking.co.nz/Dire...spx?id=5567262

[BlackPeter]

Just updating my spreadsheet and noticed that the Sanford share price reached in Dec 2019 the lofty heights of $8.00. Analyst consensus at that time was as well a pretty straight "BUY" recommendation (9.17 out of 10) - i.e. they forecasted strong further Share price growth compared to the index;

12 months later the index is 12% up, but the SAN share price dropped to $5.24 (i.e. by 35%).

Today the analyst consensus for Sanford is outperform (7.5 out of 10).

Based on this data set am I now wondering what analysts really recommend to do with Sanford shares?

Discl: holding (some) and confused ....

[Scrunch]

Just updating my spreadsheet and noticed that the Sanford share price reached in Dec 2019 the lofty heights of $8.00. Analyst consensus at that time was as well a pretty straight "BUY" recommendation (9.17 out of 10) - i.e. they forecasted strong further Share price growth compared to the index;

12 months later the index is 12% up, but the SAN share price dropped to $5.24 (i.e. by 35%).

Today the analyst consensus for Sanford is outperform (7.5 out of 10).

Based on this data set am I now wondering what analysts really recommend to do with Sanford shares?

Discl: holding (some) and confused ....

Analyst coverage is fairly thin. Market screener only has two analysts covering it. One is Forsyth who had a $7.45 target for much of the year and more recently decreased this to $7.00. The other analyst covering it would appear to have a $5.20 target, but I don't know who it is.

Its on my watch list as a potential buy, but its still in a medium-term down trend. The more recently trend appears to be tracking sideways around 4.80-5.20.

I suspect the trigger for re-rating upwards will be the rest of the world getting Covid under control so the restaurant business resumes buying fish for their dishes. Its unclear if any re-rating will occur in anticipation of Covid being under control, or confirmation of increased sales / margins. With apparently successful vaccine's it looks to be the later which may create a good buying window before any increased sales start to improve the P&L / forecasts.

[Monarch]

What do you guys think of the project south open ocean farm? They expect to produce up to 25000 GWT from it annually if it goes ahead, could be a game changer if they can maintain similar profit per GWT. The numbers seem too good to be true.

[iceman]

Analyst coverage is fairly thin. Market screener only has two analysts covering it. One is Forsyth who had a $7.45 target for much of the year and more recently decreased this to $7.00. The other analyst covering it would appear to have a $5.20 target, but I don't know who it is.

Its on my watch list as a potential buy, but its still in a medium-term down trend. The more recently trend appears to be tracking sideways around 4.80-5.20.

I suspect the trigger for re-rating upwards will be the rest of the world getting Covid under control so the restaurant business resumes buying fish for their dishes. Its unclear if any re-rating will occur in anticipation of Covid being under control, or confirmation of increased sales / margins. With apparently successful vaccine's it looks to be the later which may create a good buying window before any increased sales start to improve the P&L / forecasts.

Yes COVID has definitely hit the seafood industry. But it hit Sanford probably harder than many due to the CEO's strategy to steer away from commodity products and aim almost entirely for the top end restaurant business.
His strategy is in tatters and he has abruptly left. He has been replaced by a person with no experience in the industry. I'm not saying that is necessarily bad, but it is a fact. I would have preferred to see an industry insider that would quickly be able to put his/her finger on what needs to be done and there is lots that needs to be done.
I therefore strongly feel SAN needs some in-house tiding up to do before I would consider becoming a holder again.

[Monarch]

What do you guys think of the open ocean salmon farm Project South? The proposal says they expect to produce up to 25000 GWT of salmon yearly when fully scaled up. It seems like it could be quite lucrative if they can keep production costs in line with their other farms.

[BlackPeter]

Yes COVID has definitely hit the seafood industry. But it hit Sanford probably harder than many due to the CEO's strategy to steer away from commodity products and aim almost entirely for the top end restaurant business.
His strategy is in tatters and he has abruptly left. He has been replaced by a person with no experience in the industry. I'm not saying that is necessarily bad, but it is a fact. I would have preferred to see an industry insider that would quickly be able to put his/her finger on what needs to be done and there is lots that needs to be done.
I therefore strongly feel SAN needs some in-house tiding up to do before I would consider becoming a holder again.

Cheers - you have some good points.

Re the new CEO (Peter Reidie) - he does have primary industry experience (from Farmlands and Goodman -Fielders). Admittedly - there are not just good things one hears from these companies as well.

You are right - he was not in the fishing industry before, but I hope that Sanford does have enough other hands and heads who know how to run ships and crews and fish. I sort of hope that a pair of fresh eyes with (not fishing) primary industry experience can see more than just another fisher picked out of an anyway very small talent pool.

I must however admit that the board didn't had a particularly lucky hand in appointing the previous CEO ... and yes, I remember as well some previous issues with ships and the overall strategy.

Didn't hold them during Volker's time ... they always looked too dear to me. At the moment the shares look cheaper (though not cheap), but you are certainly right - they still need to solve a number of issues.

Question is - are the shares of NZ's largest fisher more likely to drop from here another 50% (if the s*t hits the fan) or to rise by 100%?

Discl: Hold (a modest number) as part of my growing agricultural portfolio ... preparing myself for the coming economic downturn; People always need to eat :

[Waikaka]

I have ended up with quite a bit of SAN in recent months so particularly disappointing they seem to be breaking the rules in a such a blatant way.

https://www.stuff.co.nz/environment/...protected-area

Lack of education for the skipper or just greed?