SANford Chart

[Valuegrowth]

For the first time since 2000, SAN has fallen below $4.70.
This stock had found consistent and reliable support at this level many times over the last 3 1/2 years.

Another defensive value play.

[BlackPeter]

Another defensive value play.

Not so sure.

Sanford is neither a monopoly nor low risk. Its fortunes are dependant on a huge number of factors they can't control (national and international politics, national and international fishing laws, Treaty settlement gravy train, weather events, global warming) and they would need outstanding management to survive. In the past they frequently popped around like a nutshell in the stormy waves of the ocean - and they made big mistakes in spades (like buying overpriced and unsuitable junk as ships, like ignoring national and international fishing rules, like selling fishing quota they will never get back).

What do you think has changed to turn them into a "defensive value play"?

[Valuegrowth]

Everybody make mistakes including me. They also have some labour issues, but every crowd has a silver lining. Currently, it's trading great discount to the market. To night
I will post more information on the sector and on SAN.

[Valuegrowth]

https://www.nzx.com/companies/SAN/analysis

Performance

The following information was extracted from Sanford Limited's Half Year Results, released on 22 May 2023:

Sanford Limited (NZX: SAN) has reported further improvement in its financial performance for the six months ending 31st March 2023. Key highlights include:

- Net Profit After Tax (NPAT) for H1 2023 is $11.1 million, which compares favourably to NPAT for H1 2022 ($6.1 million).
- Adjusted EBIT for H1 2023 is $26.6 million, a 38.7% increase on the same period last year ($19.2 million).
- Revenue of $277.6 million is up 2.5% versus H1 2022 ($270.9 million).
- Salmon division particularly strong with a 45% increase in profit, whilst Wildcatch again remained steady, and Mussels continues to lag expectations.
- North Island inshore catch rights to be sold to Moana New Zealand through a new long-term arrangement.

Sanford CEO Peter Reidie says that despite these improvements, labour shortages and cost pressures have meant the seafood company has not yet returned to pre-Covid levels of profitability.

Sanford is New Zealand’s largest and oldest seafood company and has a diverse range of interests across fishing and aquaculture. Its profits were heavily impacted by Covid, but Mr Reidie says that has now changed.

“We have seen very encouraging growth in global sales. There is strong demand across the board. This ranges from our highly valued scampi and salmon to more everyday products such as hoki and squid. We have seen record pricing in the period for all these species and more.”

Given the improved performance, Sanford’s Board is pleased to announce an interim dividend of six cents per share.

Led by our strategy, a focus of the first half of 2023, has been to restructure the business into three divisions: Wildcatch, Salmon and Mussels, results for which are reported below.

Disclaimer: This section is provided as general information only. It is not intended as a substitute for legal or professional advice to company directors and officers or investors. NZX Limited disclaims any liability arising from the use of this information.

[Valuegrowth]

This is a good move.Business units that are underperforming need to be addressed(Fix or sell) while focusing on core businesses.

The asset sales continue. This time inshore North Island catch entitlements and closing of their outdated factory in Auckland.
Basically saying “we don’t know how to manage this so will give it to Moana to manage”.

This follows on from PI tuna assets, Tauranga pelagic assets and quota in Tasmania. I don’t like this one bit.

[Valuegrowth]

Will this boring business becomes beautiful? I think so. Back then their share prices have traded above $8. One sector which got hit during covid-19. Naturally, Stock prices will go down in black swan situation like that. Finally, Sector has recovered and fish consumption is going to go up again. In the meantime China has resumed import of fish products from New Zealand after suspension of import during covid-19 period. On top of that tourism is picking up worldwide.

PE ratio of SAN(6.3x) is much below the market. Trading at good value when compared to peers(peer average 33.3x) and the industry. At least it should trade at fair PE ratio(between 10 to 15). This is not a highly leverage company as well. When compare with market, sector and peers, it’s very attractive to me. Peer comparison is a great way to find attractive stocks. On top of that it’s also a company in the defensive sector.

Big positive factor for meat and fish sector is rising middle class population in the Asia-pacific region. They will definitely, will create demand for quality food.

https://www.globaltimes.cn/page/202305/1291634.shtml

China resumes importing aquatic products from 20 overseas companies: customs
By Global TimesPublished: May 30, 2023 09:13 PM

China resumed importing aquatic products from 20 overseas companies starting on May 26, the General Administration of Customs (GAC) said in a statement on its website on Tuesday.

The companies are based in several countries including Pakistan, Brazil, Malaysia, Spain, New Zealand and Indonesia, the statement showed.

https://www.mfat.govt.nz/en/trade/fr...tpp-and-japan/

CPTPP is New Zealand’s first trade agreement with Japan – the world’s third largest economy and our fourth-largest individual trading partner and source of foreign direct investment.

Seafood

· immediate elimination of tariffs on more than half of New Zealand’s fish and other seafood exports to Japan, including mussels; · elimination on 95% of exports by 1 April 2023, and the remainder by 1 April 2033.

https://www.mfat.govt.nz/en/trade/fr...d-china-trade/

China is the world’s second largest economy and most populous country. Its sizeable and growing middle class offers significant opportunities for New Zealand exporters and investors.

https://www.seafoodsource.com/featur...w-to-get-there

Here’s what we’ll need for seafood in 2030, and how to get there

Come 2030, the world’s population will require 232 million metric tons (MT) of seafood, around 62 million MT more than the planet is expected to produce unless bold steps are taken, according to international research organization WorldFish Center.

https://www.scoop.co.nz/stories/BU22...id-impacts.htm

Sanford 2022 Full Year Results: Perseverance Produces Significant Recovery

file:///C:/Users/laxan/Downloads/SAN140-Annual-Report-2022-FINAL.pdf

Our high-level business model can be described as very simple. We harvest wild and farmed seafood, convert it to a desirable product and send it through our supply chain to customers nationally and internationally

https://www.marketwatch.com/press-re...023-2023-06-15

2030, Fish and Seafood Market Size | Industry Report 2023

Published: June 15, 2023 at 11:44 p.m. ET

Global Fish and Seafood market size was valued at USD 171864.14 million in 2022 and is expected to expand at a CAGR of 4.03% during the forecast period, reaching USD 217878.11 million by 2028.”

https://finance.yahoo.com/news/froze...140700678.html

Frozen Whole Fish Market to Witness Steady Growth through 2030: Increasing Demand, Cold Chain Advancements, and E-commerce Drive Expansion

According to the report, the global frozen whole fish market is expected to grow steadily through 2030, driven by increasing demand, advancements in cold chain infrastructure, and improvements in packaging and transportation methods. The report highlights key growth drivers, challenges, and factors affecting demand, as well as providing a comprehensive overview of the major consuming industries and their impact on the market.

One of the primary growth drivers for the frozen whole fish market is the increasing demand from consumers for convenient, high-quality, and affordable protein sources. The rise in disposable incomes and urbanization in emerging markets has contributed to the growth in demand for frozen fish products. Additionally, the adoption of e-commerce and online delivery platforms has made frozen fish more accessible to consumers worldwide.

https://finbox.com/NZSE:SAN/dividends/

Dividend history details

[ralph]

Interesting in that report the green lipped mussels are not meeting expectations volume wise, but still an Increase in profit in the mussels segment ,as they cannot produce enough .
It is looking to be much better for H2

[iceman]

Valuegrowth. The seafood industry has had historically high seafood prices and demand for most species for the last 2 years. Many seafood companies worldwide have been making lots of money and buying more quotas and new vessels. Sanford has not been making any meaningful money, has been selling quota assets and continues to run an outdated fleet and factories.
I'm happy to watch from the sidelines.

[BlackPeter]

...

PE ratio of SAN(6.3x) is much below the market. Trading at good value when compared to peers(peer average 33.3x) and the industry. At least it should trade at fair PE ratio(between 10 to 15). This is not a highly leverage company as well. When compare with market, sector and peers, it’s very attractive to me. Peer comparison is a great way to find attractive stocks. On top of that it’s also a company in the defensive sector.

...

https://finbox.com/NZSE:SAN/dividends/

Dividend history details

If I look at the long term (10 years) average PE of SAN, it is currently at 12.4, and if I use the analyst predictions, the forward PE is 12.5. Not so cheap. Always dangerous to make decisions based on one years results.

I assume you realise that their good earnings last year came from selling quota.
Do you understand that without quota they have no business? So, just wondering how often they can repeat this exercise before they are out of the industry?

But lets face it - a low PE (even if it is not just a blib) can mean a lot of things. It could mean that the market is nuts, and you are the only one seeing value, in this case, go for it.

It could however mean as well that the market does not expect the company to maintain these earnings (always forward looking) - expecting either the business to go down or foreseeing some really expensive investments just to stay in business.

Did you consider this second option in your analysis? From memory - the SAN fleet is aging and they have a history of buying overpriced and unsuitable (for the purpose) ships.

How many new ships you think they can afford before they eat all their potential earnings?

Is it a good time for them to make in the current situation some really big investments, or should they buy another piece of overpriced junk? What would you like to see as shareholder?

While it currently looks like most shares are going up (the thing with the tide and all boats) - SAN seems to have (just looking at the SP) a leak ... guite dangerous situation for a company relying on ships.

I personally would think there are certainly safer bets around - but anyway, good luck!

[Valuegrowth]

Thank you Iceman, Blackpeter for the information. I love out of favour stocks.