SANford Chart

[Waikaka]

I have recently started buying some Sanford. Small stakes but enough to encourage me to start reading up.

PE of ~12, 3.5% dividend and generally free cashflow.

I really like the spread of markets they sell into. solid 40+% to NZ and they rest pretty evenly spread around the world.

Does anyone hate it and why?

[hogie]

I have recently started buying some Sanford. Small stakes but enough to encourage me to start reading up.

PE of ~12, 3.5% dividend and generally free cashflow.

I really like the spread of markets they sell into. solid 40+% to NZ and they rest pretty evenly spread around the world.

Does anyone hate it and why?

Company should do well even during this "economic pandemonium" ... it's my most recent new purchase.

[Sideshow Bob]

Company should do well even during this "economic pandemonium" ... it's my most recent new purchase.

Should have significant savings at the current oil price.

[iceman]

Good discussion. This is a strong company in an industry that will come out of this crisis better than most.
I disagree that they made a mistake when selling the quota in Tauranga. It was mackerel and some low value tuna quota and several outdated purse seine vessels that have never made money for SAN and would have required significant investment if it was to be successful. They also had a few of these vessels up in the Pacific and sold them as well.

The current CEO has been totally changing the direction of the company with a view of increasing value per kg caught and I think this has been a commendable goal. He has hugely increased local NZ sales to the top end restaurants of town and overseas, particularly with salmon, but also other species such as snapper and scampi. He's also done a great job with the changes at the Auckland Fishmarket. But like the rest of us, he did not foresee COVID-19 and the drop in demand from high end restaurants, so that strategy is backfiring a little.
Sales in this industry are basically shutting down of high end products going direct to restaurants in NZ, Australia, China, US and Europe while commodities such as fillet block is in high demand by supermarkets and, in my view, will only increase during this crisis. As an example, I'm on a large factory vessel that produces a commodity product and we have Japanese buyers guaranteeing they will buy whatever we can produce and prepay it as we catch it.

So the industry will remain strong and come out of this and SAN will be able to adjust, but their strategy of higher value may need to take a back seat for some time.

I have made my view of their recent (2-4 years) vessel purchasing decisions clear in previous comments, on the other thread I think. They have been appalling and caused me to sell my SAN shares a couple of years ago. They need to get their act together in this part of their business as they are running an outdated fleet and factories that require large investments. But they haven't given any confidence they know how to do this.

The drop in the FX rate recently will be a big boost for them. A few years ago it was talked about that a drop by 1c in USD rate equaled NZ$ 1m extra revenue pa for SAN. They now sell much more in NZ/Aus so I don;t know if this still holds true.

But overall a good strong company in a good industry with a CEO that I think sees what needs to be done. But so far his results have been a little disappointing.

Discl; On my watchlist but not tempted to buy just yet

[percy]

Thanks Iceman.

[Waikaka]

Just got lost in their 162 page annual report. Seems they have complex USD hedges and commodity swaps for the fuel oil might minimise the immediate benefits from the most recent low oil prices. Definitely help them in the future though.

Always end up down a rabbit hole in the annual report footnote and appendices. Really like the KPI charts but pretty disappointing that lost time injuries are at a 5 year high, they need to sort that out.

Tried to find out how much they sell to restaurants but it is not broken out in the report. Again another company that is hard to assess the impact of COVID19.

[iceman]

Just got lost in their 162 page annual report. Seems they have complex USD hedges and commodity swaps for the fuel oil might minimise the immediate benefits from the most recent low oil prices. Definitely help them in the future though.

Always end up down a rabbit hole in the annual report footnote and appendices. Really like the KPI charts but pretty disappointing that lost time injuries are at a 5 year high, they need to sort that out.

Tried to find out how much they sell to restaurants but it is not broken out in the report. Again another company that is hard to assess the impact of COVID19.

I would say a lot of that is due to the very unfortunate death of a crew member last year, causing their "newest" vessel to be tied up in port for many weeks to make it "safer". One of the several bad vessel decisions I mentioned above.

[ratkin]

Lots of good info today, will add them to my watch list. Nearly bought a few on the big meltdown day last week, wish I had now,but was wary of going in blind. Had skimmed over the fundamentals and thought they looked ok, but that was about the extent of it. Am sure there will be other opportunities in the not too distant future.

Many restaurants will go to the wall, and if this drags on they will have very few customers even when the lock down is over. This is situation I like as generally buy with a Ten year time frame, and the cheaper it gets the better.

No funding problems to worry about? Iceman mentioned the fleet a little sub par. If you took restaurants completely out of the equation would they still turn a profit on the supermarket stuff alone?

[iceman]

No funding problems to worry about? Iceman mentioned the fleet a little sub par. If you took restaurants completely out of the equation would they still turn a profit on the supermarket stuff alone?

Definitely no funding issues. Very lowly geared. To find the answer to your 2nd highlighted question you just need to go back to Annual Reports from 2017 or before to find the answer. Since then they've made big changes to their marketing strategy but little change to fleet or factories.

[Aaron]

Good discussion. This is a strong company in an industry that will come out of this crisis better than most.
I disagree that they made a mistake when selling the quota in Tauranga. It was mackerel and some low value tuna quota and several outdated purse seine vessels that have never made money for SAN and would have required significant investment if it was to be successful. They also had a few of these vessels up in the Pacific and sold them as well.

My understanding is probably pretty limited but with quota I understand you have to use it or lose it. I assume selling the boats and leasing the quota wasn't an option?