Sanford Earnings FC effected by FX changes

[Mitch]

Analyst consensus is $6.95. Actually - I think the higher dividends are already priced in (SAN was always at the dearer end) and if you look at it - a forward PE of 15 (with limited growth) does not make it really cheap either.

Obviously - markets pushed in the past lots of dear companies still higher (AIA anybody), but this time might be now over given that markets expect interest rates to rise.

Well said. I'm still on edge whether to buy or not buy into SAN. I see a lot of good things in the future for SAN with the new CEO nonetheless.

[percy]

After attending the AGM recently and reading the very well presented Annual Report, I am very confident that the new CEO and management team is making big progress in completely changing the way Sanford operates. I believe we are seeing a major transformation from a simple primary industry harvesting company to a market and customer focused high quality food supplier and increasingly also into health products such as fish oil and pet food.

Their change of focus from frozen fish to fresh top quality direct to supermarkets, fish shops and restaurants is already jumping ahead going from 7% to 9% of their wild caught fish this year. The great thing is that almost all of that increase is more fresh high quality fish being sold in NZ where the market for high quality fish is growing very fast, thanks to better restaurant customer awareness and the large increase in the NZ Asian population.

Salmon is all being sold in NZ and they can not meet demand. Hopefully they will be granted some more water space for more farms at Stewart Island (Big Glory Bay) soon. This is a very important part of the business and would be great to see further growth in it.

This “Focus on Fresh” as well as other initiatives are seeing much smoother and more profitable operations. They have so far increased the return per kilogram of greenweight catch from $ 0.35 to $ 0.50 and are aiming to double that again. A lofty but in my view an achievable goal over the medium term.

I see no reason why SAN can not in the next 3-4 years double their profit or say 60 CPS or so. That would also give room for a large increase in dividends which I believe we will start seeing rise next year.

I really like what I am seeing from the “new Sanford” and am a happy holder.

Thank you Iceman.
Excellent commentary.
And yes I brought a small parcel with the proceeds from selling AIA.
Very pleased to see the sp creeping up.
I think having the salmon farming at Stewart Island makes more sense than the Marlborough Sounds,where I believe the water is too warm.

[Marilyn Munroe]

I see their new second hand trawler San Granit is currently fishing the Chatham Rise.

Hopefully the expected increased performance and better yield from this vessel will encourage SAN to modernise their trawler fleet.

Boop boop de do
Marilyn

[forest]

Comforting to know even an experienced guru like yourself is getting into SAN. Let the creeping up long continue.

[iceman]

Agree MM it will be interesting to watch this vessel's performance. I hear they have been having some teething problems getting the factory up to speed.
I am a bit disappointed that they have gone for a vessel this old to upgrade the fleet. I would have liked to see a much younger vessel

Mitch, yes the "focus on fresh" is being implemented by the new CEO and his completely revamped senior management and new structure.

Welcome aboard Percy 😀

[Mitch]

Mitch, yes the "focus on fresh" is being implemented by the new CEO and his completely revamped senior management and new structure.

Has this "focus on fresh" changed cash flow in any way? more optimal you would expect?

[iceman]

They have managed so far to increase average return on each kilogram of wild fish caught, from 35c to 50c. Their lofty goal is to lift it to $1
So with that possibility and hopefully more water rights for salmon farms, I do not agree with Black Peter above saying they have little growth potential.

[Mitch]

They have managed so far to increase average return on each kilogram of wild fish caught, from 35c to 50c. Their lofty goal is to lift it to $1
So with that possibility and hopefully more water rights for salmon farms, I do not agree with Black Peter above saying they have little growth potential.

I agree iceman, I don't think that their goal of $1 average return/kg is too optimistic either.

[BlackPeter]

They have managed so far to increase average return on each kilogram of wild fish caught, from 35c to 50c. Their lofty goal is to lift it to $1
So with that possibility and hopefully more water rights for salmon farms, I do not agree with Black Peter above saying they have little growth potential.

... and hey - you might be right. Just looked at the (inspirational) NZK growth curve and put SAN (the yellow line) as comparison next to it. While SAN (in my view more fully priced) grows slower - both are clearly correlated and both are pointing upwards. SAN's 10% growth in 3 months are nothing to be ashamed of either. Their might be more money in protein than I thought.

Attachment 8593

Discl: I do like salmon ... and hold NZK ;

[forest]

BlackPeter so if you hold NZK you probably realise that on average 8 to 9% of their salmon dies because NZK fish farms are in marginal locations caused by high water temperature and low water flow.
Sometimes the casualty rates for NZK salmon can be over 30%. Apart from the cost of lost salmon to the business it is less efficient to have a product which comes to market at unpredictable quantities.

SAN Salmon fish farms are in the cooler waters by Stewart Island, an ideal location for growing Salmon.