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  1. #11
    Member tobo's Avatar
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    Yes, you are taking the big picture: ongoing operational issues (US Coastgaurd legals, virus affecting young oysetr supply etc) will be dealt with by management; the substantive issues are continuity of business equipment (incl updating vessel), fish stocks, and future markets and sales prices

    re: foreign charter vessels - From Annual Report I note that "these make up only 8% of the Company’s fleet and foreign crew represent only 8% of our workforce, these vessels and crew play a vital role in our operations as a whole"

  2. #12
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    Quote Originally Posted by tobo View Post
    Yes, you are taking the big picture: ongoing operational issues (US Coastgaurd legals, virus affecting young oysetr supply etc) will be dealt with by management; the substantive issues are continuity of business equipment (incl updating vessel), fish stocks, and future markets and sales prices

    re: foreign charter vessels - From Annual Report I note that "these make up only 8% of the Company’s fleet and foreign crew represent only 8% of our workforce, these vessels and crew play a vital role in our operations as a whole"
    Yes tobo it is "only" 8% but they catch species such as Squid that have highly fluctuating catch rates year to year and Mackerel that requires large vessels with high capacity, something our domestic fleet is not geared up to do at present. It is hard to justify such investment with our high local costs and the limited opportunities for such vessels 12 months per year, which of course is an absolute must to make it economically viable.

  3. #13
    Senior Member Marilyn Munroe's Avatar
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    Quote Originally Posted by iceman View Post
    It is hard to justify such investment with our high local costs and the limited opportunities for such vessels 12 months per year, which of course is an absolute must to make it economically viable.
    Why not bare hull charter a suitable boat for the season and crew it with Kiwis? I am sure that if this was done most of the unwelcome attention brought on the industry by foreign fishing vessels and crew conditions would fade away.

    Boop boop de do

    Marilyn

  4. #14
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    Quote Originally Posted by Marilyn Munroe View Post
    Why not bare hull charter a suitable boat for the season and crew it with Kiwis? I am sure that if this was done most of the unwelcome attention brought on the industry by foreign fishing vessels and crew conditions would fade away.

    Boop boop de do

    Marilyn
    It is difficult (or impossible) to bare boat charter such vessels and move them to NZ for short periods. Also highly risky as the Squid catches are very unreliable and some years are complete disasters. The cheaper to run foreign vessels can be sent to catch other lower value species when this happens whereas a vessel crewed by Kiwis could not pay the bills that way. I am afraid that the foreign charter vessels will remain part of the industry for years to come

  5. #15
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    The CEO spending $170k of his own money buying shares in last few days. Great to see he thinks like I do that this company has been oversold and is now a good buy !

  6. #16
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    Just looking at the financial statements and the Key performance Indicators show over the last five years tonnage increasing 74%-416% on various categories of fish yet Revenue increased only 26% over the same period, profit increased only 11% over 5 years (at a time when inflation must have been close to 3%). Return on Equity is 4.1%.
    Dividends including imputation credits were 32.86cents per share or 8% at today's prices.

    Exchange rates can't be the only factor surely. Fish prices must be pretty static with at least a 74% increase in production you would expect turnover to rise by an equal amount if prices stayed the same (give or take exchange rate fluctuations).

    The US and other nations are trying to devalue their currencies making matters worse for SAN.
    Net Assets are $5.87 and this includes intangibles like quota and licenses which are saleable but at the mercy of govt interference.
    If dividends aren't growing the dividend valuation model comes up with $2.19 to $3.28 based on a capitalisation range of 10% to 15% (although $4.10 indicates an 8% capitalization rate or a higher capitalisation rate and some growth).
    Based on another thread the dividend valuation model is not widely used.
    What price range would people put on this company and what basis would you use.
    What would be a consensus P/E ratio for Sandford and why.

    I have a feeling that food will go up as populations grow and get wealthier but do not have anything to back this up.
    Looks like Sandford is a price taker not a maker.
    Last edited by Aaron; 30-12-2011 at 02:24 PM.

  7. #17
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    Hi Aaron,
    I am a little confused looking at the numbers in the "Key Performance Indicators" which show an increase in production from approx 84,000 tonnes in 2008 to 96,500 in 2011 but total sales in tonnes for the same period have reduced from 102,500t to 96,500t. So in fact, the tonnage of export and local sales combined are around 5% lower in 2011 than in 2008. Obviously being produced into different product ranges now but makes year on year comparison hard to do reliably.
    I think some of the explanation of increased catch vs static revenue is that early in the period you mention, there were severe reductions in quota of some main species such as Hoki and Orange Roughy. Sanford has during this time had to direct their local deepwater vessels to lower value species but the good news are that the Hoki stock , a strong contributor to Sanford's revenue, are on the way up and have been for 3 years now.

    Despite the disappointing earnings for 2011, due to many factors both external and unforseen operational issues, it is pleasing to see a very good cash management result in a $48m positive cashflow, justifying maintaining the dividend at same as previous years as well as paying a $25m term loan. With Pacifica Seafoods now fully intergrated and starting to contribute ahead of forecast and a "steady as she goes" contributions from other parts of the business, I have all faith that Sanford will lift earnings to above 40c per share in 2012-2013, as they did in 2008 & 2009. Hopefully they will use that to maintain current dividend and reduce debt. Of course FX is a major factor and while the USD/NZD will probably stay historically high, even a slight reduction from last years average down towards 75c would make a huge difference to Sanford's bottom line, probably about NZ$ 10m annually.

  8. #18
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    Thanks for the reply iceman. I was comparing 2007 with 2011 just the production tonnage and the gross revenue.

    How do you value this company and decide on a price you are willing to pay?

  9. #19
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    I don't really have any formula for valuing this company's shareprice Aaron but I know the company well and follow operational issues fairly closely. I sold out my entire holding in SAN last June at $5.10 and have recently bought back in (now overweight) at an avergare price of $3.83. I look at this as a defensive investment with steady and low risk dividends (around 8% at my entry price and possibility for modest capital gain. But I also consider:

    # It has got a good steady management that are focused on the business

    # The Co is highly respected by its worldwide peers

    # The Goodfellow family has a long term holding close to 40% with much involvement and dedication to the company

    # They recently changed the management stucture which I think will result in more focus on an improved return

    # The Pacifica Seafoods purchase has been intergrated and started to produce good profits but more importantly, this purchase has left Sanford in a dominant worldwide position for Greenshell mussels. They have already managed to stabilise the market prices and most or all producers have now stopped low price dumping on the market, benefitting the whole industry

    # Hoki quotas are likely to go higher in coming years and most other deepwater species are fairly healthy

    # Fish prices have plateued for now but are not expected to go down

    # New Aquaculture legislation should see new allocations of water space (after years of zero growth) and Sanford will no doubt benefit

    # Government having finished Aquaculture reform now intends to focus on changes to inshore fisheries with the aim of making them more economically sustainable. Sanford as the biggest inshore fisher will benefit if this bears fruit

    #The deal with the Central North Island Iwi Cooperative gives access to a significant amount of extra quota

    # The Board has stated that after recent expansion they will now focus on debt reduction (hopefully increased divies in 3-4 years)

    Of course there are some issues on the negative as well and fishing is an inherently risky business, but on balance I think Sanford is a fairly safe bet on current share price.
    Last edited by iceman; 04-01-2012 at 08:43 AM. Reason: Spelling

  10. #20
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    Thanks Iceman.
    What about the goodfellow family. Amalgamated marketing buys and onsells fish I wonder if they are a big customer of Sandford the related party transactions note in the financial statements doesn't really shed any light on this. I would hate to think that a fellow shareholder was doing business at the other shareholders expense.

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