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  1. #21
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    Quote Originally Posted by Aaron View Post
    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.
    No Aaron they do not and no conflict of interest at all. Amalgamated marketing used to own 50% of Amaltal Fishing Co with Talley's owning the other half. Talley's bought them out a few years ago

  2. #22
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    Interesting to see that the CEO has spent just under $ 1.8 million buying shares in SAN, in the last 2 months and the Marketing GM just over $ 200k. They continue to buy so must think current SP is good value. I agree with them, despite the ridculously strong NZ$, and keep adding to my holding.

  3. #23
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    Quote Originally Posted by iceman View Post
    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.
    If 2011 was disappointing 2012 is much the same. $NZ not looking like it will get any weaker with Japan's new PM not even trying to hide the fact that he wants to destroy the value of the yen. Still dividend maintained in what was another difficult year and $20mill reduction of long term debt. Good to see managing director showing some faith in the company and buying more shares. At what price would people value this company? Does the low return on equity matter if your getting a decent steady dividend. Govt quota system must work in favour of the larger fishing companies as they buy it up creating a barrier to new fisherman.

    Using my dividend valuation model(D/(required return-growth rate) a divvie of 23cents and a required rate of return of 8% gives me $2.88 per share. A 3% growth rate gives me $4.60. Dividends haven't grown for the last five years and total equity has only grown 6% over that time. I guess this means a value closer to $2.88 than to $4.60. I actually would prefer a return closer to 15% but in the current environment where can I get that. Gold speccies have resulted in large losses which make Sanford look good in comparison. Chasing a high return has not resulted in a better return. This company looks slow and steady but at least it is reliable.
    Other peoples valuations much appreciated.
    Last edited by Aaron; 23-12-2012 at 12:25 PM.

  4. #24
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    Quote Originally Posted by Aaron View Post
    If 2011 was disappointing 2012 is much the same. $NZ not looking like it will get any weaker with Japan's new PM not even trying to hide the fact that he wants to destroy the value of the yen. Still dividend maintained in what was another difficult year and $20mill reduction of long term debt. Good to see managing director showing some faith in the company and buying more shares. At what price would people value this company? Does the low return on equity matter if your getting a decent steady dividend. Govt quota system must work in favour of the larger fishing companies as they buy it up creating a barrier to new fisherman.

    Using my dividend valuation model(D/(required return-growth rate) a divvie of 23cents and a required rate of return of 8% gives me $2.88 per share. A 3% growth rate gives me $4.60. Dividends haven't grown for the last five years and total equity has only grown 6% over that time. I guess this means a value closer to $2.88 than to $4.60. I actually would prefer a return closer to 15% but in the current environment where can I get that. Gold speccies have resulted in large losses which make Sanford look good in comparison. Chasing a high return has not resulted in a better return. This company looks slow and steady but at least it is reliable.
    Other peoples valuations much appreciated.
    Thanks for your comments Aaron. I am overseas and have not had a chance to look at the report in detail, but you are right, it was another disappointing year. A huge negative contribution was caused by the charges laid by the US Government against the pacific tuna fleet. If you take lost catches during high season and add them to the direct costs outlined by the Co, we are looking at a very large number. I reckon no less than $ 10 mill this fiasco has cost the company. But despite this, I am with you that Sanford is a good steady dividend payer and in all likelihood will continue to be so in the future. Having said that, I sold my holding at 4.50 a couple of days before XD ! However, more a result of needing cash for Christmas than any negative sentiment towards this investment ! I will be back in again in the next few months I expect.

  5. #25
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    Lizard, Catalyst, Snoopy etc does anyone mind giving their value for this company or the reason they wouldn't take the time to give it a quick look, such as risky industry, low return on equity etc.

  6. #26
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    Quote Originally Posted by Aaron View Post
    Lizard, Catalyst, Snoopy etc does anyone mind giving their value for this company or the reason they wouldn't take the time to give it a quick look, such as risky industry, low return on equity etc.
    I'll leave this to you and iceman .....you both seem to be believers ....so stick with it and don't let the likes of me change you mind. One year you might get lucky but I can't see any long term above average returns from San

    I give it another quick look but nothing of late inspires me to spend any more time than that .....nothing even to see it worthwhile updating my financial model for them

    Too many variables outside of their control for my liking and a business that for a long time has only achieved low roe. How can you get exited about normal ebit trend of 44 /54/ 30 / 26/12/32/39/25/22/20 over the last decade?

    Granted they at least make money but even in good years seems to have some 'bad luck' that stuffs the result ....so always some good stuf but invariably some bad stuff.

    All shows up in the 20 year chart ....the 10 year chart ... The 5 year chart ....and I can see the next 5 year chart looking the same

    Nobody has provided a compelling story to get me excited

  7. #27
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Aaron View Post
    Lizard, Catalyst, Snoopy etc does anyone mind giving their value for this company or the reason they wouldn't take the time to give it a quick look, such as risky industry, low return on equity etc.
    What's you value aaron

  8. #28
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    It is not a growth stock, the lack of an increase in dividend or the equity of the company shows this over the last few years. In fact profits are declining and revenue is pretty stagnant. I have used the dividend valuation model above. My problem is deciding on the capitalisation rate and whether there should be any growth. If you didn't expect growth of at least 3% (inflation) then it wouldn't be worth it. They haven't shown an ability to do this but I think seafood in a world that is still growing should be positive.

    I would be happy buying at $3.50 but looking at the charts this might be unlikely to happen anytime soon unless something really bad happens (and I would have to have a rethink) so I would extend it to $3.80. At $3.50 with the current no growth in dividend that is a 6% yield (better than the bank with a possibility of growth) or per my div valn model 9.5%cap rate and 3% growth.
    Sorry Sparky I haven't tried the PEG ratio test but I imagine SAN would do poorly.
    The other thing I like is the price to book value and the Net assets per share of $5.94(30/9/2012). Normally I would take out intangibles but SAN's intangibles are mostly quota which currently have a real value and I think they can be leased out if not fully utilised by the company. Usually if the govt is involved there is money to be made but value can be destroyed as well. (I don't know what the greens view on the quota system is for example). This provides me with some piece of mind that I am buying $5.50 of assets for $3.50 to $3.80. If the return/yield on these assets increases next year then it is all good. Although a high NZ dollar might make this hard.

    Disclaimer I hold SAN shares and purchased these at significantly more than $3.50 so am disappointed in myself as I didn't purchase based on any rational basis but I am hoping to improve one day and will add to my holding if market sentiment goes against SAN. I am starting with a simple div valn model as it is easy but very subjective. I can change growth rates and cap rates to get a valn I am happy with but it can also show whether I am being unrealistic or not. For example 3% growth after looking at the five year comparison might not be realistic. I am probably just being optimistic about future growth but if I wasn't I wouldn't buy. Also am trying to be a share investor rather than trader so I am always looking to hold long term in good companies.
    P.s. trying to be conservative but ignorance of company risks probably means I am unaware of how risky my investments are.
    Last edited by Aaron; 27-12-2012 at 08:53 AM.

  9. #29
    Speedy Az winner69's Avatar
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    AAron - you mentioned long term investment

    Just for you the returns from holding SAN over multi time frames are in the table below (rainig today and a bit bored but enough to convince me SAN not for me). Since 2001 and includes dividends (not reinvested and no taking into account tax benefits)

    RED is negative returns .... pinkish is less than 5% and yellow highlighted the only periods when returns have been above 10% pa - minimun return in investing in equities i use (equity risk premium and all that sort of stuff)

    Note that you only get good (even if not all that good) returns when the investment period starts at a low point for the share price ...... so you have the right idea in waiting until SAN is more reasonably priced.

    Except for traders and a few clever (or lucky) people who picked the lows SAN has generally bad investment this century

    But don't let me put you off .... you seem keen and have an investment thesis of sorts so stick to it
    Last edited by winner69; 27-12-2012 at 10:20 AM.

  10. #30
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    Thanks Winner, appreciate the response, probably not a good time of year to ask questions with everyone on holiday.
    Returns are pretty poor. If they can't impove earnings then dividend and shareprice will remain poor. History would say they have had the chance to improve earnings over a number of years and not done so. I guess that is a more reliable indicator/guide of future expected earnings/returns than optimistic hoping for improvement next year.
    I will continue to hold and would still consider buying more if it goes below $3.80.

    I will get back to you on this in a years time when the next annual report comes out. You can tell me that "you told me so" if SAN continues in the same fashion and I appreciate your views as they all help me to form my own opinion.

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