Could not find thread for SeaDragon......hence this new one......
A $2.5 million cash injection has provided fish oil producer SeaDragon Marine Oils the scale to treble its capacity and expand into global markets, an investment research firm says.

An Edison Investment Research report on the Nelson-based company suggested a new fish oils plant, scheduled to be completed next year, would allow SeaDragon to diversify into omega-3 oils production.

The report said "the corner has been turned" for SeaDragon, with a $2.5m boost from an Australian bioscience investor providing the catalyst for expansion.

SeaDragon is the largest producer of refined fish oils in Australasia, but the report noted the company's historical financial performance was not promising.

Omega-3 oils were in strong demand worldwide, whereas the company's squalene production was predominantly sold in Asia, the report said.

The company produces hundreds of tonnes of refined hoki, and shark oil dietary supplements.

Last July, SeaDragon announced a three-way deal with Bioscience Managers and Auckland-listed investment company Claridge Capital.

Bioscience Managers agreed to invest $2.5m for 312.5 million shares in Claridge on the condition Claridge completed the purchase of SeaDragon.

Edison Investment Research analyst Jane Anscombe said the investment had seen the company recover from a long period of cash constraints and unprofitable numbers.

The company currently boasted net cash of $200,000 and a $3.75m shareholding in Snakk Media.

"SeaDragon is at a turning point, with a restored balance sheet improving profitability and strong demand from a large and growing market," Anscombe said.

"The real investment story is the potential for the group in the much larger omega-3 market."

Edison expected SeaDragon's revenue for the five and a half months to March 2013 would be $9.3m.

It said, however, that delays to the installation of the new plant, caused by supplier failure, had been frustrating.

The new plant was expected to be operational next year and at full production in 2015.

Edison's report said SeaDragon's outlook was tempered by caution over whether the company could consistently trade profitably.

"The strength of market demand is such that, unusually, SeaDragon's competition is for raw materials rather than for customers," it said.

"Its order books are full and we see upside to profit estimates."

Contact Hamish McNicol
Business reporter