My personal views on articles,Macro news and Micro News related to stocks, bonds, securities and bizs I am vested in or about to invest in.
My1cG (My 1c Gibberish)
DYOR (Do Your Own Research)
DNAITB (Definitely Not An Invitation To Buy)
Will be interesting to see the results on Monday. PARD biz model generates FCF, which can be used either for acquiring better long term biz (which in turn generates more and better future FCF) or they can pay divds. Th trade off now is 1/3 for divds. The danger as always; is if they overpay, either on EV/EBIDTA terms or PE terms. The absolute price has dropped from AUD 1.78 to AUD 1.58, so that should be viewed positively.
I was thinking about this, as the quota catch is limited by the govt of the fishing country, looks like there wouldnt be any increase in earnings.
With additional quota, from aquisitions of other fishing companies + involving / investing in aquaculture. Looks like they are on track to grow the EPS in coming years.
I won't compare with PARD valuations but with the target acquisition's PE and EV/Ebidta, as long as they are around 9-12, that will be reasonable, in this climate.
One observation I wish to share.... In the free oceans the target acquisitions are very commodity-like fish such as anchovies (oops!), Chilean Jack Mackerel (CJM) and Alaskan Pollock (AP). AP started as a commodity fished for fishmeal purposes, but is now commanding prices in the USD 1400/t range. Same as CJM. Even fishmeal prices, themsleves, the base commodity in the food chain, are trending up!!
As for aquaculture, they are going for "uppity" salmon, those that will command high prices for Asia's rising affluent.
So, yes, altho ITQs may be limiting eventually, there are other avenues for EPS growth; as long as the prices of the fish types (dependent on demand for fish as a source for food/proteins) are NOT outstripped by the rising operational costs.
8 comments:
I like the idea!
buying using internal cashflow again!
Will be interesting to see the results on Monday.
PARD biz model generates FCF, which can be used either for acquiring better long term biz (which in turn generates more and better future FCF) or they can pay divds.
Th trade off now is 1/3 for divds.
The danger as always; is if they overpay, either on EV/EBIDTA terms or PE terms.
The absolute price has dropped from AUD 1.78 to AUD 1.58, so that should be viewed positively.
I was thinking about this, as the quota catch is limited by the govt of the fishing country, looks like there wouldnt be any increase in earnings.
With additional quota, from aquisitions of other fishing companies + involving / investing in aquaculture. Looks like they are on track to grow the EPS in coming years.
I am a happy shareholder actually.
Agree with the overpaying. But it isnt easy though, i feel, with PARD low valuation.
I won't compare with PARD valuations but with the target acquisition's PE and EV/Ebidta, as long as they are around 9-12, that will be reasonable, in this climate.
One observation I wish to share....
In the free oceans the target acquisitions are very commodity-like fish such as anchovies (oops!), Chilean Jack Mackerel (CJM) and Alaskan Pollock (AP).
AP started as a commodity fished for fishmeal purposes, but is now commanding prices in the USD 1400/t range. Same as CJM.
Even fishmeal prices, themsleves, the base commodity in the food chain, are trending up!!
As for aquaculture, they are going for "uppity" salmon, those that will command high prices for Asia's rising affluent.
So, yes, altho ITQs may be limiting eventually, there are other avenues for EPS growth; as long as the prices of the fish types (dependent on demand for fish as a source for food/proteins) are NOT outstripped by the rising operational costs.
My1c
Correction on my previous comment post.
Should read that I am comfortable with PE range 9-12 and EV/EBIDTA range 6-9.
S&P revised chinafish outlook to negative.
:(
Not a concern, IMHO.
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