Kudos to you for going through all that due diligence. @Hopeful9 ,@McQuade and others are great mentors to bounce ideas off.
ABARES released their latest Agricultural Commodities report. Worthwhile looking through their tables if you get the chance, as provides good overview of production and value trends by commodity/sector. They have done a specific focus on 'exports to China' to understand the level of diversification (or lack of!) across different industries.
For Salmon, it's an amazing story. Check out Table 23 (row 13), and you will see salmon exports climbing year on year. From a small start of $11m in 1989/90, it climbed up to $35mand then faded based mainly on wild harvest. But things took a substantial turn with the improvements in Australian aquaculture going from $5m in 2005/06, to $54m in 2010/11 (x10!), to $80m in 2015/16, and last year peaking at $191m in 2019/20.
Unfortunately ABARES doesn't provide for free the breakdown of salmonoids exported by country. While if you look at fish exports in aggregate China is the largest destination market now, back in 2015/16 it was mainly Vietnam and Japan. The change has only marginally come from additional fish exports, it's mainly a rebalancing from Vietnam to China. I did find a reference Australian exporting to China around 5,000t in 2016 and 1,500t in 2017, which would be somewhere around 30-50% of total export by volume. Similarly another reference to around $80m of salmon exported to China in 2017/18 (of the total $137m), so around 60%. Though supposedly Chile has taken some of that market share with their larger salmon since 2018.
There is a potential risk that China could impose trade bans on fish exports from Australia if the current trend continues. The thinking is that they could easily substitute with other markets (salmon isn't iron ore or wool), as merely 15% of their salmon imports come from Australia with the bulk coming from Chile, New Zealand, Argentina, and Norway. So definitely a risk on the horizon.
Overall though, Tassals has not been so wedded to the export market, which has preserved it's earnings in the current Covid-climate. It pivoted away from export and to focus on domestic markets a little while back, though the opportunity for expanding exports still remains. In 2017, Tassals announced they were opening up an export office in Shanghai/China, not sure what the status of that is as Tassals hasn't mentioned it since 2018 as far as I am aware? One reason why Tassals has been growing larger fish though is to compete more with Chile in the export/China market. I'd really be surprised if any trade ban had a significant or material impact as it's likely just to see substitution and distortion in the global markets.
TGR Price at posting:
$3.52 Sentiment: Buy Disclosure: Held
