Norwegian Valuations / Pricing, page-23

Hey CSS Shareholders,

I read this forum post with real interest. I am a huge fan of aquaculture, and in fact my first foray into it was via Clean Seas *Tuna* back in '08 I think. Now I am holding TGR and AS1, and looking out for other opportunities. CSS remains on my watch list, but not there yet.

@Wktp and @@fyffee Thank you for sharing your models. Couple of questions - why are you forecasting the cost of production at ~$9.kg? It's over $12/kg at the moment. I understand it was $15/kg because of the inventory from Covid period, but normalising their current cost of production on the current scale gives me $12/kg still? The company in their recent presentation said they aim to be operating cash flow positive in FY22, which means that they are expecting the Price vs COGS to be equivalent, and definitely not a $7/KG operating profit margin prior to SG&A? Barramundi and salmon are much more efficient and only achieve around $4/KG. Is there something I have missed?

I spoke with some research scientists last week, one of whom did his PhD at CSS, and they reckon the waters are slow for growth. Essentially, lunar tides can create oxgyen depletions in their pens, while the cold waters slows growth during winter months. These technical barriers may be the cause for production to be growing slowly - not sure, keen to hear your thoughts. But from my observation, seems the growth in revenue/sales was only from inventory build up which is now coming to an end; their nameplate capacity of 10,000t feels pretty far away. If they can sort that out, then this could be a real game changer.

Finally, I didn't see anyone factor in CAPEX for the FCF calculations. Any guesses as to the maintenance CAPEX and growth CAPEX for next few years? That'd help understand their cash flow position. Clearly Hosfeth and the Norweigans are investing for a reason, but still not sure why. Tks!

P.S. DM me on FinTwit if you want to discuss more.