Page 5 of their annual report : "This profit result was aided by a reduction* in aggregated capitalised costs of oysters across the four-year growth cycle. This current four-year cycle included the period of COVID-19, during which our Company implemented a low-cost model to ensure we were as lean as possible. While we recognise that this necessary approach is not a sustainable long-term strategy, it is important to note that the combination of higher average prices and reduced production costs contributed significantly to gross margin, and consequently, our profit result."
My understanding of the above is that the company is now in a situation where : - they fully benefit from the high increase of market prices, - and a low cost, due the covid period. This situation will not last, but it enables the company to accumulate very high free cash flow in the short term.
* remarkable to note that their cost of goods sold decreased by 5.8 % in FY 23, while prices increased by 26 % and sales volume was flat.
ATP Price at posting:
6.0¢ Sentiment: Buy Disclosure: Held
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