Ahh so many questions @bug1 - email me, happy to talk you through it. valuedownunder(at)gmail.com
The main thing is seeing the forest from the trees: what's happening in FY30. FY22 may be a catalyst for re-rating, but FY30 is the target. If the long term numbers are even remotely correct.. then a $10,000 investment in Tassal today would be worth +$21,500 in FY23 and you would have received $14,000 in dividends. That's what a tipping point of free cash flow looks like - and even with those assumptions, there's still head room to pay down debt or invest in the next venture.
My key points is not that my FY22 is going to be bang on - it's just a forecast. I was wrong in FY21 because they didn't reduce their inventories as planned in 2H21. So once bitten, twice shy, I'm happy to underestimate.
- Production vs Sales: the difference is the draw down of 3,000t salmon from inventories, knowing we are targeting 2,000t - so could push that but again, I am conservative. That's reducing inventories from 7,000t to 4,000t - they need at least 2,000t as working capital. Similar for prawns, but there they need to INCREASE their inventory to meet working capital needs of supplying the big supermarkets. Note in Q1 they reduced their inventory rather than increased, so gotta make that up in the more productive parts of the seasons.
- CAPEX: I have included lease liabilities of $15m and maintenance CAPEX for salmon of $50m, and there is around $2m of prawn maintenance CAPEX. I think lease liabilities should be there, and yes it is a wee bit conservative but that's OK - this is a short sellers key point, so maybe they know something I don.t
- Debt could come down, you're right as they have just negotiated new longer term tenure at better rates. I had assumed linear increase based on total debt. It may be lower than that in FY22 and FY23, though looking into long term I can't see rates staying this low into perpetuity.
GLTAH. DYOR. If you think I'm wrong, tell me - please. I don't think I am right, but I also don't know where I am wrong. So there's all my models, all my assumptions, out to FY30.. and this investment seems pretty asymmetric to me from here.
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