Very quiet - hope to get the ball rolling - here is a review by...

Very quiet - hope to get the ball rolling - here is a review by comsec for those who havent read it

Tassal Group Limited
Last traded: $1.61 Sector: Consumer Staples Market cap: $163M
Buy Price target: $2.60
Summary of previous report dated 23/0210
A question of fixed cost leverage
TGR reported a disappointing 1H10 result (NPAT down 11.8%) based on higher costs (feed and Superior
Gold import costs), tight export margins and increasing retail rebates. A 4cps dividend was declared.
We have reduced our FY10 forecasts in line with the lower 1H10 result but left future years forecasts
largely unchanged. We have increased our net debt to $91.2m (up $20m) and removed our assumption
around three years of underwritten DRPs (now assume 2H10 only). Our new DCF valuation and price
target is $2.60 per share (down 5.5%).
TGR well positioned to expand its margins
While the increased cost of finished goods and retail expenses surprised on the upside in 1H10, it was
clear before the result that 1H10 would be a difficult earnings period. Over the long term TGR is well
positioned to expand its margins through the benefit supplying Superior Gold and the increased fish
biomass from the new hatchery. Domestic salmon volume growth continues to show no signs of abating.
In light of the long-term positive outlook and the steep discount to market (9.1x FY10 EPS, 57% discount)
that TGR is currently trading on, we retain our Buy recommendation.