Article on Tassal in the AFR today...Market dynamics positive...

Article on Tassal in the AFR today...

Market dynamics positive for Tassal Group

Tassal Group is no longer tied to “the vagaries of the volatile export salmon price,” JPMorgan analyst Armina Soemino said in a research note to clients on Thursday.

Soemino notes data from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) and industry feedback has revealed that the domestic salmon market is about 10 per cent under-supplied.

Global salmon prices used to dictate whether domestic competitors exported production or tried to sell domestically, but demand and therefore pricing is much more favourable in the domestic market than the export market.

“This means that all domestic salmon producers are now able to move production in Australia rather than exporting ... the global salmon price no longer influences Tassal’s earnings.”

Soemino reckons these market dynamics are likely to remain favourable until 2018 financial year, given the three-year harvest cycle of salmon.

JPMorgan has an “overweight” recommendation on Tassal and $3.70 price target.

Tassal rejected a takeover approach by private equity firm Pacific Equity Partners in late 2010 at about $1.80 a share.