Even at 25,000t harvest, I still can't justify the current price for HUO.
Assuming:
1. 25,000t harvest
2. Raw material cost being 55% of sales
3. $15/kg price
4. Similar costs for the other expenses
EBIT would be around the $25-27m mark.
At around a 400m market cap, that would be a P/EBIT multiple of 15-16x. This is also expensive considering their ROE is around 10%.
IMO, the biggest factor that will improve their EBIT is the raw material cost as a % of their sales which should be around the 50% mark. But since their IPO, that % has been at the 57% mark.
I think the only thing holding this stock up is their biological assets and the capex that went into Whale Point.
HUO Price at posting:
$4.41 Sentiment: None Disclosure: Not Held
