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$3.71 huon aquaculture group limited

HUO upside potential, page-5

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22/10/19

22:16

Post #: 41018158
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Originally posted by stan255: ↑

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.

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Agree, Huon is too expensive of a stock, high borrowings and dividends and capital management.

HUO Price at posting: $4.44 Sentiment: None Disclosure: Not Held
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