Great posts @bug1 as per usual, thanks for your thoughts.
Couple of things that jumped out at me from your prawn valuation:
- EV/EBITDA of x8 is about right for a mature business like salmon. In 2030 at 20,000tonnes that would make sense. Prawns could get a higher multiple because risks are lower relative to salmon, and there is less maintenance CAPEX required. But as a conservative guess, I think that's spot on.
- On maintenance CAPEX, you have not included that in your estimates above. It should be around $20m per annum at scale. That's less than the $50m per annum for salmon, reflecting the lower ongoing costs of RAS vs ocean based farming. This will impact your NPAT but not EBITDA.
- As prawns are currently in a growth phase, the EV/EBITDA multiple should be higher. This could be as high as x14 at the current growth rates in my opinion. In any way, I have estimated the prawns currently worth around $1 per share using some conservative figures. If you wanted to be moderately bullish, you could use 5000tonnes, $6 EBITDA/KG, $30m EBITDA, and EVx12 = $360m which is around $1.70 per share based on 214m shares including option rights.
The discussion from @desertredlion and The Call is spot on. They have no idea, and put little time in to it. But, that is also not where fund managers make their decisions.. so doesn't really mean much. I'd just note that I do agree Huon was a better takeover target. It was relatively cheaper, more exposed to the cyclical upswing with exports, one major shareholder, etc. But that doesn't mean it's a better business, and it definitely doesn't mean it has a better long term growth runway.
The shorts may also be right.. just keep that in mind. They have continued to be correct from $4.90 in 2019 to $3.40 now. That is really short term however. They are not betting on prawns in 2030, they are making bets on the stock price movement prior to the next reporting cycle. Who cares, I hope they're right, and I may buy even more. I still feel I can underwrite an increase of 17.9% CAGR on Free Cash Flow from FY22f-FY30 (I excluded the Covid dip). Neither the shorts or Goldman Sachs are betting on that.
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