You're on the money there McQuade. Couldn't agree more. And I...

You're on the money there McQuade. Couldn't agree more. And I wrote my usual FinTwit thread on it this morning for those interested.

Management have outlined they expect 50% of operating earnings to come from prawns by 2030. Currently it's only 7%, but it is growing very rapidly. There is also the new foray into seaweed, which is only 300t / $6m of revenues this year, but could be quite substantial over the coming decade. So management reckon their runway is much longer than a pure salmon-play, and that their growth rate is substantially higher. My estimates is that Tassal could ramp up to around 14% CAGR over the next decade, while a pure-salmon play will be around 6-7% based on population growth, substitution effects (from other protein to fish), and wealth effects (higher protein diets).

So let's back that out. Comparing it to Grant Thornton's assessment of Huon on a salmon-volume-basis, Tassal was worth ~$4. But that was with a 40% discount due to the ownership structure (?), and didn't appropriately factor in Tassal's lower cost of production. My guess was it was around $5.20 on a fair comparison basis. Then add in the prawn growth strategy, which means Tassal should be on a higher multiple. And optionality value for seaweed and other potential verticals. To my mind, fair estimates are closer to around $7 in 2025 and $14 in 2030.

So what's the fair value today? Well management reckon the higher growth rates and long runways are worth a lot more than the $4.85 bid they copped from Cooke. Goldman Sachs will no doubt up their $4.65 TP now they have been brought in as advisors for Tassal. I wouldn't be surprised with FIRB approval to see other internationals coming into the fray, like the Norwegians that would love to have an all-year-round China market to supply. Personally, I won't be buying more today, but I also won't be selling at below $6.