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that's true only if the water is not recirculated back into the main holding towers and fed back into the tanks thus minimizing the piping and pumping network required.
With all the IFs that I listed (1 year into OSE, strong institutional support ...) and with our fabulous Big Four behind us I donot honestly see why not. Always good to be cautious and conservative with your expectations but when I see all the ducks lined up I am not one to hold back a honest opinion. As always I may be wrong but that's how I see it today.
maybe they should schedule a 4-week delay and we could see a $4 gain at current pace hehe ?
type in a 6m chart:
http://finance.yahoo.com/echarts?s=SIAF#{%22range%22%3A%226mo%22%2C%22scale%22%3A%22linear%22}
bad decision IMO. Look at it this (speculative but reasonable IMO) way:
ETF at 10% yield: $100 invested today would yield $110 in a year provided pps stays unchanged in a year (not sure considering S&P500 now at a ATH after 6 straight years of gain)
SIAF: invest $100 today at $14.2 (=7 shares) MAY yield in a year with a possible pps of 10 x $7.5 eps = $75 times 7 shs = $525.
so stay with Siaf would mean in a year 525/110 = 4.77x compared to ETF !
JMO
I tend to agree with you re. the feasibility of future dividends Challe. I believe that one year or so after we are on OSE (say end of 2016, early 2017 assuming OSE listing by end of this year per Bertil) and with healthy institutional ownership with the help of our own "Big Four": Artic, Burnham, Bertil and Box Comm, this stock may very well trade at a P/E of 30 if not higher. Assuming a 2016 eps of 10$ (RD projected $11.7 I believe) and thus a pps of $300, our market cap would be about 6.6B USD or 51 BNOK, surpassing the current MC of the three largest seafood companies on OSE: Marine Harvest (42.4 BNOK, yield= 1.7%), Leroy Seafood (13BNOK, Y=4.7%) and Austevoll Seafood (8.7 BNOK, Y=5%). Since we will be spinning off and divesting the non-fish subsidiaries one after another bringing more and more cash into the company's coffer, I would expect Company to pay a dividend in par with other seafood companies on OSE, ie. a yield of likely 2% or higher IMO. Here is again the complete list of seafood companies currently listed on OSE for reference:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=113129145
IIRC I wrote about 2/3 of messages of that thread. I donot recall of another thread on the topic although I read this mb almost every day in past months.
snow: there is nothing unclear in what was stated in the 10k (page 121 re. the new loans). It did not say that Company was going to issue collateral shares for the loans which would mean new dilution (even if on a temporary basis). Instead the shares would be pledged by unrelated third parties.
There is a difference bw the company issuing collateral shares directly to the new lenders vs a third party like ECAB loaning their conversion shares to secure the loan in order to support the company and the LT. value of their conversion. In both cases those shs will be kept in an escrow acct and returned either to treasury or the third party. But in first case there will be a temporary ( 3 years which are a long time imo) dilution bc the os will increase until the shs are returned and eps in the mean time will be decreased by that dilution. Not in the second case. I still think that Siaf will draw the last tranche of ECAB in return of latter to help them out with not having to issue another 1.5 to 2m of collateral shs. I think the 750k shs they issued in March are shs that need to be issued anyway to ECAB conversion of the first tranche (about 7.5m USD) come Sep or whatever time is date of the first conversion.
That's not what the PR said. It said the loans are collaterized by shares belonging to third party shareholders who are willing to loan out their shares IIRC.
Did he akso say that they issued 750k shs in March to collaterize the new loan? This is not what the PR said when the loans were announced .
snow: true. I wouldn't mind at all seeing Siaf trading at PE comparable to Marine Harvest and Havfisk instead of a lowly 6.6 as implied in my post considering we are growing eps at a 30% clip in the next 4-5 years. Yes Siaf would be a bomb on OSE since it has real $$ eps and LT growth! But it may take a few years to gain traction on OSE due to past dilution history. So the p/s comp was meant to be a conservative view to determine a floor valuation at the beginning so to say. Here are the other OSE peers' valuation acc. to Redbull:
Havfisk 2 252 MNOK p/e 42,48 yield 0%
Marine Harvest 42 286 MNOK p/e 41,21 yield 8.8%*
Grieg Seafood 2 937 MNOK p/e 21,27 yield 1,9%
Austevoll Seafood 8 676 MNOK p/e15,63 yield 4.67%
Lerøy Seafood Group 13 044 MNOK P/e 12,35 Yield 5.02%
SalMar 13 539 MNO p/e 11,35 yield 8.37%
Bakkafrost 8 721 MNOK p/e 11,09 yield 3.87%
Norway Royal Salmon 2 680 MNOK p/e 10,5 yield 2.44%
The Scottish Salmon Company 917 MNOK p/e 6,51 yield 0%
* note Marine Harvest's actual yield is 1.7% since the 8.8% yield had a special dividend included.
yeah P/S is a fair comp b/w companies of widely varying eps (some with negative or near zero, some with near double digit $ like Siaf). Would be too unfair to compare P/Es when a company has a tiny eps yet growing revenues and eps with more mature companies with stable earnings IMO.
Mr Fister: here is a more objective perspective of how Siaf compares to three OSE listed peers of (currently) comparable market cap (see Redbull's message #87249 for details on more OSE seafood companies):
GSE: Grieg Seafood
NRS: Norway Royal Salmon
SSC: Scottish Salmon Co.
The last line represents the hypothetical case of how Siaf would stack up on OSE at a P/S of 1.1 comparable to that of the first two quoted companies (all prices in NOK or MNOK):
Stock pps P/E eps* MC P/S Yield %
GSF 28.8 23.1 10.55 3205 1.2 1.74
NRS 66.0 11.1 5.78 2832 1.1 2.29
SSC 4.74 6.4 0.58 917 0.53 NA
Siaf 105.3 2.4 58.3** 1790 0.4 NA
___________________________________
(Siaf 290 6.6 58.3** 4922 1.1 NA)
I donot think he will.
IHub may be one of the culprits of your running out of memory. It was my top usage taking over 2 gigs of my iPhone memory. I deleted it all and reinstated just a few of the MB I really need and cut memory usage by more than half . Fyi
thank you Z for the connections and the reminder about the tiger... makes sense to me.
it will take years and years to divest all the other assets. In the mean time the current structure is still operating and will be valued based on its 2014 eps and 2015/2016 financials. If we make it onto OSE this year we will likely be granted a higher PE but otherwise the business is still pretty much the same IMO. So I think 25-30 max 40 by year end is a good guess IMO.
Nice post Challe. Looking back I would say that last year was truly a pivotal moment in Siaf's history and for many of us longs as well. It all began with the Mega Farm (was it in March when the contract was signed?) then came the loan agreement with ECAB in August. I get shivers thinking where would the pps be today without ECAB ....
Agreed. It will probably take the whole 5-year plan to divest it all and be the fish only company they want to be in the future. That's why they have secured (with the help of ECAB imo) the backing of Nordic and US investment bankers and brokers like Artic and Burnham to get them the 100m+ USD they need in the next few years to buy a 55% stake in MF and 75% stake in the remaining demo farms among other things like expanding into other seafood markets and building out their import export network. JMO
Any idea what kind of eps growth is projected for Marine Harvest ?
I am very impressed by that choice. I agree with those who say that ECAB has been the best thing that has happened to this company. Yesterday's PR bears clearly FD's signature IMO.
Ah ok. Special divis donot count of course for the payout calc as a % of eps I did. So their regular yield is about 1.7%. At a PE of 41 the payout ratio is still a formidable 1.7 x 41= 70% of eps. I pointed out in the past that many income paying companies pay 50% or more of eps. I guess Siaf may second Marine Harvest in a non distant future with a high PE (>30) and a smaller but decent divi yield close to 2%. Let's see if we get there in a few years but the OSE listing is a good start in that direction IMO.
Yes but it will take a few years.
Thanks for the info. Are you sure about Marine Harvest? How can they pay a 8.8% yield at a 41 PE? That would mean they pay out about 3.6x of eps??
My view is if Siaf is still cash poor in the near future and is unable to get debt at reasonable terms then it shouldnt pay a dividend, period. Nobody forces it to pay a dividend. But if it can get a generous credit line or loans at low APR (3 to 8%) with the help of Arctic and Burnham and can afford to pay a dividend without hurting its growth it should make the yield decent enough to attract income seeking investors and institutions like many other food and agri companies. Considering its superior growth a low yield of 1-2% would be sufficient IMO, like Grieg Seafood at PE 21 and 1.9% yield. That would be my dream (albeit conservative) numbers.
Btw how many MNOK is 0.5 Bill USD? Am running
to catch agym class to look it up.
Is the new CFO fluent in English?
Agreed. In my mind that's the only logical conclusion if you think about all the collateral shares required for the $25m new loan? Which third party investor has 1.5m to 2m shares available for that purpose?
That's what I thought. Even if Norway consumes only 10% of that production it would still mean the average household eats 0.13 tons (or 130 kg) of salmons a year assuming Norway has about 1 million households!
Red: we sure need better stats on OSE fish companies' average PE and dividend yields. If it is true as was posted by some here yesterday that the average PE of OSE listed salmon producers is 10 (corresponding to a 5-year forward eps growth of 5 to 10%?) and an avg yield of 4 to 5% then that implies a payout ratio of 4x to 5 x10 = 40 to 50% of eps. Once Siaf has resolved its financing problems as an OSE listed company and the MF is on track to a superior annual production growth I cannot see any reason why it shouldn't trade at a PE of 20-30 by 2018-2019 on OSE. So if it wants to attract many Nordic investors and funds it must sport a competitive yield of at least 1 to 2%. Anything below that would seem too unattractive to most income investors. This means a divi payout in the range of 20 to 60% of eps. So the payout ratios you have assumed seem too low to me. I may be wrong.
Does it mean that Norway produces about 1.3 Millions tons of salmon a year? Or are there many producers that are not public companies? How much of the 1.3M MT is exported ?
Yes focus on our core aquaculture business with a listing on Oslo SX. I like that.
Can you give us some info about average PE and Market Cap of stocks listed on the Oslo Exchange? Are there different tiers like Nasdaq, OTC... there too? Thanks.
wow listing in Norway with the help of Artic, a new Norwegian CFO and a Nordic IR !! Looks like we will reach orbit some time soon?
Agreed. I was thinking along the same line and donot really want to see a second major investment that may be a major drain on our cash flow when it finally turns positive in a year or two. Just wanted to hear your take on that . Thanks for the reply.
You mean 300k before split?
Thank you for sharing your valuable thoughts and boots-on-the-ground observations. I am curious about your assessment of the SJAP spinoff re. possible timeframe, valuation and what exchange... Maybe you have had a chance of talking with S and George about that? Do you think we will possibly get a second Megafarm in the near future?
true Challe. Ask yourself if you were a fund manager who manages hundreds millions $ of other people's money and are held accountable for that every quarter, would you touch a too-good-to-be-true company that has a history of crazy dilution and doesn't issue any guidance ? What makes a stock reach its full valuation is institutional owenrship, not retail. Institutions want complete transparency, esp. re. eps growth not only one year out but if possible 5 years out so they crunch the numbers before they invest. I have the same problem with my other stocks, huge growth prospects but poor IR/PR and no guidance result in poor stock performance and a fertile ground for shorts and manipulators. It is no rocket science to understand that as you said.
The company must act in a financially transparent and accountable way to all its current and potential shareholders if it wants to be granted a fair valuation. That's the name of the game. There's a reason why we are trading at PE 2 and not 20 or more. How can they be accountable if they donot provide clear attainable goals at least for the short term so investors know what to expect? It's part of the financial discipline that they talked about. How can they attract institutional investors without providing minimum guidances they can be held to? It's time for Mgmt to show they are serious about financial discipline. Providing a guidance that can be met and exceeded is part of that. Enough with bad excuses and delays. If RD can do a 20-year projection for the MF why can't Mgmt provide a guidance for 2015 and beyond? It's time for shareholders to press this Mgmt to act in a more responsible and accountable way. Enough with delays and bad excuses.
what i mean is a floor eps guidance that we all can count on. If they end up with much higher numbers then that's fine with me. But no guidances at all? Who really needs pie-in-the-sky expectations or promises ? I need solid numbers I can bank on while I understand the limitless prospects. But I donot want to wait another 4 to 5 years to see solid results.
C'mon it's late April. I want see a guidance for 2015, not just talk ...
Fin: yes every thing takes some time for success to materialize as long as the right catalysts are in place that Carog has pointed out. One of the most important things for pps to take off is credible Guidance. If Solly can provide solid guidance for 2015 with Q1 ER we may see pps double to triple by year end IMO.