Any JV or partnership has a negative and dilutive effect on the current shareholder value. The eps is negatively impacted because profits are being shared. And if the O/S is continually increased that also has negative pressure on the eps and pps.
Calculating the future pps is fairly easy for SHMP is super easy. As I’ve pointed out before every fully operational facility producing 6,000 lbs of shrimp per week supports .12-.13 in pps. Numbers, eps, O/S, PE, etc don’t lie. With the current state of the TX facility being only about halfway completed and not yet producing 6,000 lbs per week one could argue that SHMP is priced today at a premium and with the production potential factored in.
When SHMP builds another fully operational facility producing 6,000 lbs of shrimp per week then the price per share should be .24-.26. And you can do that math for every additional facility. Three plants = .36-.39, four plants = .48-.52, etc. Remember these are 24 tank, 48 harvests a year, 6,000 lbs of shrimp a week producing facilities. The LaCoste facility isn’t even a third of the way to a 24 tank facility.
Now let’s say a JV or partnership comes together and says, “we’ll give you x, y, and z” (build out costs, facilities, capital infusion, distribution rights, etc) in exchange for a 50-50 split of the profits. The production of 6,000 lbs of shrimp per week remains the same but the benefit to the shareholder is reduced by 50%.
Even if the deal results in setting up 20 fully, operational facilities across the entire East Coast SHMP shareholders would only see a gain of .06-.065 pps per facility vs the .12-.13 because of the profit sharing with the JV or partnership.
The bottom line is right now each facility adds .12-.13 to share price. There isn’t a JV or partnership that will make the pps more valuable. Just the opposite...partnering with others may sell more shrimp but the benefit to the shareholder is negatively impacted from today’s value.
A major question that’s been concerning me is F&Ts ability to produce enough pumps and monitoring stations in a timely fashion to meet an aggressive build out plan. It’s been almost 6 months since Lot 180 “cracked the code” and they’ve only been able to supply the Natural Shrimp LaCoste plant 3 pumps? In conversations I had with Peter back in February it’s “one pump per tank”. How are they going to be able to produce 24 pumps and monitoring systems for a new facility quickly when it’s taken them almost 6 months to produce three?
