Angel Seafood has the ultimate ASX aphrodisiac: a profit
Food & Agriculture
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Special Report: Angel Seafood’s 2020 is looking very valuable as growth plans begin to deliver some real pearls.
Oysters are reputed to put a little extra buzz into a romantic evening, but it’s a South Australian company rather than the shellfish which is being lusted over by connoisseurs.
Angel Seafood (ASX:AS1) is the largest sustainable and organically certified producer of Pacific oysters in the Southern Hemisphere. It grows organic Coffin Bay oysters which gourmands and gourmets alike are hungering for, so much so the company returned a maiden profit just 18 months after listing on the ASX.
Revenue has tripled to $4.3m through the production of 5.3 million oysters in the 2019 fiscal year as record prices in Australia didn’t deter lovers of the bivalve. The company is planning to almost double production sales in the coming year to 8 to 10 million oysters.
While its success to date has largely come from domestic markets by being the first in the industry to corporatise the production process, Asia is a new area where the love is coming from.
Angel began using its purpose-built export facility in Port Lincoln in the June quarter this year, making $56,460 in that short period via exports, largely to Hong Kong.
The company received “very positive feedback” from its initial Hong Kong venture and expects this year to expand into new markets in the region while building sustainable long-term relationships with export customers.
“Asia continues to represent a large opportunity given the demand for premium and certified organic oysters from Australia,” CEO and Founder Zac Halman says.
Demand for oysters is rapidly growing with production, worth about $US3.7 billion per year, not able to keep up with demand for the premium product.
“Key customers experiencing strong growth are soaking up any additional supply. Broader market demand means supply is our only constraint.”
Australia is the world’s 11th largest producer with less than one per cent of the global market, so there is significant room for Angel to bite into others’ market share in the premium market.
After listing in just February 2018, another key reason for its domestic leadership has been the ability to lead the local industry on satisfying ‘clean, green’ demand through their eco-farming practices. The company own multiple sites in South Australia, utilising the pristine growing environment that allows their oysters to consistently enjoy fresh, high-quality conditions.
They employ a systemised, eco-friendly farming approach that gives their oysters exposure to tidal flows to improve quality and feed.
Angel are certified as both organic and sustainable by National Association for Sustainable Agriculture and Friends of the Sea.
The company is tapping into the strong demand recently seen for luxury, organic and sustainable foods from Asian and Australian consumers.
Angel Seafoods are pioneers in Australia, championing a multi-bay system, redistributing oysters to locations as they grow and mature.
The multi-bay strategy is a first in Australia and allows Angel to optimise growth and conditioning, while simultaneously fast-tracking production to maximise asset utilisation and revenue.
The spat and juvenile nursery based at Cowell in South Australia, a 15-hectare area where up to 20 million oysters can be raised in sustainable, long-line baskets over 12-18 months.
The 12-hectare Coffin Bay location is the maturing ground where 2.5 million mature oysters are fattened up over 10-12 weeks.
And to the north is Haslam, a 7-hectare warehousing area which can hold 1-2 million mature oysters.
The heavy investment in real estate and successful execution of the multi-bay strategy represents a strong and extended pipeline for future sales and will be a significant contributor to producing profits in the near future.
Global oyster production is now at its peak since 2008, and it’s opportunely coinciding with peak production of Angel’s oysters and their convincing expansion plans.
“There are significant drivers for growth in Australia’s production,” Halman says. “Our key customers are looking to increase orders in line with customer demand and are soaking up any additional supply we can offer.
“Alliances with export channels are still in their infancy, with upside only limited by production expansion which is set to increase by 60-100% in the coming year.”
The company believes efforts over the last two years will start bearing fruit in fiscal 2020, and expects the coming year to be delicious.
The development of strong infrastructure facilities and a convincing operating environment positions them to start bearing pearls in fiscal year 2020.