Fishing for a bargain? These seafood small caps could be just the thing
Food & Agriculture
Food & Agriculture
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Humans are eating more fish per capita than ever before — up by a third to 20kg per person since the 1990s.
That’s despite over-fishing now affecting a third of the world’s oceans — which is in turn driving fish farming.
Aquaculture’s share of total fishery production in Australia grew from 27 per cent in 2006 to 43 per cent in 2016, according to the government figures.
“Most of the growth in supply has come from increased aquaculture production, predominantly from the Asian region,” says the department of agriculture.
While Australia’s fishery and aquaculture industry is a minor global player with a market share of less than 0.2 per cent, the industry is known for high value fishery and aquaculture products such as southern bluefin tuna and live lobster and abalone products.
With demand continuing to outstrip supply, it could be time to net yourself a few of these ASX seafood stocks:
Murray Cod (ASX: MCA) As the name suggests, these guys produce fish from NSW’s Murray River. To date they’ve mostly distributed in Australia — though last month the cod was sold for the first time in Japan and there are now plans for exports to the US.
At present they outsource production but are now building their own plant in Griffith. Murray Cod recorded a loss of nearly $300,000 last financial year although revenue increased threefold from $800,000 to $2.6m. The shares have more than tripled to above 20c over the past six months.
Mareterram (ASX: MTM) Fremantle-based Mareterram fish for prawns and scallops in WA’s world heritage area Shark Bay using 10 trawlers. They export their produce to local and Asian markets.
Last week the stock dropped to 17c — its lowest point in more than two years — after reporting an annual haul of estimated 540 tonnes of prawns — down from 830 last year. Despite a historically poor season, Mareterram says better quality prawns are bringing higher prices and it is focusing on cost-cutting and growth opportunities.
Angel Seafood (ASX: AS1). After listing at 20c in February this stock has strugged to stay above water — and is now trading at aroudn 15c. Angel exports oysters from farms in South Australia’s Coffin Bay to restaurants around Australia and Asia.
They have a unique farming process involving delicate selection and hessian bags that preserve quality. The company boasts of being “one of two sustainable oyster growers in the world”. Australia has a relatively low proportion of oyster production despite record prices and growing demand (0.3%).
Angel recorded a $1.1m loss last year on slightly higher revenue of $1.5 million amid tight supply of oyster larvae.
Huon Aquaculture (ASX: HUO) has been farming salmon in Tasmania for 30 years. The company listed in 2014 but the stock has drifted since 2017. Huon sells in Coles and Woolworths stores, online and at its own store in Tasmania.
Huon is reporting record revenue and profitability despite rocky relationships with local communities. Recently the company had to move its oeprations amid heckling by protestors. However, the State government is supportive of the company and the salmon farming industry at least for now.
Ocean Grown Abalone (ASX: OGA) supplies West Australian abalone (a species of sea snail) in markets throughout Asia, where abalone is in heavy demand. The company raised $10m in an IPO priced at 25c last year but is now trading at around 16c. OGA is pioneering “ocean ranching technology” which involves raising juveniles at a hatchery and placing them on artificial reefs where they are fed and monitored for growth. OGA wants to establish more reefs in South Australia and move into tourism.
Clean Seas Seafood (ASX:CSS) specialises in South Australian kingfish from the Spencer Gulf. The company this week signed a deal to sell its “exceptionally high quality” yellowtail kingfish to China following a distribution agreement with one a premium seafood distributor.
Their kingfish is a premium brand used by 2000 world-renowned chefs such as Gordon Ramsay. They sold 562 tonnes in the first quarter of the financial year — a slight decline from the 596 tonnes sold in the first quarter of last financial year.
However, they recorded an annual profit of $3.4 million and expect to be producing 4,000 tonnes of kingfish by 2021. While this is a lower production figure than Mareterram – kingfish are a premium brand.
Seafarms Group (ASX: SFG) have been a long-standing operator of prawn farms in Northern Australia for export to Asia. Last year it received a $25m investment by Japanese seafood group Nippon Suisan Kaisha to build a landmark shrimp farm called ‘Project Sea Dragon’. They ultimately want to produce 100,000 tonnes a year. In spite of $35m in revenue last financial year they produced a $19m loss.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.