CSS - Clean Seas Seafood

[fiftyeight]

I was in and out of this when it went on its sp run. Looks pretty attractive again given where the price has fallen back to. The cap raise was done to grow the fish stock which takes feed, that's expensed not capitalised, so I'd expect it drag on cashflow. The main growing period is over summer so expect cashflow to tick up in q4.

You must of got on to this one nice early then.

I will have a re-read I assumed incorrectly the capital raising for the new facility. Cheers for pointing at that out. I am home next week so will have another read.

 

[fiftyeight]

I will have a re-read I assumed incorrectly the capital raising for the new facility. Cheers for pointing at that out. I am home next week so will have another read.

Selective memory playing up again. Had this slide saved, must get better at taking notes and reading said notes

 

[fiftyeight]

At around the 10 min mark Head explains that the marketing role out is about 3 months behind due to a change of the head of sales. Also that it was "bigger job than we thought it would be" with a marketing team is 1 person (poor audio quality). With new Aussie entrants to the market surely there will be a first mover advantage here and the Sales and Marketing team need to smashing down doors to take advantage of this. Not sure why they have a team of 1?

Wow, this one dude must be flat out!!!!

 

[greggles]

Let's see. 1,600 chefs over 16 weeks is 100 chefs per week, which means 20 chefs per day. If he does a normal 8 hour day and has 45 minutes for lunch and 15 minutes for morning tea that leaves 7 hours (420 minutes) for meetings. 20 chefs in 420 minutes is 21 minutes per chef. If you allow 1 minute of change over time (30 seconds walking out the door and 30 seconds walking in) that gives him 20 minutes of quality "one on one" time with each chef.

Busy, but doable.

 

[fiftyeight]

So first time looking at this stuff, CSS has been trending down since Oct 2017. Lately there has been a lot (I think) of insider buying.

On first pass this seems like a good thing. Or is there so much selling pressure coming in driving price down and the insiders are trying to absorb in an attempt to hold up the price?

Interested to know more experienced members thoughts? Possible cap raising coming and need to protect the SP, it is actually a good buy or it means nothing?

 

[galumay]

it is actually a good buy or it means nothing?

I believe there are better businesses in the sector, but CSS probably offers more upside (and downside) due to the stage of its development. I am not usually keen on commodity businesses, and live food commodity businesses are a bit like airlines for investors I suspect!

Its been a rough few years for CSS, whether they can transform the business into a profitable and sustainable business is the main question you have to ask yourself.

 

[fiftyeight]

Its been a rough few years for CSS, whether they can transform the business into a profitable and sustainable business is the main question you have to ask yourself.

So don't try and second guess what others motivations may be just come to my own conclusion.

 

[galumay]

So don't try and second guess what others motivations may be just come to my own conclusion.

If there has been strong insider buying then that can inform your analysis, I would want a bit more substance than that to make me a buyer of the business!

 

[fiftyeight]

If there has been strong insider buying then that can inform your analysis, I would want a bit more substance than that to make me a buyer of the business!

Yeah definitely, just another part of the puzzle

 

[john5]

i agree, there are better businesses than css, but, in general, aquaculture is a good long term play imo, as costs and difficulties rise for sourcing seafood from the wild, the market will increasingly turn to farming for this commodity, seafood is on the healthier range of meat options as world diet trends will eventually drive demand

 

[luutzu]

Who's interested in CSS? You shouldn't

@ducati916 this is what I reckon a purely speculative ag play is.

 

[luutzu]

Maybe it's just me, it's probably is just me... but I find the way CSS recognise its revenue to be quite... erm... fishy.

For one, can you really recognise as revenue the weight gained your fishes have gained? They're not sold yet, they're stillin their cages so why are they booked as revenue? Or put in a column where when you sum them up they're practically seen as revenue.

And assuming they're all sold and spoken for so it's totally legit to book them as revenue... WHY then are the gain also booked as your current asset?

I mean, if they're sold to someone else, they're no longer yours right?

If you hold this stock, you should really investigate. Its historical performance have been pretty bad for investors. Unless there's some miracle coming up... without continued support from shareholders i.e. continued capital injection... it's a gonner soon.

btw, I don't hold any shorts or have any interest in its competitors etc.

Community service

 

[Ann]

Maybe it's just me, it's probably is just me... but I find the way CSS recognise its revenue to be quite... erm... fishy.

For one, can you really recognise as revenue the weight gained your fishes have gained? They're not sold yet, they're stillin their cages so why are they booked as revenue? Or put in a column where when you sum them up they're practically seen as revenue.

And assuming they're all sold and spoken for so it's totally legit to book them as revenue... WHY then are the gain also booked as your current asset?

I mean, if they're sold to someone else, they're no longer yours right?

If you hold this stock, you should really investigate. Its historical performance have been pretty bad for investors. Unless there's some miracle coming up... without continued support from shareholders i.e. continued capital injection... it's a gonner soon.

btw, I don't hold any shorts or have any interest in its competitors etc.

Community service

Luu, loving those charts!

I reckon the thing is a gonner now, they just did a 1 for 20 share Consolidation announced 3/12/2018 on the ASX.

WEALTH WARNING: This stock has been subject to a share Consolidation in the past and may at some time in the future cause you to lose all your invested capital. Better value elsewhere.

 

[luutzu]

Luu, loving those charts!

I reckon the thing is a gonner now, they just did a 1 for 20 share Consolidation announced 3/12/2018 on the ASX.

WEALTH WARNING: This stock has been subject to a share Consolidation in the past and may at some time in the future cause you to lose all your invested capital. Better value elsewhere.

Yea, it's going to be pretty tough. Winter is coming.

The banks haven't really lent them any money since, from memory, around 2012? Beside a couple million pegged against their assets for leases... the bankers used to lent tens, twentys million for them to take over the world. Practically none past few years.

So it'll be up to the shareholders and gov't grants and subsidies. Failing that, game over.

 

[Ann]

Yea, it's going to be pretty tough. Winter is coming.

The banks haven't really lent them any money since, from memory, around 2012? Beside a couple million pegged against their assets for leases... the bankers used to lent tens, twentys million for them to take over the world. Practically none past few years.

So it'll be up to the shareholders and gov't grants and subsidies. Failing that, game over.

I am guessing they may have some major investor who will hop in now they have done the share Consolidation. Problem is they have vanquished their whole supporting stockholder base, so there will be no-one to hold this stock up into the future. I will be astounded if it doesn't end up flat lining eventually, or just pack up their fishing rods and go away. Interesting to see.

 

[luutzu]

I am guessing they may have some major investor who will hop in now they have done the share Consolidation. Problem is they have vanquished their whole supporting stockholder base, so there will be no-one to hold this stock up into the future. I will be astounded if it doesn't end up flat lining eventually, or just pack up their fishing rods and go away. Interesting to see.

Yea, that's one very real possibility actually.

The current (and previous) shareholders have invested some $182m into the business. Zero dividends.

At one point CSS was valued at $500m [? I could be wrong as that's just my estimate seeing there's the split at some stage and the consolidation recently].

With some 15 years and $180m, not to mention the gov't subsidies... it ought to have some value for some raider who can pick up for next to nothing. Then either sell the parts or start losing their own money if they kept at it as a going concern.

But yea, lots of people's cash are at risk on this one.

 

[fiftyeight]

There is no doubt that CSS have burnt through a lot of cash.

But what the company is doing now is vastly different to what they were doing previously.

They are not researching/testing/experimenting with Blue Fin Tuna or learning how to grow King Fish.

After an issue with feed which is currently working its way through the courts and may result in a substantial payout, it looks likes CSS have FINALLY figured out how to grow and process fish efficiently.

So while the numbers are terrible, I am not so sure it is a true reflection of where CSS is now.

CSS are a specy company who have a product they can produce and a plan on how to sell it. I am not convinced on marketing to only high end chefs, but what do I know about trying to get a new fish into Asia.

 

[luutzu]

There is no doubt that CSS have burnt through a lot of cash.

But what the company is doing now is vastly different to what they were doing previously.

They are not researching/testing/experimenting with Blue Fin Tuna or learning how to grow King Fish.

After an issue with feed which is currently working its way through the courts and may result in a substantial payout, it looks likes CSS have FINALLY figured out how to grow and process fish efficiently.

So while the numbers are terrible, I am not so sure it is a true reflection of where CSS is now.

CSS are a specy company who have a product they can produce and a plan on how to sell it. I am not convinced on marketing to only high end chefs, but what do I know about trying to get a new fish into Asia.

Yea, financial statements only show the past and history may not always dictate future performances.

Need to really know the business and industry etc. to make informed decisions about that future. With years of experience and loads of cash behind them, maybe they will finally get things right.

Saw a few of their ads. Very pretty. Quality stuff.

But like you, I'm not too sure about marketing directly to what look like high end chefs either.

I mean, in fancy restaurants... wouldn't the clientele prefer fresh [as opposed to frozen] and wild catch, as opposed to caged.. fish?

And assuming those 40% who express interest in taking orders. Wouldn't be cheap to ship a box or two per restaurant.

Do they also have some sort of middle man? Or are they selling direct to the restaurants and fish market?

 

[Dona Ferentes]

back of the napkin estimates : that things could have got a lot worse. China boycott and Covid lockdowns/ trade disruptions?

• Sales volumes rebound significantly as restaurants reopen and new channels are developed
• COVID lockdowns continue to intermittently impact sales in specific markets
• Production issue at Boston Bay farm location
• Renewal of bank facility confirms funding for working capital and infrastructure investments

Despite ongoing disruption in the food service channel, Clean Seas achieved sales of 1,413t in H1 FY21, versus 1,016t in H2 FY20, and 1,406t in H1 FY20. This is a good outcome in a highly disrupted global market. ... has picked up a US partnership for retail distribution.