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CSS - Clean Seas Seafood

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Re: CSS - Clean Seas Tuna

FI$H said:
I take from this article

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=4213142B-1871-E587-E13DAA02FD0A4316

that they're aiming for 25000 fingerlings in december which was previously defined as precommercial quantity.
Click to expand...

Yes that is RBS saying 25,000 not CSS. I dont think CSS are placing limits yet.

I have read the RBS report, I know the analyst covering the stock has changed recently and, quite frankly, the new guy has no clue.

Firstly he is basing his valuation (80c) upon CSS reaching a maximum target of SBT in 2015 of 5,000t. He is then assuming a "conservative" $5-7/kg margin rather than the company base case of $10. If he assumed 10,000t at $10/kg he would be getting a significantly higher valuation.

The problem with valuations is most analysts look at todays price and then work out what they need to assume to get to it. It is a little bit around the wrong way I think.

Also in todays market ask an analyst to value a company that needs a capital raising (for whatever reason) and he/she immediately puts a 30%+ discount on the base case valuation straight away. They will do exactly the opposite in a bull market. When CSS starts production and starts stringing some good results together these guys will be falling over themselves to upgrade thier asumptions and hence valuations.
 
Re: CSS - Clean Seas Tuna

I'm not all too worried about their arbitrary price targets.

This has resulted in an increase in the 12-month target price from 41c to 69c.

How can you narrow down a price target to single cents for stocks that happily fluctuate 5-10% on an average trading day?

truevalue, what's your opinion when they could become cash-flow positive in a best case scenario assuming 10 000t production and 10$ margin?
 
Re: CSS - Clean Seas Tuna

Sorry Fi$h, just back to my earlier post whilst Truevalue considers his response to your last.

At least we are getting some good discussion going whilst we wait for the next update from CSS.

I would like to briefly clarify my previous posts.

1.The Sashimi aspect of production should be the priority and any other marketing of SBT , as speculated by myself , would be in a scenario where CSS are producing overwhelming quantities of fingerlings.

2. John West is already , successfully, selling packaged CSS's YTK portions at supermarkets ( $ 39.99 / kg ).

3. Tinned tuna sounds a bit " out there " for SBT , but don't be surprised if there is a substantial market for ( packaged ) SBT, after all, prior to the Sashimi market that is precisely what the Stehrs and every other Tuna fisherman was doing with their SBT catch, presumably at a reasonable profit.

4. I'll do a quick comparison with YTK to illustrate my point. Truevalue will correct me if I am wrong.

YTK ( Packaged ) - Sells for $ 39.99 / kg ( retail ) wholesale price around $ 10/kg to CSS. Takes 18-24months to reach marketable size ( 4-8kg ). Food , production and husbandry costs amount to approx. $ 7 / kg. Margin around $ 3 /kg.

SBT ( Packaged ) - Sells for $ 39.99 ( retail - at least ) wholesale price to CSS ( let's say same as YTK , realistically should be more ). Takes 4-6mths to reach a similar size as YTK. Food, production and husbandry costs amount to approx $ 2.50/kg. margin around $ 7-50/kg.

So what does this all mean , well to put it simply if they can sell SBT in the packaged form, like YTK, they can nearly triple the margin they are presently making with YTK. And that is where Simplot enters the scene.
Only time will tell if I am correct.

Over to you Truevalue!
 
Re: CSS - Clean Seas Tuna

Thank you for the link, oracle! Let's cross our fingers for another successful commando-like mission. Here's a link that you might find interesting:

http://www.fis.com/fis/worldnews/worldnews.asp?l=e&country=&monthyear=&day=&id=32288&ndb=1&df=0

It seem the UAE is interested in PBT production and have asked Kinki university for their help. I didn't know that Kinki's output is so small despite being a few years ahead in research:

He also said the fish nursery he runs grows approximately 10,000 bluefin tuna, which they later sell, every three years.

“It takes three years for the eggs to grow to commercial size, which is between 13 to 60kg. Every year, we sell around 2,000 bluefin tuna,” the director said.

Japan’s bluefin tuna consumption consists of 200,000 tonnes per year and costs about AED 110 (EUR 22) per kg.
 
Re: CSS - Clean Seas Tuna

FI$H said:
truevalue, what's your opinion when they could become cash-flow positive in a best case scenario assuming 10 000t production and 10$ margin?
Click to expand...

Hi Fish,

If you assume they get to 10,000 tonnes production by 2014 and 10,000 tonnes in sales by 2015 they will be cashflow positive in 2015. I am not assuming much growth beyond 2015 in that situation. If they decide to grow significantly beyond 10,000 tonnes then cashflows will lag profit until growth slows down and sales tonnages start to catch up to production tonnages. At that stage the business will generate massive amounts of cash. Given the margin the cashflows will turn positive much faster than we have seen in kingfish so far.

I am fairly relaxed about cashflows at this stage. We know the next 2 years will be a big negative number as they grow out their first and second vintages without any sales, but once sales start to kick in the business starts to support itself from a cash perspective relatively quickly. Effectively 5000 tonnes of sales can support 10,000 tonnes of production.

As Oracle says if you can reduce the time in the water and turn-over stock more quickly then your cashflow breakeven becomes much shorter. CSS needs to know their market and provide a product that is right.

I personally would hope that if packaged kingfish sells for $40/kg then SBT would at least sell for $50/kg with much of that extra margin going to CSS. Feed conversion ratios (FCR) for kingfish are quite a bit lower than SBT because kingfish waste very little (they are like piranhas). This means the feed cost/kg for SBT will be higher than kingfish. Of the $10/kg cost of producing a kg of SBT around $7 is feed cost. While of the $7/kg to produce a kg of kingfish the feed cost represents around $4.
 
Re: CSS - Clean Seas Tuna

Thank you for your sentiment truevalue. I wasn't sure if my expectations to become cash flow positive soon after production growth stops was justified. Improving the kingfish margin could significantly improve the cash-flow situation till then.

It seems the transfer of additional fish to the breeding stock was successful:

http://www.independentweekly.com.au...reed-endangered-tuna/1516593.aspx?storypage=1

Let's hope that they fall in love with their new flatmates and don't get tired of each other till October.
 
Re: CSS - Clean Seas Tuna

Clean Seas also advised that its oldest Southern Bluefin Tuna (“SBT”) fingerlings were now over 55 days and greater than 15 cm in length. In addition, the SBT fingerlings were eating man made feeds
Hagen Stehr AO commented,
“Today’s equity raising allows us to step forward with confidence towards our goal of successfully producing commercial quantities of aquaculture bred SBT.
The support of our investors is not taken for granted. We will work hard to ensure it is wisely spent to create wealth for Clean Seas shareholders.
With the progress being made in growing out our first batch of SBT fingerlings at Arno Bay, I have no doubt that FY2010 promises to be a very exciting year.”

No mention of numbers again. Hopefully we get a full update in the next week or so.

Looks like Fi$h's scenario of investors taking the profit on entitlements is coming true. I'm sure the underwriters will be keen to see a decent buffer between the entitlement price and the share price as June 12 draws near.
 
Re: CSS - Clean Seas Tuna

What's the point of realizing 2.5c of profit per share on your small entitlement if it decreases the value of your total holding by 30%?
 
Re: CSS - Clean Seas Tuna

Can I ask what people's thoughts are on the stock trading below the price being offered on the rights issue? Obviously there is little to no motivation for holders of the stock to participate in the offer if the stock is trading around 0.55.

I have held CSS for a little under a year, and it's disappointing to see there is nothing much that can be done to avoid the dilution caused by the recent institutional placement. I'm no expert, but could not the rights issue have been offered at 0.55 or a price based on a discount to the VWAP over a trading week? I think they would have attracted many more existing holders this way.

I do believe in the long term prospects of this company, and will continue to hold. I guess I'm just wondering what people's thoughts are on the short/mid term stock price action caused by the placement.
 
Re: CSS - Clean Seas Tuna

keskinu said:
Can I ask what people's thoughts are on the stock trading below the price being offered on the rights issue? Obviously there is little to no motivation for holders of the stock to participate in the offer if the stock is trading around 0.55.

I have held CSS for a little under a year, and it's disappointing to see there is nothing much that can be done to avoid the dilution caused by the recent institutional placement. I'm no expert, but could not the rights issue have been offered at 0.55 or a price based on a discount to the VWAP over a trading week? I think they would have attracted many more existing holders this way.

I do believe in the long term prospects of this company, and will continue to hold. I guess I'm just wondering what people's thoughts are on the short/mid term stock price action caused by the placement.
Click to expand...

Good question Keskinu. The trouble with the second option is that shareholders have an incentive to push the price down to as low level as possible to get the lowest price in the issue. Under those circumstances the institutional offer would not have been possible.

My concern is that the sub-underwriters (Lonsec have off loaded their underwriting exposure to sub-underwriters) of the offer are holding the price down to make the rights issue unattractive to shareholders thereby ensuring they get more stock at 55c. If this is the case then the sub-underwriters get all the shares at 55c and the stock jumps back up to 70 or 80c after the deadline on June 12, taking the existing shareholders profit with it.
 
Re: CSS - Clean Seas Tuna

Hopefully, it will be more difficult to pull off these games the closer we get to production and sales.
Why haven't we received an update today?
 
Re: CSS - Clean Seas Tuna

The problem CSS has had for the past 12-18months is " uncertainty" .
Investors are unsure about the scope of success with SBT propogation and progress with YTK sales.
This uncertainty will prevail until they update the market with a detailed comprehensive report on the entire business, including the outlook.
CSS have advised the market that they will report by the end of May. They must deliver on this promise. I have not been satisfied with various snippets of information, some material in my view, being released to the media but not the market.
It was a mistake, in my view, not to include a detailed update in accompaniment with the Cap raising notice.

As for the share valuation shennanigans, the present action is typified by many other raisings over the past year or so, it's not perculiar to CSS.
If you are a long term holder it really doesn't matter what traders, brokers, underwriters or anybody else for that matter, are doing.
It's where CSS will be next year and in the years ahead that concern me i.e. " the big picture".

Presently, I am planning is to participate in the Cap raising and shortfall facility in full. This is subject to a satisfactory update from CSS prior to the closing date. There are many other Cap raisings on the calendar at the moment and I will divert more funds to those if I am not satisfied with CSS's update.
 
Re: CSS - Clean Seas Tuna

truevalue said:
My concern is that the sub-underwriters (Lonsec have off loaded their underwriting exposure to sub-underwriters) of the offer are holding the price down to make the rights issue unattractive to shareholders thereby ensuring they get more stock at 55c. If this is the case then the sub-underwriters get all the shares at 55c and the stock jumps back up to 70 or 80c after the deadline on June 12, taking the existing shareholders profit with it.
Click to expand...

How would the Sub-Underwritters influence the share price Truvalue?
Do they have enough shares to sell already?
Were the underwriters only underwritting the instution part of the cap?
And was it fully subcribed so do they still buy the shares?


tge oracle said:
The problem CSS has had for the past 12-18months is " uncertainty" . Investors are unsure about the scope of success with SBT propogation and progress with YTK sales.

Presently, I am planning is to participate in the Cap raising and shortfall facility in full. This is subject to a satisfactory update from CSS prior to the closing date.
Click to expand...

The uncertainty is an issue Oracle but should reduce in time.

How relevant is price in your decision to participate fully in the Cap raising?
On Friday you could have bought shares for 54c (no idea how many though) Why wait for the Cap if Price then is 1c cheaper?

Can or will CSS lower the offer price?
 
Re: CSS - Clean Seas Tuna

one more Q is have the institutions got thier shares yet?
Can they be the recent sellers to make a quick profit?
If they are selling existing holding at a higher price they paid for the new holding they may end up with same amount of shares at a lower purchase price.
 
Re: CSS - Clean Seas Tuna

Basilica,

The issue price is relevant and has to be " fair value ". By my own research and methodology I am comfortable with a valuation around the current levels for CSS. Any decision to purchase more securities will be based on the current status of CSS in addition to their outlook. If I believe the value of CSS should be re-rated , then I will participate fully in the offer and shortfall facility. I must stress, however, that any intention to purchase additional securities will be very dependant on my impression of the market update.

In answer to your second question, I won't be purchasing any additional securities without the informatiom previously discussed, no matter what the price. CSS have to update their current status and detail their plan for the furure for me to invest further.
I am a long term investor and, generally, won't quibble over a few cents off an offer price. Brokerage fees need to be taken into account and the applicable volume of securities on offer in the share entitlement before purchasing on market.

It is unlikely they will lower the offer price as the placement has been fully subscribed @ 55c and the retail offer is fully underwritten by Lonsec.

CSS investors - don't construe my intentions as a recommnedation to invest or subscrbe ( if you already hold ) for additional securities.
Do your own research or consult a financial adviser.
 

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