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HUO - Huon Aquaculture Group

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I have been recently communicating with an associate in Japan and have some interesting news to report. Apparently there is a news article being broadcast on Japanese television about the high demand for farmed seafood, particularly BFT and Unagi ( Freshwater Eel ). There are reports that Kinki are unable to meet demand and are running out of mature BFT. It is interesting that Japanese consumers prefer the farmed product over wild caught and the main reason for this is the fat content which improves flavour , texture and health benefits ( omega 3 etc ). Australian consumers may not realize but the same principle applies in this country. Most of our top sushi restaurants purchase farmed product in preference over wild caught product for the same reasons stated above. I believe this dynamic is an increasing global phenomenon, which is gradually gaining traction in the consumer world and more importantly, for investor’s, the financial world.
HUO and CSS have realized this potential and will benefit significantly from this changing consumption dynamic. TGR have decided to focus more on the domestic market but still have limited exports that will still benefit from this demand.
I am of a view that the conundrum facing Kinki will become a reality for HUO and CSS in the future as this raindrop becomes a flood. This is particularly relevant when noting the comment by Mr Kamiya, in my last HUO post, where he states that Salmon is the most popular sushi / sashimi choice by Japanese consumers.
It is important to note that, in the case of Salmon, Japan is only a minor producer and essentially imports most of it’s Salmon.

I will keep investors updated with any other relevant information / reports by my contacts in Japan.

Disc – Opinion only. Invested in HUO ( accumulating ) , CSS ( accumulating ) and TGR. DYOR.
 
I found this interesting article whilst conducting investment research. It is a few months old but what I find interesting is that Credit Suisse accurately predicted pricing pressure as a short term risk but raised their 12 month target to $ 5-50 and applied an outperform rating for HUO.
I don't disagree with their rating / target and , in fact, consider it to be very conservative.

http://www.afr.com/markets/equity-m...ment-view-on-huon-aquaculture-20150225-13p1l5

Disc - Invested in HUO ( accumulating ). Opinion only.DYOR.
 
That's all very interesting, and I have HUO on my watchlist as a potential investment.

BUT

Am I correct and 60M shares are still sitting in escrow? That's 68% of the total, I'm led to believe.
Could that be the reason why HUO is trading at the lower end of its overall trading range?
 

Hi Pixel, do I understand you correctly.......you are considering investing! I thought you were more of a trader following your CSS posts. Anyway, I am very exited about the prospects for HUO and firmly believe this company will deliver the long term returns I , initially, expected from CSS. HUO will become a great investment for long term holders.
You are correct about the shares in escrow, however, I don't believe this is the reason for the lower valuation of HUO,it has more to do with Norwegian salmon dumping in Australia as a result of Russian and Chinese trade import restrictions and the subsequent profit warning. As is quite often the case, the market over reacts to such events and great companies get " thrown out with the bath water". As a significant investor, in aquaculture, I couldn't believe my luck when HUO shares got punished so heavily and have been happily relieving the seller of his burden.

Aquaculture is yet to have it's " day in the sun " but it is starting to happen in this country and investors / fund managers will eventually wake up to it's potential and growth delivery . You may have read the recent news article about plans for the worlds largest prawn farm in Northern Australia. This is just the beginning, Australia offers a unique environment for aquaculture with it's geographic bio security and clean healthy environment. These are the cornerstones for successful aquaculture and this gives us competitive advantage.

Disc - Invested in HUO ( accumulating ) , CSS ( accumulating ) and TGR. DYOR.
 

Thanks for that, tge-Oracle
I had watched Landline on Sunday when a similar plan was presented from Queensland. The operator of an existing prawn farm talked about plans to expand, but cited red tape, dozens of different departments being involved with often conflicting agendas.

OK, prawns are different animals to Huon's salmon, but the problems are comparable - as are the potential rewards from export markets. After all, Australia has still that clean green reputation. Let's foster it and pray that our governments don't stuff that up as well...

As to my trading, you're correct in principle. But when I see long-term prospects like this, I'm not averse to parking a few funds in a long-term project that may reap rewards over a longer time horizon.
 

Good to see you are open to long term investing Pixel. I am very confident you won't be disappointed with an investment in HUO, should you decide to proceed.

I take note of your comments in regards to Govt red tape but, in a perverse way, this is beneficial to aquaculture in Australia. Consumers are gradually accepting farmed seafood for one very important reason - environmentally responsible, sustainable and impeccable health controls. These can only realistically be achieved through Bureaucratic red tape and regulatory oversight. It is onerous, but not for companies that understand this principle, in fact , this is precisely why Norwegian salmon was barred from China and Russia ( product contamination ). TGR and HUO should be beating the doors down in these markets to establish a foothold in the absence of Norwegian salmon.

Disc – Opinion only. Invested in HUO ( accumulating ) , CSS ( accumulating ) and TGR. DYOR.
 
Having had a chance to peruse the Annual report , my impression is one of mediocrity, particularly, when compared to Tassal. I was quietly hopeful that HUO would deliver at the higher end of their April estimates i.e. EBITDA of $45M.
I was pleased to see overall revenue meet prospectus forecast albeit at lower prices. This is a dynamic that should change for FY2016 with increased demand and higher prices.
Looking at the positive side, we are yet to realize the full value from processing at Parramatta Creek, increased biomass, new external market penetration and growing domestic demand ( around 10% ).
I was hoping for an inaugural dividend but acknowledge that the funds are better spent on their growth plan as I am confident this will result in an improved dividend for FY 2016 and a lower debt ratio.
The early stages of public listing can be frustrating, but not for patient investors. TGR embarked on a similar expenditure and 5 year growth plan,when they first listed, which resulted in exponential growth in the entity value and dividends payable.
I am very confident that HUO will follow a similar trend and view this company as providing a better growth profile than TGR .
I have been building my portfolio positions in HUO , TGR and CSS over the past 12 months or so but have now reverted to a hold for all three as I am accumulating MGC ( Dairy ) and CGC ( Fruit/Veg ) due to price weakness.
I am very bullish on the food sector and continue to see this sector as providing the best growth potential both in Australia and Overseas.

Disc – Opinion only. Invested in HUO, TGR and CSS ( all holds ). MGC and CGC ( accumulating both ). DYOR.
 
This article in today's Australian won't help sentiment. I do think it is a little dramatic though.....the author hasn't taken April's profit warning and reduced forecast into account. This information was already known by the market. Yesterday's result fell within April's guidelines. I accept, however, that the non payment of a dividend was unexpected and will have disappointed investors.


http://www.theaustralian.com.au/bus...misses-forecasts/story-fn91vch7-1227501859729

Disc - Opinion only. invested in HUO ( hold ). DYOR.
 
Einstein described compound interest as the 8th great wonder of the world. He was , of course , correct. For investors who can see the big picture there are other great wonders……..for example, macro economic events.
The rapidly depreciating AUD is a unique cyclical event that only happens once every 10-20years. For investors seeking opportunity in entities that benefit from the weakening AUD , the time has come.
I have been actively accumulating a range of agricultural and aquaculture investments and continuing to do so in selected companies that , I believe, have been oversold.
HUO is at the top of my list along with MGC, CGC and now AAC .
Despite the overriding negative sentiment in Australia, as a result of the collapse of the mining boom, there is cause to be optimistic in the soft commodities sector which will provide the next cyclical boom.

Disc – Opinion only. Invested in HUO, TGR, CSS, MGC , CGC , WBA and AAC. DYOR.
 
I have attached a quote from legendary investor Carl Icahn from an article on the front page of today’s SMH. He is very bearish on the world economy and, in particular, Australia. He does, however, single out agriculture ( presumably also aquaculture ) as a bright spot in Australia’s future. I have not posted the full article but it is worth a read.

Quote:

“For Australia, the end of the China-led commodities boom does not spell an end to China-led export growth. Agriculture represents a huge opportunity, as do services and education, while China's need for commodities will never be modest.”


For full article follow link:

http://www.smh.com.au/comment/a-glo...h-us-down-the-wrong-path-20151002-gjzuu8.html



Disc – Invested in MGC, AAC, CGC, WBA, TGR, HUO and CSS
 
A profoundly disappointing result. I am questioning the progress of this company since listing and can't help thinking that it was a pump and dump to maximise the sale price for the Benders.......a bit like Dick Smith was by Anchorage Capital. Much of what is happening to HUO could be forseen, to a degree, and I now believe the company will assume a value much closer to it's real value ( not the $4.75 per share float price ). I can't say where that will be but do believe it will be significantly less than current value. As such, I am selling my entire holding in HUO until it completes it's re-valuation.



Disc – Invested in MGC, AAC, CGC, WBA, TGR, and CSS
 
Nothing has changed looks like since TGE Oracle has posted in 2016!
Today HUO has published a disappointing performance (look at the cash flow also)
But I could not understand the statutory profit being up by 45% with operating profit fell more than 50% and all negatives but the reaction of market movement with positive price flow after this result.
DNH: Have been following to see cheaper lobster price than buying this stock for a while.



 
Huon seems to be thrashing in the water

Huon Aquaculture Group Limited (ASX: HUO) has delivered a statutory loss of $95.3 million for the six months ended 31 December 2020 ($22.0 million NPAT pcp). The result includes a non-cash impairment charge of $113.9 million ($79.9 million after tax). Despite a 24% increase in revenue to $220.1 million on the strength of a 45% increase in harvest tonnage, earnings continued to be significantly impacted by COVID-19. The reduction in global demand for salmon resulted in a 28% fall in the international salmon price relative to the previous six months. This impacted pricing across all Huon’s distribution channels but particularly the lower priced spot export market. The scheduled increase in production resulted in a shift in the channel mix towards the international market which, during the half, accounted for 51% of total volume and contributed to a 15% drop in the overall average price to $11.41/HOG kg.

In light of recent unsolicited approaches, the Board has initiated a strategic review to assess the potential for corporate level transactions for the benefit of shareholders. Shareholders should not assume that any transaction will eventuate from the strategic review.

(might be worth a tip for the Comp//)
Three year, daily chart :
 
The Forrest family’s private investment arm, Tattarang, has paid almost $20 million for a 7.33 per cent stake in Huon.

Tattarang secured the stake in a block trade as Phil King’s Regal Funds Management, a long-time shareholder, sold out.

Takeover suitors have been circling Huon, which announced in February that it had appointed advisers after receiving unsolicited offers for the business.
Click to expand...

HUO reported a half-year statutory loss of $95.3 million in February, down from a net profit after tax of $22 million at the same time last year. The half-year result included a non-cash impairment charge of $113.9 million and a 24 per cent increase in revenue to $220.1 million after a 45 per cent jump in harvest tonnage.

The 19,293 tonne harvest was a record and Huon also reduced operating costs. However, it reported an EBITDA loss of $100.1 million.

Founder and chairman Peter Bender and his family control more than 50 per cent of Huon.
 

Meat Giant JBS to Enter Fish Market With $314 Million Huon Deal​


Meat Giant JBS to Enter Fish Market With $314 Million Huon Deal

(Bloomberg) -- JBS SA, the world’s biggest meat producer, is expanding into the fish business by acquiring Australian salmon producer Huon Aquaculture Group for A$425 million ($314 million). The deal already has the backing of the majority shareholders and is set to be completed by the end of...
au.finance.yahoo.com

DYOR

i do not hold this share

i avoid aquaculture because it is just too easy to be hit be someone else's contamination

but i hope all the share-holders escape with a profit
 
Yep, thats a get out of jail free card for shareholders, plus that grub Twiggy knew something, bought the stake from Regal at $2.30!! Laughing all the way to the bank, thats why its so hard for the little guys to beat the big players, JBS would have already been looking at that time.

Agree about aquaculture, I held TGR for a while, but I was never comfortable, they are commodity plays, price takers, massive capital requirements, black swans flapping all around, whether its disease, greenies, climate, always one hovering!
 
i think it was ATP that i was looking at about 10 years back and they were hit by some contamination , and that woke me up to the extra uncontrollable risks so went for SHV ( where i did very nicely while i held them )

but the big guys ( and their financial advisors ) often hear insightful gossip ( insider-trading if you were Renee Rivkin )
 
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