SFG - Seafarms Group

[herzy]

Everything seems to be ticking along nicely enough (except the share price). At the moment, I'm holding off until I see some serious funding go in (and at what price).

It's also difficult to see how many more approvals etc they need. Every one they achieve seems to be 'key', but I haven't seen a list of what's required moving forward. I haven't looked very hard though.

 

[greggles]

A big move north for Seafarms Group this morning before it went into a trading halt at 11:42am "pending an announcement to the market regarding a proposed transaction involving a substantial investment into the company."

Obviously someone out there knew that this announcement was coming. 1.5 million shares traded in around an hour and a half wasn't a co-incidence.

 

[greggles]

Well, the announcement is out and the SFG share price is up.

Here's the announcement in part:

Japanese seafood giant, Nissui, invests in Project Sea Dragon

Seafarms Group Limited (Seafarms or SFG) is pleased to announce that it has finalised an extensive agreement with Nippon Suisan Kaisha (Nissui) that includes a A$24.99 million equity investment in Seafarms at a substantial premium to SFG’s current share price. This will assist in the development of the Company’s world class Project Sea Dragon (PSD).

Nissui was formed in 1911 and has established itself as one of the world’s largest producers of seafood. Its Marine Products Business has global access to marine resources, developed expertise in fisheries, fish and prawn farming, marine research and development, extensive processing and production abilities, logistics and international marketing networks.

Nissui is listed on the Tokyo Stock Exchange, constitutes a member of the Nikkei 225 Index and has a market capitalisation of approximately ¥180B (US$1.7B). Nissui employs over 9,000 employees globally (on a consolidated basis). Its total net sales in 2017 (1 April 2017 to 31 March 2018) are at ¥683B (US$6.39B). Nissui’s seafood sales are predominately in Japan (and Asia), but enjoys a significant presence in the US and Europe

Equity in Seafarms Group Limited:

• Nissui will subscribe for approximately 249.87 million fully paid ordinary shares in Seafarms. The total issue price for the SFG ordinary shares will be $24.98 million at A$0.10 per share – a substantial premium to the closing price of SFG share on 21 May 2018.
• Nissui will receive approximately 28.4 million new listed options on the same terms as the existing listed options (issued under prospectus dated 5 July 2017: exercise price of A$0.10 and an expiry date of 17 July 2021) and approximately 5.3 million new unlisted options at an exercise price of $0.065 and an expiry date of 1 June 2023.
• Nissui’s shareholding will represent a 14.99% shareholding interest in Seafarms Group.
• A total $24.99 million will be raised via this capital placement.
• Nissui has been given a right of first refusal to subscribe for shares in SFG or subscribe or acquire shares in PSD Co in priority to any other Japanese seafood company.
• Nissui expects to be a long term shareholder in the SFG group of companies and has agreed not to sell SFG securities for 3 years, subject to certain limited carve outs, including in the event of a recommended off market takeover or a shareholder approved merger.
• SFG intends to issue 28,396,974 listed options, 5,320,622 unlisted options and 178,845,108 shares under its Listing Rule 7.1 capacity and 71,032,549 shares under its Listing Rule 7.1A capacity.

New issues:

Nissui has a right to participate in new issues of securities to maintain its interest in SFG (up to a maximum of 25%) (which is subject to ASX granting a waiver to permit the grant of this right).

So it appears that Nissui is getting 15% of Seafarms Group for $25 million at 10c a share with the option to increase its holding later as a result of the issue of the 28.4 million options exercisable at the same price of 10c a share.

This would appear to be a big vote of confidence in the company but it's hard to fully assess the implications of this deal at this early stage.

SFG opened at 9.4c, reached a high of 9.6c but has since slipped back to be currently trading at 7.8c.

 

[So_Cynical]

Thanks for keeping us up to date greggles, great news for Seafarms and its supporters and shareholders..

 

[greggles]

Thanks for keeping us up to date greggles, great news for Seafarms and its supporters and shareholders..

No problem So_Cynical. I enjoy posting some updates here and there just to let others know what's going on with certain stocks.

After closing at 7.4c yesterday Seafarms Group is up 5.4% today and is trading at 7.8c. I think people are still digesting the implications of the deal. There was a flurry of excitement after the announcement yesterday but it seemed to die off fairly quickly and profit takers took control. Will be interesting to see what happens to the SFG share price in the coming weeks.

 

[greggles]

After spending the last couple of months consolidating between 7.7c and 9c, Seafarms Group has now moved up and out of this consolidation zone beginning on Friday last week and is currently trading at 10.5c.

Recent developments of interest include the granting of an aquaculture license for the proposed Project Sea Dragon development project in the Northern Territory and the satisfaction of the last substantive condition for the A$24.99M equity investment in SFG by Nippon Suisan Kaisha Limited.

Looks like everything is going to plan for SFG.

 

[So_Cynical]

I forgot i wanted to look for an entry...dam!

 

[greggles]

I forgot i wanted to look for an entry...dam!

If you'd waited a few days after my last post you could have got set around 9c during the brief retrace. It's starting to gather some momentum now following the announcement on Wednesday that
it is about to commence on‐ground earth works at Legune Station.

Project Sea Dragon is officially underway.

 

[greggles]

Seafarms Group is my top pick for the CY 2019 tipping competition.

SFG is Australia's largest producer of farmed prawns. The company's industrial scale Project Sea Dragon in Northern Australia is progressing nicely. Equity and offtake agreements have been reached with Asian global seafood giant Nippon Suisan Kaisha (Nissui). The export potential here is massive and I believe that SFG is going to see substantial share price growth in the coming year as PSD begins to take shape.

Chartwise SFG is sitting just above support at 10c and I don't expect it will fall beneath that level in the absence of bad news. So this is a a pretty good entry point. Looking forward to a great 2019!

 

[greggles]

SFG coming alive again in the last couple of months, up from 5c to 9c on increased volume.

The company has been quietly progressing its Project Sea Dragon in the Northern Territory and things are slowly but surely moving ahead. An update was released to the market on 23 July and appears to have renewed interest in SFG. I think given the progress that has been made, the company started to look undervalued relative to its potential.

Some info about Project Sea Dragon here: https://gateway.icn.org.au/project/3770/project-sea-dragon

Completely unaffected by COVID-19, I think this one will be worth watching over the coming months. It wouldn't surprise me to see it back above 10c in the near future.

 

[greggles]

It wouldn't surprise me to see it back above 10c in the near future.

Well, looks like I was being conservative. SFG hit 13c today and is currently trading at 12.5c, just two weeks after my last post.

The Annual Report, released on 1 September, updated the market on Project Sea Dragon which looks to be progressing well and with government support.

SFG hasn't been at 13c in more than 18 months. Historically, 15c is an important level and 18c represents SFG's all-time high.

Seafarms Group is near the top of my watchlist as we head into the final quarter of 2020. It should be an interesting few months for the company.

 

[Boggo]

The break through 10c got my attention last week.

(click to expand)

 

[The Triangle]

Is a capital raising just around the corner? I can't see the investment case here. Just short-term in and out.

Spending a lot of cash. Targeting export market when exports not doing well and currency not doing well (if you are exporting) Lost 25 million last year, 30 million year before, and about 20 million in '17 & '18, have 30 million in net assets and market cap is 275 million? They need funding (and seem to be looking for Asian banks) - So, Australians not interested? Smells fishy here. They had a please explain last month and have nearly tripped in that time based on not a whole lot?? But hey, good for those who made a lot of money on it.

 

[greggles]

Is a capital raising just around the corner? I can't see the investment case here. Just short-term in and out.

You have to take a medium to long term view. South-east Asia is rapidly over-fishing itself. Seafood stocks in the oceans are lower than they have ever been. Asian countries are literally fighting over what remains.

Bloomberg - Are you a robot?

The future of seafood is high quality farmed, and Australia can do this like no other country in the region thanks to our strict regulations and clean environment.

In my view SFG represents a compelling long term investment in high quality seafood exports. There might be sexier industries around at the moment, but we all need food and seafood is a huge part of Asian culture and cuisine. When the seas run dry, Asia will be looking to companies like SFG.

 

[galumay]

Is a capital raising just around the corner? I can't see the investment case here. Just short-term in and out.

Thats how it looks to me, the NT project is a massive capital intensive investment and its not a clear path to profit by any means.

At the end of the day its just a cyclical commodity price taker so its not an industry that attracts me. I made my mistake once, with TGR and although I still hold some of them I would be happier if I didn't!

I think there is much better places to invest capital.

 

[galumay]

Looks pretty grim from this article on the ABC, LINK

 

[finicky]

Fantasists with other peoples' money. $50m of tax payers' money spent already on roads to nowhere 'cept some drop-kick's fantasy. Guess they get paid well though. All approved by N.T minister who was a primary school teacher, never risked or managed a dollar in business in her life. Only need another $2 billion, lol

 

[Chronos-Plutus]

Looks pretty grim from this article on the ABC, LINK

I have always found the aquaculture business interesting; something that has a facade of simplicity seems to be quite difficult to get up and running. CleanSeas (CSS) had huge problems for the best part of decade trying to get their aquaculture projects up and running.

Share Price Information | Clean Seas

www.cleanseas.com.au

 

[galumay]

Yep, similar with TGR, usually when you look through them, they report EBIDTA that is multiples of Cash Flow, it just never gets to the bottom line and CapEx is the main reason. Its not a pretty sector for investors!

 

[Dona Ferentes]

when SFG came out, wow what a story (sarcasm) . Greenfields development up around Innisfail QLD, then NT Darwin, then Wyndham NW WA. Shipping little prawns between these centrally located spots. Bloke must have run a transport company, and/ or a private airline. And dependent on Govt money. Motherhood, who can argue against it?

And now revisiting the narrative, quel surpris!