Monthly Archives: December 2018

Motley Fool: A healthy investment opportunity

Domestic per capita consumption of salmon has almost doubled over the past seven years.Who controls the food chain, business or politicians? That’s a question investors in the Tasmanian salmon industry may ask themselves after the recent announcement of a Senate inquiry into the sustainability of the industry. Senators from The Greens are worried about the environmental impacts of salmon farming and in the inquiry’s investigative sights is Australia’s leading salmon farmer Tassal (ASX:TGR).

Since the announcement of the inquiry, shares in Tassal have sunk to a 52-week low, while its newly-listed archrival Huon Aquaculture (ASX:HUO) has also been on the nose with investors.

Healthy demand

The investigative problems are set against a backdrop of fast-growing consumer demand for Tasmanian salmon, which has seen the industry publicly state its aim to double production by 2030.

In Australia, harvests of salmon and trout grew at a 10% compound annual growth rate between 2000 and 2013, with Huon mainly selling to high-margin wholesale customers who supply food businesses, fishmongers or sushi and sashimi restaurants. Tassal primarily sells to retail stores, supplying the major supermarkets and other retailers, with both businesses now focused on the domestic market due to strong demand supporting premium prices.

Domestic per capita consumption of salmon has almost doubled over the past seven years and this is a trend supported by immigration patterns and the shift toward healthier diets. Both businesses also enjoy the natural advantage of Tasmania’s cold waters, as nowhere else in Australia is the water temperature suitable to farm salmon. More traditional barriers to entry are also high, with high costs and risks associated with setting up salmon farming infrastructure, while government issued marine leases are strictly limited.

Disruptive technology

Fish farmers are also beneficiaries of new and disruptive technologies that allow them to modify production methods to cut costs, grow production and potentially super-size fish (and profits.)

Tassal’s ambitious growth plans have potential to improve its return on assets by breeding larger fish through selective breeding programs and diet strategies. It also has significant capital investment programs to support marine lease expansions.

Huon aims to grow its harvest by 10% in the year ahead, investing $200 million over the next four years to grow production alongside shareholders’ returns. The family-run business hit the ASX boards in October 2014 and recent half-year revenues and earnings grew 4.5% and 10% respectively over the prior corresponding period.

The company’s prospectus guides for it to earn 33.7 cents per share on a pro-forma basis in 2015, which places it on 13.5x forward earnings at a recent price of $4.56.

Tassal grew revenues and earnings 12.3% and 28.8% respectively over the prior corresponding period and recently updated the market that it expects strong demand growth over the next 18 months. After the recent sell down the shares trade on 12.5x trailing earnings of 28 cents per share at a recent price of $3.49.

Murky waters

On the surface, both businesses appear attractive value given the tailwinds and growth outlook, but the looming government inquiry is muddying the investment case.

Environmentalists, local people and rival aquaculture business owners have complained about the alleged pollution caused by the salmon farms. In particular they point to falling dissolved oxygen levels at depth in Macquarie Harbour and the pollution caused by fish effluent.

Tassal has protested further scrutiny is unnecessary as it’s already a heavily regulated global leader in sustainable environmental practices. Investors will hope the inquiry comes to the same conclusion.

Foolish takeaway

Aquaculture stocks are risky in nature due to the known unknowns of changing seasonal conditions, storms, disease and varying stock mortality rates. Not forgetting the aforementioned potential of regulatory creep to leave investors deep underwater.

However, as a Tassal shareholder I believe it or Huon remain a reasonable long-term investing bet, based on growing demand, barriers to entry, and the potential for operational improvements to boost profits over the medium term.

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Tom Richardson is a Motley Fool writer/analyst. He owns shares in Tassal. The Motley Fool owns shares in Computershare.

You can follow The Motley Fool on Twitter @TheMotleyFoolAu. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Robbie Katter flags alliance with Billy Gordon

Katter’s Australian Party state leader Rob Katter. Former Labor MP Billy Gordon. Photo: Facebook

Gordon not mentioned at meetings: Premier

While the major parties fight out who should accept Cook MP Billy Gordon’s vote, the Katter Party wants to make it clear they have his number – and they are willing to call it.

Robbie Katter said he had met with Mr Gordon on Monday and came to the conclusion the now-independent had the same aspirations for north Queensland and the regions as the Katter party.

Mr Katter said it made sense for the group to work together on the cross bench as a caucus, and that “mathematically”, it meant the two Katter MPs and the two independents now had “a lot of leverage” in the Labor-led hung Queensland Parliament.

“It is important for people to know that we have been speaking with Billy Gordon and we have had agreement to caucus on issues in parliament so that we are working together and I think it is important for people to know that the KAP recognises that many of the issues that face his electorate of Cook, are very closely aligned,” he said.

“We fight the same battles and it stands to reason that we should caucus and we should be working together in parliament.

“What came out strongly in the statements made by Mr Gordon yesterday is he is there primarily for the seat of Cook and to champion those same issues that we look at.”

Mr Katter said while he expected Mr Gordon to still be tethered to the Labor party given he was elected under their banner, he said he was no longer bound to support it on every issue.

“His starting point is he is a representative of the Cook electorate, I think that is good news for the KAP and also good news for Queensland,” Mr Katter said, adding that he did not agree with the treatment Mr Gordon had received.

“I think he has every right to be there … I think Billy Gordon was treated badly and I think it is a great thing that he stood up and said I am not going to be pushed aside and used.

“As long as Mr Gordon is in Parliament there and willing to progress things, get jobs in those aboriginal communities, the peninsula development road, those sort of things, as long as we are having those sort of conversations, we will be a supporter of him and I think we can expect the same support back from him.”

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Club’s golden anniversary

DROUGHT BROKEN: Kerang Golf Bowls Club’s 2012/13 Northern District Bowling Division Saturday Pennant Division Three title ended an 18-year premiership drought.CELEBRATIONS will be held tomorrow night to mark the 50th anniversary of the Kerang Golf Bowls Club.

Current and former members will gather at the Kerang Golf Club clubhouse for the event, which doubles as the club’s annual presentation night.

“We’re really looking forward to the celebration, and it is shaping up to be a really nice event,” club president, Frank Boxshall said.

Like most bowls clubs aligned with golf clubs, the need for golfers to play a sport during summer months drove the initiative to form the Kerang Golf Bowls Club.

At the time of the club’s formation, the Kerang golf course used sandscrape greens, which could only be used during the winter.

Efforts to form the Kerang Golf Bowls Club began in 1964, with members working to establish a six-rink green.

The club joined the Royal Victorian Bowls Association in 1965, and played its first competitive matches in the Murray Valley Bowls Association action from 1966.

A second six-rink green, developed on a section of reclaimed golf course land, opened in 1985.

During the past five decades the club has won four pennant titles across the men’s, ladies, midweek and Saturday competitions, all within Division Three sections.

The club broke an 18-year drought in 2013 when it won the Northern District Bowling Division Saturday Pennant Division Three title.

“We are still only a small club compared to the other clubs in the district, but we continue to have an emphasis on the enjoyment of the game,” long-serving member Tony Laughlin, who has been compiling the club’s history, said.

Festivities will kick off at 6.30pm, with numerous club memorabilia items to be on display.

Entry is $20, which includes a meal and entertainment.

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Battle under lights

LIGHT IT UP: Wandella coach, Peter Morris and Murrabit counterpart, Nathan Henry are looking forward to tomorrow’s historic Golden Rivers Football League twilight encounter.

THE final touches are being put in place for tomorrow’s historic Golden Rivers Football League twilight match.

Local rivals, Murrabit and Wandella will open the 2015 season with a match under lights at the Murrabit Recreation Reserve.

Blues personnel spent this week testing the venue’s lighting to ensure players and spectators will be able to watch the action, with the seniors match commencing at 5.30pm.

“Hopefully we will get a few more people attending than normal, considering Central Murray (Football Netball League) starts a week later,” Murrabit president, Rowan McKerrow said.

The home side lobbied the competition’s board for the event, receiving approval from a league level at the 2014 annual general meeting before embarking on negotiations with Wandella.

All matches scheduled have been moved back three hours to ensure the majority of the seniors match will be held under lights.

The under 17.5 match between the Blues and the reigning competition premiers will begin at 1pm, with the under 14s to take to the field at 2.50pm

The reserves will open their season at 3.50pm, with the seniors starting prior to dusk.

“As far as the playing group is concerned, there are no differences (to playing at dusk compared to the afternoon), Murrabit coach, Nathan Henry said.

“The players are feeling excited about the match. It will be a way to showcase the league to other people.

“It will also be good to get the first match out of the way after training for so long.”

Wandella will go in to the match with three night matches under its belt, thanks to its participation in the Swan Hill night series.

“We train under lights, but we have not played for points under lights,” Bombers coach, Peter Morris said.

“We have been pretty excited by the night series at Swan Hill. Obviously we played the three games there, so it has given us a bit of a leg up for Saturday.”

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DEVASTATED: communities mourning murdered bride-to-be Stephanie Scott

Leave your tributes to Stephanie ScottRead rolling coverage hereCANOWINDRA’S Stephanie Scott was supposed to be walking down the aisle on Saturday.

But two days out from the happiest day of her life, a 24-year-old Leeton man has been charged with her murder.

His arrest followed a massive social media campaign to find the high school teacher after she failed to come home on Easter Sunday.

Helping to spread the word was Leeton’s Michelle Tweedale, who said her family was devastated by the news of her murder.

She said it was difficult to watch people speculate on social media about the reasons behind her disappearance.

Absolutely gutted and heartbroken for the Scott and Woolley families from Canowindra. Been a very rough year for my little home town. RIP

— Michael Earsman (@mickearsman) April 8, 2015A Go Fund Me page has been set up to assist the family in their search for Ms Scott and to bring her body home when it’s found.

The page, created by Mr Leeson-Woolley’s mate and co-worker Brad McKinnon, is hoping to raise $5000.

“The fund will help with the search, the helicopter expenses and any various support needed for the family,” Mr McKinnon said

“We have a set a target for $5000 but any donation would be great.”

To help Ms Scott’s family, click here.

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