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From CIMB this morning!!!!
hina Fishery Group (S$2.31) ? Initiating Coverage - Prize catch
Trawling operations form the core of its business, accounting for 65% of 1Q07 revenue. All supertrawlers are linked to vessel-operating agreements (VOA) and are highly profitable with net margins of above 30%. Long-term contracts also provide relatively secure earnings streams and visibility with the earliest expiry for the first three VOAs in 2024. Management is on the lookout for more VOAs, and has been aggressively expanding its fleet of purse seine fishing vessels and fishmeal operations through acquisitions. We believe acquisitions represent the most efficient way for it to leverage management?s extensive experience in industrial fishing and expand operations.
Net profit is expected to jump 122% yoy to US$106.5m in 2007, on full-year contributions from the company?s Peruvian fishmeal operations. Given its strong operating record, 20% share of fishing quotas in Russian waters and significant market position in the Peruvian fishmeal industry, we believe CFG should not be trading at discounts to its global peers, most of which are concentrated in single lines of business. Our target price of S$3.10 values the company in line with the industry average of 13x CY08 P/E, offering potential upside of 34%. Initiate with Outperform.
Hi Hotstock, Thanks for yr post. You are right, China's food product has caused a great concern for its low hygiene level. That in a way is Good for China Fishery. China Fish main fishing ground is Pacific Ocean (95.6%). They don't catch fish from your back yard's pond. Consumer who are concern will swtich from eating fresh water fish to sea water fish. This will improve profit for China Fishery. Pls refer to the attached Fin Report.
Also Flooding and river contamination is a big concern in China, but again it has benefited China Fish! Flooding and other river chemical poisoning case means that there will be accute shortage of fresh water fish! Consumer got no choice but to buy sea water fish which is China Fishery Business.
At this moment, 50% Revenue is from China. the rest from Korea, Japan and Europe. With expansion in Peru, u can see that the % of revenue from China will drop, hence the Business risk will also be reduced. Great Move by its Management!
REVENUE BY FISHING
LOCATIONS
Pacific Ocean remained as the most significant fishing
ground, accounting for 95.6% of aggregate turnover.
Through the Group
Waters also accounted for 3.8% of total revenue.
?s foray into Peru in FY2006, PeruvianREVENUE BY MARKETS
PRC remained as the Group
and Korea gained significant share as sales of premium
products such as fish roe increased. With a larger fleet
and hence greater onboard processing capabilities, sales
of processed-at-sea frozen fish fillets to the European
market also increased.
?s largest market, while JapanThis fish has been salted. BB has already finished dinner with this fish and there is no reason why they want to come in at this stage. The price rise so far is due to its expansion in Peru water for more fish. Beyond that there are still lots of ??? especially that China Food safety is a hot topic world wide.
Better to stay out of this fish. Dun forget its IPO price + stock split.
Instead of Chinese Fish, I think it is safer to invest on Pacific Andes, own 60% of China Fish...
It still has a room to move up, easilty hit $1...
Sorry, forgot to include: Target $3.30 by year end.
Time to accumulate. This Fish somehow escaped the BB's net.
EPS 2004=5.79, 05=10.05, 06=13.4. constant, steady growth averaging 60%. Q1 profit U$30.5m which is 45.3% up compare to Q1 06'.
It's cleverly executed expansion in South America - Peru, should see further grow in new future. Balance sheet also looks solid.
Today Price drop to 2.31, providing a very good buy opportunity.