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seriously is it a good deal? In my opinion I believe CFGL should have enough advisors and financial personals to do the simple maths for them, whether or not it is worth the risk... so the best scenario will be no major changes in their Russia business and a good integration between CFGL and Copeinca. As for the reduction in TAC of fishes in Peru and in fact everywhere, it is a measure taken for the sustainability of the precious resources so hopefully it would improve in time to come. Sorry if i sound abit bias but this is what I think la...and mayb cos im vested too...LOL....
The article posted by kewe81 is well-written & thorough..... looking at the thorns & appreciating the rose together.....
The article is long it has a pinch of sarcastism. It said the long term investment is for company " to shake the label" at the risk of " borrowing a lot of money against its balance sheet, they ponied up even more money to get Copeinca at a record price”.
The Peruvian fishes are high valued products but " the anvhovy catch was disappointing in 2013" moreover, the Peruvian government was concerned and acted against overfishing. The deal is " a bit of desperation"
" China Fish should have acquired Copeinca in 2012 when its prices was low and CF was flush with cash with a half year bond" but it did not. " They waited until this year, when they were cash-strapped and forcefully conducted a rights issue when China Fishery’s share price was weak, and even upsized the bid for Copeinca"
Moody’s sees the ratings outlook as still negative, “reflecting: 1) the potential refinancing risk of the bridging loan and 2) regulatory uncertainties on its Russian contract supply business, which will contribute over 40% to its revenues even after the Copeinca acquisition..
Can Copeinca deal see Pacific Andes emerge from shadows of past?
The planned acquisition of Peruvian fishmeal and fish oil producer Copeinca by China Fishery Group, part of the Pacific Andes seafood empire, is a chance for the company to emerge from the shadow of its past, sources told Undercurrent News.
Acquisitive Pacific Andes — in the process of buying fish finger production plants in Europe, as well as Copeinca — has long been a controversial company in the seafood sector.
In the early 2000s, the company was implicated in an illegal toothfish fishing operation by the Australian media, something it denied.
Then, last year, the Russian Federal Antimonopoly Service (FAS) accused the company of illegally controlling Russian fishing companies, which Pacific Andes also denied.
This has hit the value of the company’s bond and caused ratings agencies, such as Moody’s and Fitch, to downgrade the company.
Despite Moody’s and Fitch also being bearish on the Copeinca deal from a financing perspective, a senior seafood sector executive, wishing to be quoted anonymously, said he believes the Copeinca deal makes sense, for several reasons.
“They just have to shake the label they have carried from the allegations of poaching toothfish and of Russian payoffs,” he told Undercurrent.
With the move for Copeinca, Pacific Andes is securing “their business longer term”, he told Undercurrent.
“I actually think they have executed a sound strategy with regard to the fishmeal and oil products from Peru. They perhaps recognized before most that Peru was becoming more attractive for international investment, and becoming one of the ‘food baskets’ for agricultural and seafood products to North America,” he said.
“Long-term value for the Peruvian seafood products looks to be heading toward premium values as aquaculture feeds are in higher demand, and the health benefits from fish oils are now widely accepted,” the source told Undercurrent.
“The Peruvian species are known to be high in EPA and DHA, highly valued products in Japan. Couple that with a more responsible approach to fishing quotas by the Peruvian government and the investment looks sound, in the long-term,” he said.
Pacific Andes and China Fishery are, however, very dependent on the Ng family for management, said the source. Expanding in South America might force the company to hire more outside talent, seen as a positive step, the source said.
“They probably need to add some strong international management longer term, if they want to solidify the investment portfolio,” he told Undercurrent.
“If the German plans come off [where Pacific Andes is buying up fish finger plants] as well as Copeinca, they will need to look to get in more management, I would think,” he said.
‘Transformative’
A “successful integration of Copeinca’s operations represents a transformative event for China Fishery, aligning it closer to Chinese fish consumption and supply trends”, said a July 10 report on the company, from the Seaport Group, a US-based finance and analysis firm.
Other financial sector sources are not so convinced, but also feel the deal is a significant development for the company.
An Asia-based investment executive, who feels China Fishery is overpaying for Copeinca as it is striving to find a new story to tell investors, in light of the troubles in Russia, still labels the deal “transformative”.
The deal is “definitely transformative, at any price necessary”, said the executive, who wished to be quoted unnamed.
“This is case of small fish eating big fish, as the Chinese say,” he told Undercurrent.
China Fishery has “already borrowed a lot of money against its balance sheet, they ponied up even more money to get Copeinca at a record price”.
That’s despite the anchovy catch being disappointing in 2013 and the Peruvian government being concerned enough to act against overfishing, said the source.
“I think it all smells a bit of desperation, but let’s see,” he said, of the price China Fishery is willing to pay.
On July 17, China Fishery launched its new, improved takeover bid for Copeinca. The new offer price values the entire share capital of Copeinca at NOK 4.78 billion ($786 million)
At NOK 68.17 in cash per share in Copeinca, this new bid will cost China Fishery far more than it initially intended.
China Fishery already owns around 8.22% of shares in Copeinca, and it could now cost it around NOK 4.4bn ($730m) in cash to secure the rest of the shares.
That is far above its initial offer of NOK 3.15bn ($556m) for all the shares in the company, made on March 13.
To fund the higher bid, China Fishery said it would increase a loan facility to $401m from $295m.
The sequence of events in the lead-up to the bid is “puzzling”, said the Asia-based source.
“Why buy Copeinca now? China Fishery has been in Peru a while and should be familiar with it,” he said. “If it saw true value, it could’ve offered to buy Copeinca anytime in 2012, when Copeinca’s stock price was weak and China Fishery was flush with cash from a half-year bond.”
Copeinca shares started 2012 trading at NOK 33, before peaking at NOK 47, on Oct. 3. The share price was NOK 41.50 on Feb. 21, before rocketing to NOK 56.25 on Feb. 26, presumably as a result of takeover talk in the markets.
China Fishery could have chosen to bid when the share price was lower, instead of pre-paying its fourth so called long-term supply agreement, to secure access to Russian pollock for its processing plants, said the executive.
“Instead, they wait until this year, when they are cash-strapped and forcefully conducted a rights issue when China Fishery’s share price was weak, and even upsized the bid for Copeinca,” said the Asia-based executive.
On Nov. 14, China Fishery prepaid $150m to British Virgin Islands (BVI)-registered entity Perun Limited to secure all the fish harvested by its vessels.
Perun and another BVI registered firm Alatir are the two companies China Fishery deals with to secure Alaska pollock caught in Russian waters.
Negative ratings
Both Moody’s and Fitch, two of the three major ratings agencies, along with Standard and Poor’s, have issued statements rating China Fishery as negative.
On July 4, a week after Moody’s maintained a negative ratings outlook on China Fishery Group, Fitch ratings downgraded the company from stable to negative.
The ratings agency cited China Fishery’s higher-than-expected offer of $778m for Copeinca from the previously stated valuation of $600m as the main reason for downgrading.
Fitch makes no mention of the regulatory risks in Russia, but Moody’s does.
On one hand, Moody’s supports the fact the deal would lower China Fishery’s revenue and earnings reliance on its Russian contract supply business, “where the regulatory risk has been increasing”, to 41% and 47%, respectively, from 62% and 90% currently.
The contribution from the Peruvian fishmeal business would increase to 53% of total revenue from 30% previously, and to 65% of total its earnings before interest and taxes (EBIT) from 34% previously, said Moody’s.
Despite the obvious positives of the deal, “the increased financial leverage will likely reduce the headroom available under China Fishery’s bank loan covenants and lower its financial flexibility. Moody’s also expects the company’s liquidity to tighten, as it will need to refinance the bridging loan related to the acquisition upon its maturity in 12 months”.
However, Moody’s sees the ratings outlook as still negative, “reflecting: 1) the potential refinancing risk of the bridging loan and 2) regulatory uncertainties on its Russian contract supply business, which will contribute over 40% to its revenues even after the Copeinca acquisition”, it said.
The Seaport Group, the US based investment group, is more positive on the regulatory risk in Russia.
“It is our contention that a number of factors greatly reduce Russian regulatory risk,” it said, in a report dated July 10.
“China Fishery continues to operate under the existing agreements with its Russian partners” and also its “contractual right to recover any/all pre-payments would be financially deleterious to their Russian partners,” said the report.
“Most persuasively, that with the Copeinca acquisition China Fishery becomes a top global fishmeal supplier – a key input to growing aquaculture industry — and hence a company with whom the Russians will want to do business with in meeting their own protein consumption needs,” said Seaport Group.
Source: Undercurrent News
Used to have 10 carps. Rear them from 3 inches until they are about 22 inches long..initially on fish pallet but too expensive. then make own food with eggs, biscuits mixed with dry shrimps sometimes, just one hard boiled or fried eggs a day. They take normal white bread as well.. Just wanted to say there are alternative foods for aquaculture fishes..
CF maybe doing the right thing. According to the article, the final paragraph states
" This means that the aquaculture industry is using a large proportion of the fish caught in the world?s oceans each year.
Many of the fish stocks used as feed - mostly anchovies, pilchards, mackerel, herring, and whiting - are already fished at, or over, their safe biological limit. So instead of relieving pressure on the marine environment, aquaculture is actually contributing to the overfishing crisis that plagues the world's fisheries." stockpicker ( Date: 23-Jul-2013 16:22) Posted:
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Presently. aquaculture fish farming are threats but not much to resist fish imports from as far as South America. They could only capture about 60% of the market in China. This is because
· up to 22kg of wild-caught fish is needed to produce just 1kg of farmed tuna
· 4kg of wild-caught fish is needed to produce 1kg of farmed salmon
· up to 2kg of wild-caught fish is needed to produce 1kg of farmed marine shrimp
also, there are hosts of other problems such as space constraints, diseases etc.
http://wwf.panda.org/about_our_earth/blue_planet/problems/aquaculture/fish_feed/
If the ocean fish price are getting more expensive, it will only benefit these aquaculture fish farmers
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Presently. aquaculture fish farming are threats but not much to resist fish imports from as far as South America. They could only capture about 60% of the market in China. This is because
· up to 22kg of wild-caught fish is needed to produce just 1kg of farmed tuna
· 4kg of wild-caught fish is needed to produce 1kg of farmed salmon
· up to 2kg of wild-caught fish is needed to produce 1kg of farmed marine shrimp
also, there are hosts of other problems such as space constraints, diseases etc.
http://wwf.panda.org/about_our_earth/blue_planet/problems/aquaculture/fish_feed/
If the ocean fish price are getting more expensive, it will only benefit these aquaculture fish farmers
The company is poised for greater things, but I think the price will only soar if the management can provide a clearer picture of their future plans and the direction and vision it has, providing more confidence for investors. I do see Pacific Andes acquiring companies and growing it, as is China Fishery, but the question is, can they sustain their debt ratio, make a profit, and still give dividends to investors. My fingers are crossed.
It used to be in supermarket, they have stickers that show Genetic Modified Food [GM]. But nowadays instead of GM food, you will see Organic stickers or labels. Also, the price of Organic items are very very expensive. Global population is increasing exponentially, can the sea provide enough food for us ??? I'm sure there is only one way for the price to go ..... UP UP and AWAY
stockpicker ( Date: 19-Jul-2013 18:18) Posted:
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" Its the same reason why people will continue to pay high prices for property in Singapore, land is a finite resource, as it becomes less and less, prices will skyrocket..."
Not wrong with the above statement if there are no other alternatives. First, fish food is not a must on every table everyday. There are alternatives as food. Second, there are aquaculture sea and freshwater fish (e.g those rear in ponds) as an alternative. " Globally, aquaculture supplies more that 50 percent of all seafood produced for human consumption ? that percentage has been and will continue to rise. Conventional wisdom holds that traditional fisheries are producing near their maximum capacity and that future increases in seafood production must come largely from aquaculture." When sea fishing getting more expensive because of shortage in supply, aquaculture fishing will become more viable. Any additional investments to acquire more seafishing ground will only benefit the aquaculture fishing..
http://www.nmfs.noaa.gov/aquaculture/faqs/faq_aq_101.html
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It was not easy to control but it went back up again..hope Fish is greedy taking another bigger fish and Copeinca will come to its rescue.
http://tinypic.com/r/xf5a3l/5
I think it is only normal for any product to have a substitute for it... From fish to energy... People is also coming out with means and ways to reduce the over reliance on oil by having solar energy etc... but life still goes on....maybe one day CFGL may go into fish farming business too! Ensuring a sustainable supply of fishes ..
Never mind, there is no argument, let the market decide.:)
stockpicker ( Date: 22-Jul-2013 12:17) Posted:
Like your argument although I could taste different kinds but not btw ocean and farm seafish..
bamboo300306 ( Date: 21-Jul-2013 22:51) Posted:
Can you taste the difference btw a agriculture fish and a sea fish? Yeah, the are fish, but it's a different thing.
If you have the money, will would choose the sea fish? Why? For simple reason, they survive the rough sea!
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Like your argument although I could taste different kinds but not btw ocean and farm seafish..
bamboo300306 ( Date: 21-Jul-2013 22:51) Posted:
Can you taste the difference btw a agriculture fish and a sea fish? Yeah, the are fish, but it's a different thing.
If you have the money, will would choose the sea fish? Why? For simple reason, they survive the rough sea!
stockpicker ( Date: 19-Jul-2013 18:18) Posted:
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" Its the same reason why people will continue to pay high prices for property in Singapore, land is a finite resource, as it becomes less and less, prices will skyrocket..."
Not wrong with the above statement if there are no other alternatives. First, fish food is not a must on every table everyday. There are alternatives as food. Second, there are aquaculture sea and freshwater fish (e.g those rear in ponds) as an alternative. " Globally, aquaculture supplies more that 50 percent of all seafood produced for human consumption – that percentage has been and will continue to rise. Conventional wisdom holds that traditional fisheries are producing near their maximum capacity and that future increases in seafood production must come largely from aquaculture." When sea fishing getting more expensive because of shortage in supply, aquaculture fishing will become more viable. Any additional investments to acquire more seafishing ground will only benefit the aquaculture fishing..
http://www.nmfs.noaa.gov/aquaculture/faqs/faq_aq_101.html
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I still need to wait till the fy result out next month before invest..i think...how the quota cut and the good will write off will impact fish...price attractive but need confirmation
Can you taste the difference btw a agriculture fish and a sea fish? Yeah, the are fish, but it's a different thing.
If you have the money, will would choose the sea fish? Why? For simple reason, they survive the rough sea!
stockpicker ( Date: 19-Jul-2013 18:18) Posted:
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" Its the same reason why people will continue to pay high prices for property in Singapore, land is a finite resource, as it becomes less and less, prices will skyrocket..."
Not wrong with the above statement if there are no other alternatives. First, fish food is not a must on every table everyday. There are alternatives as food. Second, there are aquaculture sea and freshwater fish (e.g those rear in ponds) as an alternative. " Globally, aquaculture supplies more that 50 percent of all seafood produced for human consumption – that percentage has been and will continue to rise. Conventional wisdom holds that traditional fisheries are producing near their maximum capacity and that future increases in seafood production must come largely from aquaculture." When sea fishing getting more expensive because of shortage in supply, aquaculture fishing will become more viable. Any additional investments to acquire more seafishing ground will only benefit the aquaculture fishing..
http://www.nmfs.noaa.gov/aquaculture/faqs/faq_aq_101.html
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Quite sure China Fish (CF) must have made its decision based on good ground and reasons. But is it really a valued purchase of another company in debt?
On 21 May, Marine Havest (MH), a Norwegian aquaculture farmer made an offer of USD1.7 biln to take over Cermaq, which is its Norwegian competitor The condition was for Cermaq to abandon the bid for Copeinca that Cermaq mooted sometime ago. They explained that Copeinca would become a debt burden. However, Cermaq ignored MH's offer and went ahead to bid for Copeinca on 28 May for USD$9.76 per share. By then, China Fish (CF) in Feb already offered a bid of USD$8.81 per share for Copeinca. When CF revised its off er again in June to USD$11.15, Cermaq had already withdrew its Copeinca's offer and pre-accepted CF's offer.
On the surface, it would appear that MH is helping CF to secure Copeinca until one finds out that before this second bid by CF, Cermaq's Board had already rejected MH's offer and thereafter, it had also forced Cermaq to withdraw the Copeinca bid.
Among the 3 players, CF is the weakest. MH has the largest cap of USD$4.0 bil, Cermaq, USD$1.7 bil and CF, the smallest, only USD$613 mil also, MH and Cermaq have a 1 yr price hike of more than 50% whereas CF's price dropped 42% in that year.
The market was then left with the question as to why CF was so eagle to up about 30% its bid over Cermaq's for Copeinca. Was it a set up or Was it just coincidental? The reader may already have answers.
.....despite facing various " headaches" , China Fish has been resilient in tackling them..... as she grows & transforms in this sustainable business..... may the shareholders be rewarded in due time.....
the low volume of free floating shares may be the reason why the prices does not reflect the value of the stock. Also as you mentioned earlier that Copeinca financial report for last quarter is not looking too good at the moment, I believe most will prefer to wait and see what impact will the acquisition caused to CFGL before jumping onboard or choose to give it a miss. But I chose to believe that the acquisition would be a transformational one.
Someone earlier mentioned that Copeinca is a done deal and indeed it is. China Fish announced on 27 June that it has already own or pre-own about 75% of Copeinca's total shares available. The annoucement to come in August is just a formality..wonder why the stock price never move.. for those who did not know and intended to jump in before August's announcement..
http://sbr.com.sg/manufacturing/more-news/china-fishery-launches-new-offer-copeinca
