The problems with pricing this company are many, and usually what happens is the market is caught unaware of improved earnings at times.
Consider the following:
- What is the true maintenance capex figure?
- As a result of the above, what's your growth capex?
- Given the size of growth capex and the time taken for salmon to grow and eventually be farmed (~3years from memory), what's is being done with that growth capex in the meantime? Are there costs associated with using those assets, even though they're not producing an income yet?
- What does this mean to the operational expenditures of the company?
And longer term:
- SGARA throws out figures significantly. After adjusting for the points above, what's the real ROE?
- Does this ROE apply long term? If so, is there a franchise value here?
I was revisiting my notes on this, and the above still seem to check out.
If only I could claim it as my own... (a better investor pointed me in the right direction).
TGR Price at posting:
$3.95 Sentiment: Buy Disclosure: Held
