Ozzy, Now that I am fed and watered and all day stuff is out of...

Ozzy,

Now that I am fed and watered and all day stuff is out of the road let me try and put some meat around my earlier post. Firstly I have always said anything from about 6 cents to 7.2 cents is good buying in COZ and that historical view still stands. Even more so now that they have started to act upon what they have articulated in the past, irrespective of some of decisions that I would probably debate.

Crustaceans - Prawns - COZ
COZ has no competitor for large scale production of prawns (either banana or tiger) but they do have an overseas threat being cheaper imports from SE Asia and China. Bio-safety and bio-security will be their main differentiator. Having a large single location prawn breeding, farming and harvesting operation in one location, Legune Station, will be their operational risk but to get their requires a lot of feasibility, funding and research work and that is their current risk including getting the funds to achieve it. Some obvious partnering will have to occur here to provide a yield from the acreage on Legune Station and I have my views as to who and how to engage them but the Board doesn't pay me and I don't fell like being gratuitous via Hotcopper.

COZ also have its carbon arm that although is small it is operational and provide a small revenue stream in the meantime. I really wish they would take a closer look at MBD for some form of merging and propelling this part of the business forward as well as cross-leveraging.

Anyway there is nothing to excite or scare shareholders about other than it staves off dilution just to stay viable so there exists some degree of capital preservation whilst COZ seeks to grow the business and spread revenue risk.

Lets go through the others...

Pelagics - Sea Salmon - HOU and TGR
TGR re-established itself about 10 years ago after Kidder Williams (David Williams) picked it up and gave it a helping hand to get going again. They are travelling quite nicely and will continue to do so with nothing startling hidden in the business or the market.
HUO is a relative newcomer to the ASX with a first time Chairman out of another agri-processing sector, but the company is not a newcomer to salmon farming, with the initial family having a strong hold on issued capital and an active involvement in day to day management. Again a quiet performer in the same space as TGR. They are now post honeymoon on the ASX and just above IPO list price.

The greatest risk with both of these companies are predators, both onshore and offshore. Onshore being their ongoing farming licenses and the view of many about sea-pen based salmon farming and offshore the list is long with pen damage from various sea life forms (i.e. seals, sharks, larger pelagics, dolphins, squid, barracouta etc.) and the elements. I can't comment on these two stocks specifically but the industry has a high morbidity and a high mortality rate and limiting a constant moving fish to a pen also raises questions about quality of the protein when harvested.

There are other options to sea-pen raising salmon as is being done somewhere else and their morbidity and mortality rate is close to zero with no in-water predators and their protein quality is well beyond that of sea-penned salmon but these businesses are quiet, private companies and not in Australia. but they prove there are other methods of greater efficiency and greater effectiveness that command greater a per Kg price for processed salmon than any peer globally.

Aside from the last comment both of these will, in the future, be nice yield earners in their sector, but underperformers if compared across sectors with others stocks.

Pelagics - Southern Blue Fin Tuna and Kingfish - CSS
This company came out of the sudden growing demand for Southern Blue Fin Tuna in the late 1990's after the harvesting of Northern Blue Fin Tuna was getting harder due to depleting stocks in and around Japan. The largest shareholder of CSS is the previous company that had the licence for Southern Blue Fin Tuna as this was their means of realising some of their nett worth locked in to those licences. Since then they have moved into (Yellowtail) Kingfish and somehow manage to breed, grow and farm these medium-sized fast moving pocket rockets. If you think getting a decent sea salmon on a fishing line is fun, try one of these two bad boys...

How they are going in the market for their products I don't know but they are mid-flight of a rights issue at the moment and this is apparently to fund Kingfish aqua-farming. The same product farming risks apply to CSS that are present for TGR and HUO.

Worth noting there are different types of salmon in the southern waters, each with a different feed conversion ratio and different protein yield however they both can be farmed in either fresh or salt water so long as it has motion. Tuna and Kingfish are pure salt water based.

You choose which of the four you would go into if you wanted exposure to aqua-farming in Australia.

Cheers.