Thanks for posting the link. It was an interesting article, but...

Thanks for posting the link. It was an interesting article, but I need to raise some concerns with it:-
1. I am not certain that there are high barriers to entry. The article did not specifically point them out. If a Marine Harvest wanted to set up in Tassie, it would not have, IMO, much issue around finance and licences. IMO, a high barrier to entry would be, for e.g. the blood plasma market in the US, not Salmon farming in Tasmania.
2. I am not certain that it delivers above average returns. The question is "relative to what" and based on what measures? Is the comment relative to other Salmon producers or other stocks on the ASX? Is above average return measured by ROE, ROC, ebit margin, dividend yield, cash flow or something else? While TGR is providing above average returns when compared to competitors in the Aust fish farming industry (HUO, CSS), I am not sure that it beats other stocks in other sectors.
3. Using the dividend discount model to come up with target share price makes a number of underlying assumptions, which I am not sure that I agree with.
a) the business is defensive (like Coles or WOW) - I am not sure that it is
b) no environmental issue will affect production and sales. - there is no discount for "black swan" events, which is probably needed for an commodity agricultural stock.
4) Having said all that, the comment that the market has not factored in the De Costa acquisition and cost out, then the price target if $5.78 seems fair and reasonable.

I would give the report a score of 5 /10.

HT1