Tassal Group Limited (ASX: TGR) is Australia's leading aquaculture company with a market capitalisation of $600 million. Fellow listed salmon farmer Huon Aquaculture Group Ltd (ASX: HUO) meanwhile has a market capitalisation of $350 million.
Interestingly, while Tassal's share price has gained 15.5% over the past 12 months, Huon's share price has fallen 17.5%. This is particularly significant given Huon only listed (via initial public offer) one year ago.
With Tassal recently holding its Annual General Meeting (AGM) now could be a good time for an investor to consider the investment merits of both Tassal and Huon.
Tassal results recap:
- Revenue up 16% to $310 million
- Operating earnings before interest and tax increased 13% to $54 million
- Operating net profit after tax (NPAT) expanded 15% to $35 million
- Total dividend up 21.4% to 14 cents per share
- Gearing of 17.6%
Huon results recap:
- Revenue of $192 million
- Operating NPAT of $20 million
- Operating earnings per share of 25.6 cps
- Gearing 13.3%
Future Outlook:
A key strategic initiative taken by Tassal during the year was to shift from a pure salmon producer to a diversified seafood business via the acquisition of De Costi Seafoods, the market leading seafood supplier in New South Wales.
The acquisition of De Costi delivers a step change in the group's stated strategy to "grow domestic per capita consumption, with the majority of sales in retail, continue to deliver sustainable, growing returns."
Meanwhile, Huon has disappointed investors after failing to meet its prospectus profit forecast however the group provided an upbeat assessment for its outlook in the current financial year "with volumes up significantly in a tightening global market that has resulted in improved export pricing, especially for larger fish."
Buy, hold or sell
The relative underperformance and pricing of Huon is certainly interesting however so are the strategic growth initiatives and market positioning of Tassal. Given the outlook for domestic salmon consumption plus the potential Asian regional growth opportunities, both stocks arguably look appealing at current prices.
