Why Clean Seas Tuna Limited shares have soared 35% higher today

Credit: Gamel

Shareholders of Clean Seas Tuna Limited (ASX: CSS) are smiling today after the company’s release of its full year sales update sent its share price higher by over 35% at one stage.

The company’s update revealed that sales in FY 2016 grew a massive 83% year on year to 2,012 tonnes. This is not only a big improvement year on year, but also beats management’s full year forecast of 1,700 tonnes given in its half year report.

This makes it an impressive two consecutive years of strong sales growth from the Port Lincoln-based micro-cap. In FY 2015 the company produced sales of 1,098 tonnes, up 98% from 571 tonnes in FY 2014.

The good news for investors is that this run could yet continue thanks to additional news in the announcement that states it has signed a contract with Beston Global Food Company Ltd (ASX: BFC) for the distribution of its fresh and frozen Kingfish into China, Hong Kong, and South Korea.

The contract runs from June 2016 through to December 2017 and includes an initial shipment of 176 tonnes of frozen product. According to the update, 176 tonnes has fallen into FY 2016 sales figures, with at least an additional 340 tonnes expected over the remainder of the contract.

The company stated this about the new contract:

“This exciting development will facilitate the establishment of Clean Seas’ Kingfish as a premium Australian seafood product in the Chinese and South Korean markets. Clean Seas and Beston will be working together to develop these markets, leveraging Beston’s networks and relationships in the region and Clean Seas’ outstanding Kingfish.”

I believe this is positive news for the fledgling company and its shareholders. It is of course early days and investors shouldn’t get too carried away just yet, but it is clear to see how popular Australian produce is in Chinese markets. You only need to look at the success of Blackmores Limited (ASX: BKL) and a2 Milk Company Ltd (Australia) (ASX: A2M) to see this.

Being a micro-cap Clean Seas Tuna would be a reasonably high-risk investment. But I do see a lot of growth potential in the company which makes it well worth adding to your watch list at the very least in my opinion.

If you need to make room in your portfolio for an investment in Clean Seas Tuna then I would highly recommend checking to see if you own one of these three rotten ASX shares. Each could potentially be damaging your portfolio right now and might be better off gone.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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