stronger for longer - fish poolfishpool.eu/wp-content/uploads/2016/11/abg-price...this document is...
Post on 17-Apr-2020
1 Views
Preview:
TRANSCRIPT
This document is for the use of the recipient only and should not be copied or distributed to any other person or entity.
Please refer to important disclosures at the end of this presentation.
Stronger for longer
Fish Pool/Nasdaq Christmas Seminar
23 November 2016
Vidar Strat
vidar.strat@abgsc.no
Investment Research
This document is for the use of the recipient only and should not be copied or distributed to any other person or entity.
Please refer to important disclosures at the end of this presentation.
Stronger for longer
Fish Pool/Nasdaq Christmas Seminar
23 November 2016
Vidar Strat
vidar.strat@abgsc.no
Investment Research
This document is for the use of the recipient only and should not be copied or distributed to any other person or entity.
Please refer to important disclosures at the end of this presentation.
Stronger for longer
Fish Pool/Nasdaq Christmas Seminar
23 November 2016
Vidar Strat
vidar.strat@abgsc.no
Investment Research
This document is for the use of the recipient only and should not be copied or distributed to any other person or entity.
Please refer to important disclosures at the end of this presentation.
Stronger, but only for a little longer
Fish Pool/Nasdaq Christmas Seminar
23 November 2016
Vidar Strat
vidar.strat@abgsc.no
Investment Research
Page 5ABG Sundal Collier
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
21.7
25.3
32.0
25.025.8
30.6
37.5
31.3
26.2
39.139.7
40.6
60.8
58.0
51.0
20
25
30
35
40
45
50
55
60
65
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
NOK/kg
Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe)
We were used to a cyclical salmon price
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg * YTD
Page 6ABG Sundal Collier
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
21.7
25.3
32.0
25.025.8
30.6
37.5
31.3
26.2
39.139.7
40.6
60.8
58.0
51.0
20
25
30
35
40
45
50
55
60
65
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
NOK/kg
Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe)
Then followed three years with stable prices
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg * YTD
Page 7ABG Sundal Collier
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
21.7
25.3
32.0
25.025.8
30.6
37.5
31.3
26.2
39.139.7
40.6
60.8
58.0
51.0
20
25
30
35
40
45
50
55
60
65
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
NOK/kg
Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe)
Super strong salmon price in 2016
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg * YTD
Page 8ABG Sundal Collier
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
21.7
25.3
32.0
25.025.8
30.6
37.5
31.3
26.2
39.139.7
40.6
60.8
58.0
51.0
20
25
30
35
40
45
50
55
60
65
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
NOK/kg
Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe)
Super strong salmon price in 2016
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg * YTD
+50% +45%
Page 9ABG Sundal Collier
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
21.7
25.3
32.0
25.025.8
30.6
37.5
31.3
26.2
39.139.7
40.6
60.8
58.0
51.0
20
25
30
35
40
45
50
55
60
65
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
NOK/kg
Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe)
Super strong salmon price in 2016
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg * YTD
With «The salmon price», we mean NASDAQ salmon price (all sizes) minus NOK 0.75/kg = Old FHL price
+50% +45%
Page 10ABG Sundal Collier
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
21.7
25.3
32.0
25.025.8
30.6
37.5
31.3
26.2
39.139.7
40.6
60.8
58.0
51.0
20
25
30
35
40
45
50
55
60
65
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
NOK/kg
Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe)
Super strong salmon price in 2016
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg * YTD
With «The salmon price», we mean NASDAQ salmon price (all sizes) minus NOK 0.75/kg = Old FHL price
+50% +45%
What awaits in 2017?
? ?
Page 11ABG Sundal Collier
2016 was special
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Page 12ABG Sundal Collier
2016 was special
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Page 13ABG Sundal Collier
2016 was special
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Page 14ABG Sundal Collier
2016 was special
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Page 15ABG Sundal Collier
537 574 599
723 741
856945
1006
1183 11441199 1234
1179
6%7%
4%
21%
2%
16%
10% 6%
18%
-3%5%
3%-4%
0
200
400
600
800
1000
1200
1400
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
346385 369 356
403
239
130
221
364
468
583 598
486
23%11%
-4%
-4%
13%
71%65%
29% 24%
3%
-19%0
100
200
300
400
500
600
700
800
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Chile Supply growth, Chile
Growth y-o-y kTonnes
2016 was special – Low supply in main production regions
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Supply of Atlantic salmon, Norway
Supply of Atlantic salmon, Chile
Page 16ABG Sundal Collier
537 574 599
723 741
856945
1006
1183 11441199 1234
1179
6%7%
4%
21%
2%
16%
10% 6%
18%
-3%5%
3%-4%
0
200
400
600
800
1000
1200
1400
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
346385 369 356
403
239
130
221
364
468
583 598
486
23%11%
-4%
-4%
13%
71%65%
29% 24%
3%
-19%0
100
200
300
400
500
600
700
800
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Chile Supply growth, Chile
Growth y-o-y kTonnes
2016 was special – Low supply in main production regions
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Supply of Atlantic salmon, Norway
Supply of Atlantic salmon, Chile
Page 17ABG Sundal Collier
2016 was special – Low supply in main production regions
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Supply of Atlantic salmon, Global
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
Page 18ABG Sundal Collier
2016 was special – Low supply in main production regions
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Supply of Atlantic salmon, Global
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
Page 19ABG Sundal Collier
2016 was special – Low supply in main production regions
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Supply of Atlantic salmon, Global
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
Is this really a strong price reaction?
Page 20ABG Sundal Collier
2016 was special – Low supply in main production regions
Global supply of Atlantic salmon, 2016e
54%
22%
8%
7%4% 5%
Norway Chile UK Canada Faroes Others
Supply of Atlantic salmon, Global
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
Is this really a strong price reaction?
I will soon revert to this question…
Page 21ABG Sundal Collier
Supply model – ChileSupply model - Norway
4%
11%
0%4%
2% 1% 2%-1%
3%
-3%
3%
0% 0%
3%
4%
0%-3%
1%
-6%
1%
6%
18%
-3%
5%3%
-4%
3%
-10%
-5%
0%
5%
10%
15%
20%
2011 2012 2013 2014 2015 2016e 2017e
Y-o-y growth
Estimation error H1 sea temp. impact (adj. for last year )
Fish due for harvest (end September) Actual/ABGSC est.
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
2260
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
4%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
20
17
e
Global supply, ktonnes Global supply growth
Growth y-o-y kTonnes
What salmon supply to expect in 2017e?
Global supply, Atlantic Salmon
KPIs and annual summary
2013 2014 2015 2016e 2017e
Average harvest weight (WFE kg) 4.3 4.8 4.8 4.8 4.9
Number of smolts expected to be harvested (m) 140 153 135 143 132
Actual number of harvested fish (m) 109 122 124 102 109
Mortality and losses/wastage 22% 20% 8% 29% 17%
Smolt yield, fish harvested (WFE kg) 3.3 3.8 4.4 3.4 4.0
Harvest (WFE ktonnes) 468 587 598 486 531
29% 25% 2% -19% 9%
Page 22ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
What is the implication for the salmon price?
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
Page 23ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
4% global supply growth = 10% price increase NOK 67/kg
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
+10%?2017e?
Page 24ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
4% global supply growth = 10% price increase NOK 67/kg
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
+10%?
Is it really that simple?
2017e?
Page 25ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
4% global supply growth = 10% price increase NOK 67/kg
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
+10%?2017e?
Is it really that simple?
Probably not
Page 26ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
We are obsessed with supply forecasts
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
Page 27ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
We are obsessed with supply forecasts, for good reasons
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
Page 28ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
We are obsessed with supply forecasts, for good reasons
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
What about demand?
Page 29ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
We are obsessed with supply forecasts, for good reasons
What about demand?
Page 30ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
We are obsessed with supply forecasts, for good reasons
What about demand?
Page 31ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
?
?
We are obsessed with supply forecasts, for good reasons
What about demand?
What happened in 2012 and in 2013?
Page 32ABG Sundal Collier
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
We have to study the salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Salmon price/meat price ratio since 1990
Page 33ABG Sundal Collier
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
2012: Abnormal salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Salmon price/meat price ratio since 1990
Page 34ABG Sundal Collier
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
2012: Abnormal salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Salmon price/meat price ratio since 1990
Change in demand
Page 35ABG Sundal Collier
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
2016: Abnormal salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Salmon price/meat price ratio since 1990
Page 36ABG Sundal Collier
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
2016: Abnormal salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Change in demand?
Salmon price/meat price ratio since 1990
Page 37ABG Sundal Collier
Selected quotes about demand from listed salmon farming companies’ Q3’16 quarterly material
– «Notwithstanding the substantial decline in supply, continued strong demand globally»
But demand is super strong, right?
Page 38ABG Sundal Collier
Selected quotes about demand from listed salmon farming companies’ Q3’16 quarterly material
– «Notwithstanding the substantial decline in supply, continued strong demand globally»
– «Strong salmon market driven by good demand and low supply growth»
But demand is super strong, right?
Page 39ABG Sundal Collier
Selected quotes about demand from listed salmon farming companies’ Q3’16 quarterly material
– «Notwithstanding the substantial decline in supply, continued strong demand globally»
– «Strong salmon market driven by good demand and low supply growth»
– «Together with a strong demand for salmon in nearly all markets, this has resulted in
a significant increase in the salmon prices during 2016»
But demand is super strong, right?
Page 40ABG Sundal Collier
Selected quotes about demand from listed salmon farming companies’ Q3’16 quarterly material
– «Notwithstanding the substantial decline in supply, continued strong demand globally»
– «Strong salmon market driven by good demand and low supply growth»
– «Together with a strong demand for salmon in nearly all markets, this has resulted in
a significant increase in the salmon prices during 2016»
– «Experiencing continued good demand in core markets»
– «There is strong underlying demand for salmon and good prices are therefore epected
during the remaining months of 2016 and into 2017»
– «… strong growth in demand for seafood in general, and fresh seafood in a
consumer-friendly format in particular, gives grounds for optimism …»
But demand is super strong, right?
Page 41ABG Sundal Collier
Selected quotes about demand from listed salmon farming companies’ Q3’16 quarterly material
– «Notwithstanding the substantial decline in supply, continued strong demand globally»
– «Strong salmon market driven by good demand and low supply growth»
– «Together with a strong demand for salmon in nearly all markets, this has resulted in
a significant increase in the salmon prices during 2016»
– «Experiencing continued good demand in core markets»
– «There is strong underlying demand for salmon and good prices are therefore epected
during the remaining months of 2016 and into 2017»
– «… strong growth in demand for seafood in general, and fresh seafood in a
consumer-friendly format in particular, gives grounds for optimism …»
But demand is super strong, right?
Let’s look at the facts!
Page 42ABG Sundal Collier
Supply of Atlantic salmon, Global
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
eSupply, Norway Supply growth, Norway
Growth y-o-y kTonnes
6% supply growth in three years is not much (~2% per year)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
?
+6%
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
Salmon price, Norway (EUR/gwe)
+30%
Page 43ABG Sundal Collier
1205 1249 12701397
1492 1468 14551633
2000 20412228
23222163
5%4%
2%
10%7%
-2% -1%
12%
22%
2%9%
4%
-7%
0
500
1,000
1,500
2,000
2,500
-20%
0%
20%
40%
60%
80%
100%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
e
Supply, Norway Supply growth, Norway
Growth y-o-y kTonnes
Supply of Atlantic salmon, Global
6% supply growth in three years is not much (~2% per year)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
?
+6%
2.6
3.2
4.0
3.13.1
3.5
4.7
4.0
3.5
5.0 4.7
4.5
6.5
6.4
5.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16* '17e '18e
EUR/kg
Salmon price, Norway (EUR/gwe)
+30%
+16% per year Fair price reaction = 55% increase
Page 44ABG Sundal Collier
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
2016: Abnormal salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Salmon price/meat price ratio since 1990
Page 45ABG Sundal Collier
50
100
150
200
250
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Index value
Salmon index Beef Poultry Pork
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
2016: Abnormal salmon price relative to other proteins
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
1990 1995 2000 2005 2010 2015
Ratio
High/low band Salmon vs. avg. meats
Salmon price/meat price ratio since 1990Salmon vs. other proteins (indexed since 2000)
Source: ABG Sundal Collier, Kontali, Kontali, IMF, FAO, Sjømat Norge, NASDAQ, Bloomberg
Salmon price/meat price ratio since 1990
So, what do I believe?
Page 46ABG Sundal Collier
The salmon price will stay stronger, but only for a little longer
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg
Page 47ABG Sundal Collier
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
1.8x
Q1'
07
Q3'
07
Q1'
08
Q3'
08
Q1'
09
Q3'
09
Q1'
10
Q3'
10
Q1'
11
Q3'
11
Q1'
12
Q3'
12
Q1'
13
Q3'
13
Q1'
14
Q3'
14
Q1'
15
Q3'
15
Q1'
16
Q3'
16
Q1'
17e
Q3'
17e
Salmon vs other meats (lhs) Global supply growth y-o-y (rhs, reversed)
481467507
585
509543
569607
535556
580
651
541503
532
587
518516
584
642
6%
-2%1%
4%6%
16%
12%
4%5%
2% 2%
7%
1%
-10%-8%
-10%
-4%
3%
10%9%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
700
Global supply Global supply growth
Global supply of Atlantic Salmon (quarterly) Salmon/meat price ratio vs change in global supply
The salmon price will stay stronger, but only for a little longer
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg
Page 48ABG Sundal Collier
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
1.8x
Q1'
07
Q3'
07
Q1'
08
Q3'
08
Q1'
09
Q3'
09
Q1'
10
Q3'
10
Q1'
11
Q3'
11
Q1'
12
Q3'
12
Q1'
13
Q3'
13
Q1'
14
Q3'
14
Q1'
15
Q3'
15
Q1'
16
Q3'
16
Q1'
17e
Q3'
17e
Salmon vs other meats (lhs) Global supply growth y-o-y (rhs, reversed)
481467507
585
509543
569607
535556
580
651
541503
532
587
518516
584
642
6%
-2%1%
4%6%
16%
12%
4%5%
2% 2%
7%
1%
-10%-8%
-10%
-4%
3%
10%9%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
700
Global supply Global supply growth
Global supply of Atlantic Salmon (quarterly) Salmon/meat price ratio vs change in global supply
The salmon price will stay stronger, but only for a little longer
Source: ABG Sundal Collier, NASDAQ, Sjømat Norge, Bloomberg
2017 = NOK 58/kg
Page 49ABG Sundal Collier
2012
2013
2014
2015
2016e
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-10% -5% 0% 5% 10% 15% 20% 25%
Global supply change (Atl. salmon)
Nominal price change (EUR)
R2 = 0.81
Our ’17e salmon price estimate is in line with ’15e reaction
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
2001-2011
-4%2017e
Page 50ABG Sundal Collier
NOK 58/kg is quite decent, right?
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
Page 51ABG Sundal Collier
67.061.5
50.5 53.058.0
74.5 72.0
62.3 62.267.8
-10%
-15%
-19%
-15% -14%
-20 %
-18 %
-16 %
-14 %
-12 %
-10 %
-8%
-6%
-4%
-2%
0%
0
10
20
30
40
50
60
70
80
Q1 Q2 Q3 Q4 2017e average
2017e
NOK/kg
ABGSCe Forward ABGSCe vs forward curve
NOK 58/kg is quite decent, right?
Nominal supply/salmon price regression (EUR)
Source: ABG Sundal Collier, Kontali, Sjømat Norge, NASDAQ, Bloomberg
Yes, but expectations are even higher
Page 52ABG Sundal Collier
Concluding remarks
Page 53ABG Sundal Collier
Concluding remarks
I believe the salmon price in 2017 will be NOK 58/kg, down 6% from ‘16e at NOK 61.6/kg
Page 54ABG Sundal Collier
Concluding remarks
I believe the salmon price in 2017 will be NOK 58/kg, down 6% from ‘16e at NOK 61.6/kg
The salmon price will probably be higher in the first half of 2017 than in the second half of 2017
– I question the robustness in demand as
• the volume growth is slim (and limited opportunities to develop new markets)
• the salmon price is very high relative to other proteins
– I believe ~10% increase in supply in H2’17 will contribute to a correction in the salmon price relative to other
proteins
Page 55ABG Sundal Collier
Concluding remarks
I believe the salmon price in 2017 will be NOK 58/kg, down 6% from ‘16e at NOK 61.6/kg
The salmon price will probably be higher in the first half of 2017 than in the second half of 2017
– I question the robustness in demand as
• the volume growth is slim (and limited opportunities to develop new markets)
• the salmon price is very high relative to other proteins
– I believe ~10% increase in supply in H2’17 will contribute to a correction in the salmon price relative to other
proteins
The market will probably be disappointed
– Fish Pool forward curve is currently at NOK 67.8/kg (we are 14% below)
Page 56ABG Sundal Collier
Concluding remarks
I believe the salmon price in 2017 will be NOK 58/kg, down 6% from ‘16e at NOK 61.6/kg
The salmon price will probably be higher in the first half of 2017 than in the second half of 2017
– I question the robustness in demand as
• the volume growth is slim (and limited opportunities to develop new markets)
• the salmon price is very high relative to other proteins
– I believe ~10% increase in supply in H2’17 will contribute to a correction in the salmon price relative to other
proteins
The market will probably be disappointed
– Fish Pool forward curve is currently at NOK 67.8/kg (we are 14% below)
Risks to these conclusions: Biological challenges/surprises
– Example:
Page 57ABG Sundal Collier
Concluding remarks
I believe the salmon price in 2017 will be NOK 58/kg, down 6% from ‘16e at NOK 61.6/kg
The salmon price will probably be higher in the first half of 2017 than in the second half of 2017
– I question the robustness in demand as
• the volume growth is slim (and limited opportunities to develop new markets)
• the salmon price is very high relative to other proteins
– I believe ~10% increase in supply in H2’17 will contribute to a correction in the salmon price relative to other
proteins
The market will probably be disappointed
– Fish Pool forward curve is currently at NOK 67.8/kg (we are 14% below)
Risks to these conclusions: Biological challenges/surprises
– Example:
Page 58ABG Sundal Collier
DisclosuresAnalyst certification
I/We, Vidar Strat, the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our
personal view about the companies and securities covered in this report. I/We further certify that I/we have not been, nor am/are or will be, receiving direct or indirect compensation related to the specific
recommendations or views contained in this report.
Analyst stock ratings definitions
BUY = We expect this stock’s total return to exceed the market’s expected total return by 5% or more over the next six months.
HOLD = We expect this stock’s total return to be in line with the market’s expected total return within a range of 4% over the next six months.
SELL = We expect this stock’s total return to underperform the market’s expected total return by 5% or more over the next six months.
TRADING BUY = We expect this stock’s total absolute return to exceed 10% over the next six weeks.
TRADING SELL = We expect this stock’s total absolute return to fall below negative 10% over the next six weeks.
Analyst valuation methods
When setting the individual ratings, ABG Sundal Collier assumes that a normal total absolute return (including dividends) for the market is 8% per annum, or 4% on a six-month basis. Therefore,
when we rate a stock a buy, we expect an absolute return of 9% or better over six months. We have more rigorous guidelines for trading buys and trading sells on small cap stocks; defined as having
a market capitalisation below USD 1.5 billion. For trading buys on small cap stocks, we must identify a potential absolute return of 15% or more over the next six weeks. This more rigorous
guideline reflects the fact that the low trading volume for small cap stocks inhibits the ability to trade them within a narrow price band.
ABG Sundal Collier analysts publish price targets for the stocks they cover. These price targets rely on various valuation methods. One of the most frequently used methods is the valuation of a
company by calculation of that company’s discounted cash flow (DCF). Another valuation method is the analysis of a company’s return on capital employed relative to its cost of capital. Finally, the
analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and
investment companies, the ratio of price to net asset value is considered. Price targets are changed when earnings and cash flow forecasts are changed. They may also be changed when the
underlying value of a company’s assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change.
Stock price, company ratings and target price history
For the stock price, company ratings and target history of each company mentioned in this report for which ABG Sundal Collier provides coverage (unless it is initiating coverage), please refer
to the research section of our website located at www.abgsc.com.
Page 59ABG Sundal Collier
Important company specific disclosures
For company specific disclosures including employee, partner and ABGSC holdings, Corporate Finance services, market making, conflicts of interest of each company
mentioned in this report for which ABG Sundal Collier provides coverage (unless it is initiating coverage), please refer to the research section of our website located at
www.abgsc.com.
Stock price, company ratings and target price history
For company specific disclosures, stock price, company ratings and target history of each company mentioned in this report for which ABG Sundal Collier provides
coverage (unless it is initiating coverage), please refer to the research section of our website located at www.abgsc.com.
All prices are as of 22 November 2016, unless otherwise noted
Disclaimer
This document has been prepared by ABG Sundal Collier which is the marketing name referring to all or any of ABG Sundal Collier ASA, ABG Sundal Collier AB or ABG Sundal Collier Partners LLP and any of
their affiliated or associated companies and their directors, officers, representatives and employees. This document is provided solely for the information and use of professional investors, who are expected to make
their own investment decisions without undue reliance on this document. The information contained herein does not apply to, and should not be relied upon by, retail clients. This document is for distribution only
under such circumstances as may be permitted by applicable law. This document is a marketing communication that has been prepared by ABG Sundal Collier for information purposes only, is provided purely on a
factual basis and does not constitute investment research as described in European Union legislation. Any recommendation(s) in this publication is (are) has/have no regard to specific investment objectives and the
financial situation or needs of any specific recipient. The views expressed in this document may not reflect the views of the firm, which means that they may differ from the views of our fundamental research
analysts. For information on the opinions and estimates of our research analysts, please visit the research section of our website located at www.abgsc.com. All opinions herein reflect the judgment of the author of
the document on the date it was issued and are subject to change without notice. The material in this document has not been prepared in accordance with legal requirements designed to promote the independence of
investment research. ABG Sundal Collier accepts no liability whatsoever for any losses arising from any use of this document or its contents. This document is not to be used or considered as an offer to sell, or a
solicitation of an offer to buy. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but ABG Sundal Collier makes no representation as to its accuracy
or completeness and it should not be relied upon as such. Past performance is not indicative of future results. The compensation of persons contributing to this document is not based on specific investment banking
revenues, however, it is determined from the profitability of the ABG Sundal Collier Group, which includes earnings from investment banking operations and other business. Investors should assume that ABG
Sundal Collier is seeking or will seek investment banking or other business relationships with the companies in this report. From time to time, ABG Sundal Collier and its affiliates and any shareholders, directors,
officers or employees thereof may (I) have a position in, or otherwise be interested in, any securities directly or indirectly connected to the subject of this document, or (II) perform investment banking or other
services for, or solicit investment banking or other services from, a company mentioned herein. ABG Sundal Collier relies on information barriers to control the flow of information contained in one or more areas
of ABG Sundal Collier, into other areas, units, groups or affiliates of ABG Sundal Collier.
Norway: ABG Sundal Collier ASA is regulated by the Financial Supervisory Authority of Norway (Finanstilsynet); Sweden: ABG Sundal Collier AB is regulated by the Swedish Financial Supervisory Authority
(Finansinspektionen); UK: This document is a communication made, or approved for communication in the UK, by ABG Sundal Collier Partners LLP, authorised and regulated by the Financial Conduct Authority
in the conduct of its business. US: This document is being distributed in the United States in accordance with FINRA Rule 1050(f)(3)(B) by ABG Sundal Collier Inc., a FINRA member which accepts responsibility
for its content. Research analysts are not registered/qualified as research analysts with FINRA or the NYSE, and are not associated persons of ABG Sundal Collier Inc. and therefore not subject to FINRA Rule 2711
and NYSE Rule 472, the research analyst conflict rules. Research reports distributed in the U.S are intended solely for “major institutional investors,” as defined under Rule 15a-6 of the Securities Exchange Act of
1934. Each U.S major institutional investor that receives a copy of this document by its acceptance represents that it agrees it will not distribute this document to any other person. Any U.S. major institutional
investor receiving this document who wishes to effect transactions in any securities referred to herein should contact ABG Sundal Collier Inc., not its affiliates. Further information on the securities referred to
herein may be obtained from ABG Sundal Collier Inc., on request.
This document may not be reproduced, distributed or published by any recipient for any purpose whatsoever without the prior written express permission of ABG Sundal Collier.
Disclosure with respect to the company mentioned above can be found on our website: www.abgsc.com. Furthermore, if reference is made in this publication to other companies and ABG Sundal
Collier provides research coverage for those companies details regarding disclosures may also be found on our website: www.abgsc.com. Additional information is available upon request
© Copyright 2016 ABG Sundal Collier ASA
Page 60ABG Sundal Collier
ABGSC contact details
Norway
ABG Sundal Collier ASA
Pb. 1444 Vika
Munkedamsveien 45E, 7th floor
NO-0115 OSLO
Norway
Tel +47 22 01 60 00
Fax +47 22 01 60 60
Sweden
ABG Sundal Collier AB
Box 7269
Regeringsgatan 65, 5th floor
SE-103 89 STOCKHOLM
Sweden
Tel +46 8 566 28 600
Fax +46 8 566 28 601
USA
ABG Sundal Collier Inc.
850 Third Avenue, Suite 9-C
NEW YORK, NY 10022
USA
Tel +1 212 605 38 00
Fax +1 212 605 38 01
United Kingdom
ABG Sundal Collier Partners LLP.
St Martins Court, 5th floor
10 Paternoster Row
LONDON EC4M 7EJ
United Kingdom
Tel +44 207 905 56 00
Fax +44 207 905 56 01
Germany
ABG Sundal Collier, Frankfurt Branch
Schillerstrasse 2,
5. Obergeschoss
DE-60313 FRANKFURT / MAIN
Germany
Tel +49 69 96 86 96 0
Fax +49 69 96 86 96 99
Denmark
ABG Sundal Collier, Copenhagen Branch
Forbindelsesvej 12
DK-2100 COPENHAGEN K
Denmark
Tel +45 35 46 30 00
Fax +45 35 46 30 10
top related