Shrimp prices rise by 61% in March in US to touch 14 year old high. The shrimp story continues .
Understanding EMS
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As EMS has been hovering around as a severe threat to this investment thesis and people have been skeptical , it prompted me to understand various aspects related to this disease
In India we are seeing that MPEDA is proactive about this issue, we have authorised hatcheries where broodstock is quarantined before supply to farmers,
1). Then , what are the possible sources of EMS entering our shrimp ecosystem?
a. shortage of broodstock ;farmers try to obtain seeds from unauthorized sources
b. Bad farm management practices ,not maintaining enough hygiene, pH and salinity levels
2). How does it spread through the system ?
A farmer obtaining seeds from authorized sources and also following good farming practices may still get affected by its neighbors who share the same tributary for intake and discharge of their water .
3). Suppose if EMS is confirmed what will be the recovery procedure ? Is it too Tedious ?
a. Even after drying the pond and chlorination, EMS can still crop up.
b. Since shrimp farming requires huge capital , farmers take severe losses in case of their ponds getting affected by EMS and consequently become risk-averse and farm on a much smaller area .
c. There is no cure now for this disease , and only way is prevention through better farm management.
d. Since countries like Thailand, Vietnam etc are still recovering and havenât reached 60-70% of normalized production after 2-3 years provides testament to the fact recovery is going to take quite long.
I request the seniors here , who have had a firsthand experience with farmers and others to educate us more about the ground realities.
Thanks Aditya for bringing this up. In fact EMS/disease is one of the main reason why I’ve not loaded up this business though, IMHO, it is still a tad undervalued. I like to be paranoid and invest sort of scared (in a good way).
Not to generalize or paint India in a negative way, but we may not maintain discipline specially when there is quick buck to be made. Occasionally if caution is thrown to winds? What happens if EMS strikes? There will be a mad rush to offload at markets and we will be back at square one or even worse.
What would be probability that EMS may strike India? What would the management do then and now to make sure things don’t go where it should not go. I read the Management QnA again now and they seem to optimistic that we may not have that issue. It would be nice to know how stringent are the quarantine, MPEDA measures etc followed strictly. It is in the best interest of the farmer that they take utmost precaution.
Based on current fact of EMS do we have to exit from Avanti or hold on
kindly advise.
The global market for aquafeed is expected to reach USD 133.1 billion by 2020, according to a new study by Grand View Research, Inc. Increasing use of aquafeed in carp and crustacean farming is expected to boost market demand over the forecast period. The growing market for aquaculture, owing to the static natural production of fishes is expected to be another key driver for market growth over the next six years. In addition, the increasing focus on nutraceuticals such as omega 3 enriched products is also expected to have a positive impact on aquafeed applications.
Key aquaculture additives include antibiotics and amino acids as they cannot be synthesized by the fish but are essential for regular body mechanism. Amino acids were the largest used aquafeed product, with estimated market revenue of USD 236.0 million in 2013. Feed acidifiers are expected to be the fastest growing segment over the forecast period, at an estimated CAGR of 6.1% from 2014 to 2020
- Mollusks and Crustaceans were the other large application segments for the aquafeed market together accounting for 33% of the global market in 2013. Crustaceans such as lobsters, shrimps and crabs and mollusks such as oysters are increasing being used as exotic food products and improving economic conditions in parts of Asia Pacific is expected to further the demand for aquafeed over the forecast period.
- Asia Pacific was the most dominant regional market accounting for 65% of global consumption in 2013. The presence of vast aquaculture industry particularly in China is expected to enhance the demand for aquafeed in the region over the next six years
- http://www.prweb.com/releases/Aquafeed-Aquaculture/Additive-Market/prweb11760431.htm
- Aquafeed market seems strong for short to long term
http://www.globefish.org/shrimpaprilmarkettrends.html
The Latest report on the worlwide shrimp industry from GLOBEFISH
Looks like India (Avanti Feeds) is gaining significant market share at everybody else’s expense.
'During the first three quarters of 2013, India shipped more shrimp to the major European markets compared with the same time period in 2012, particularly to the UK (+19%), France (+11%) and Belgium (+23%), thanks to a bounty harvest in 2013. "
It is not just the US , India is doing well in EU too.
Disclosure : Invested , Looking to significantly add to current position.
Did an extensive on the overall outlook of the shrimp industry and here are the Postives in my opinoin
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Huge opportunity size. ( rising income levels across the world will lead to an increase in consumption of shrimp)
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India’s rising stature in the global shrimp market and Avanti’s significant market position in India
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The production in Limited to theTorrid zone or Tropical zone ( lies between the tropic of cancer (23-1/2 N) and the tropic of Capricorn (23-1/2 S).This in itself is a huge moat.
4)Growthin wages in major competitors (Countries like Thailand , China , etc) since labour wages form a significant position for the processing and production of shrimp.
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Foray into the domestic market . (http://www.avantifeeds.com/prawn.php). I for one am optimistic on this segment. A growing list of well travelled Indians would like to experiment with new exotic and healthier food choices. Avanti is in a great position to capitalise on this trend if they manage this well. Significant first mover advantage.
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Lastly , the presence of TUF with a 25 % stakedefinitelyprovides the technical know-how and adds to the credibility of the company going ahead. An astral like situation of course with very differentindustrydynamics.
Good points Shashank.
Considering the FY 15 EPS AFL seems attractively priced at 4-6 PE. if dividend payout & bonus/ split happens both EPS & PE shud increase.
Are you linked to AP/TN cud u pl give the ground level feedback of shrimp prices n ground level development?
Unfortunately I dont have any ground level information on this .I am from Mumbai.
But will be meeting some sea food exporters shortly. Will try and get info from them about the general trends for the shrimp industry.
Unfortunately I dont have any ground level information on this .I am from Mumbai.
But will be meeting some sea food exporters shortly. Will try and get info from them about the general trends for the shrimp industry.
Some old info about Avanti Feeds during 90’s by PV Subramanyam:
_"In the late 1980s Avanti feeds came out with an IPO and the issue was about to bomb at the IPO. So the company approached one of the best fixers in the IPO market and asked him to fix it.
So he approached a few âMumbaiâ brokers who could EASILY fix such failing IPOs. Coming from a Hyderabad promoter with a TN fixer was not unusual, and the negotiations began. I was offered Rs. 2-3 per share. All one had to do was subscribe to the share at Rs. 10 (for which you got a brokerage of Rs. 2) and the management PROMISED that the share would be listed at Rs. 20 and you could sell it in the market.
NO LOCK IN, NO NOTHING â AND YOUR CUSTOMERS GOT 100% RETURN.
Only problem was it was in the fish business which meant my Jain clients would not touch it. Fine with us, we were not in the elite brokers who were doing this fixing.
However a few friends jumped at the opportunity and put in the money. True to their word the share got listed and MOST of the people sold it off for Rs. 20. Many of them held back and sold it at Rs. 50, Rs. 60, etc. after holding it for a few years. Company also paid dividends and it did not look like a bad company.
I too tracked the company for a long time (but with my no Hyderabad rule!!) I did not hold more than 1000 shares of this company at any time. I remember i sold off at a nice profit. Was never serious about this company, till I saw the price recently at Rs. 500!
I HAVE NO CLUE HOW THE PROMOTERS ARE, I have no holding now, I just penned some thoughts. I have not seen the PnL, B/S NOTHINGâ."_
)- http://www.subramoney.com/2014/04/avanti-feeds-a-blue-chip-in-the-making/
In the late 1980s Avanti feeds came out with an IPO and the issue was about to bomb at the IPO. So the company approached one of the best fixers in the IPO market and asked him to fix it.
So he approached a few âMumbaiâ brokers who could EASILY fix such failing IPOs. Coming from a Hyderabad promoter with a TN fixer was not unusual, and the negotiations began. I was offered Rs. 2-3 per share. All one had to do was subscribe to the share at Rs. 10 (for which you got a brokerage of Rs. 2) and the management PROMISED that the share would be listed at Rs. 20 and you could sell it in the market.
NO LOCK IN, NO NOTHING â AND YOUR CUSTOMERS GOT 100% RETURN.
Only problem was it was in the fish business which meant my Jain clients would not touch it. Fine with us, we were not in the elite brokers who were doing this fixing.
However a few friends jumped at the opportunity and put in the money. True to their word the share got listed and MOST of the people sold it off for Rs. 20. Many of them held back and sold it at Rs. 50, Rs. 60, etc. after holding it for a few years. Company also paid dividends and it did not look like a bad company.
I too tracked the company for a long time (but with my no Hyderabad rule!!) I did not hold more than 1000 shares of this company at any time. I remember i sold off at a nice profit. Was never serious about this company, till I saw the price recently at Rs. 500!
I HAVE NO CLUE HOW THE PROMOTERS ARE, I have no holding now, I just penned some thoughts. I have not seen the PnL, B/S NOTHINGâ.
I HAVE NO VIEW, I do not look at a B/s if it does not have a market cap of at least Rs. 5000 croresâ.
)- See more at: http://www.subramoney.com/2014/04/avanti-feeds-a-blue-chip-in-the-making/#sthash.4IU4QYcm.dpuf
In the late 1980s Avanti feeds came out with an IPO and the issue was about to bomb at the IPO. So the company approached one of the best fixers in the IPO market and asked him to fix it.
So he approached a few âMumbaiâ brokers who could EASILY fix such failing IPOs. Coming from a Hyderabad promoter with a TN fixer was not unusual, and the negotiations began. I was offered Rs. 2-3 per share. All one had to do was subscribe to the share at Rs. 10 (for which you got a brokerage of Rs. 2) and the management PROMISED that the share would be listed at Rs. 20 and you could sell it in the market.
NO LOCK IN, NO NOTHING â AND YOUR CUSTOMERS GOT 100% RETURN.
Only problem was it was in the fish business which meant my Jain clients would not touch it. Fine with us, we were not in the elite brokers who were doing this fixing.
However a few friends jumped at the opportunity and put in the money. True to their word the share got listed and MOST of the people sold it off for Rs. 20. Many of them held back and sold it at Rs. 50, Rs. 60, etc. after holding it for a few years. Company also paid dividends and it did not look like a bad company.
I too tracked the company for a long time (but with my no Hyderabad rule!!) I did not hold more than 1000 shares of this company at any time. I remember i sold off at a nice profit. Was never serious about this company, till I saw the price recently at Rs. 500!
)- See more at: http://www.subramoney.com/2014/04/avanti-feeds-a-blue-chip-in-the-making/comment-page-1/#comment-129037
In the late 1980s Avanti feeds came out with an IPO and the issue was about to bomb at the IPO. So the company approached one of the best fixers in the IPO market and asked him to fix it.
So he approached a few âMumbaiâ brokers who could EASILY fix such failing IPOs. Coming from a Hyderabad promoter with a TN fixer was not unusual, and the negotiations began. I was offered Rs. 2-3 per share. All one had to do was subscribe to the share at Rs. 10 (for which you got a brokerage of Rs. 2) and the management PROMISED that the share would be listed at Rs. 20 and you could sell it in the market.
NO LOCK IN, NO NOTHING â AND YOUR CUSTOMERS GOT 100% RETURN.
Only problem was it was in the fish business which meant my Jain clients would not touch it. Fine with us, we were not in the elite brokers who were doing this fixing.
However a few friends jumped at the opportunity and put in the money. True to their word the share got listed and MOST of the people sold it off for Rs. 20. Many of them held back and sold it at Rs. 50, Rs. 60, etc. after holding it for a few years. Company also paid dividends and it did not look like a bad company.
I too tracked the company for a long time (but with my no Hyderabad rule!!) I did not hold more than 1000 shares of this company at any time. I remember i sold off at a nice profit. Was never serious about this company, till I saw the price recently at Rs. 500!
)- See more at: http://www.subramoney.com/2014/04/avanti-feeds-a-blue-chip-in-the-making/comment-page-1/#comment-129037
In the late 1980s Avanti feeds came out with an IPO and the issue was about to bomb at the IPO. So the company approached one of the best fixers in the IPO market and asked him to fix it.
So he approached a few âMumbaiâ brokers who could EASILY fix such failing IPOs. Coming from a Hyderabad promoter with a TN fixer was not unusual, and the negotiations began. I was offered Rs. 2-3 per share. All one had to do was subscribe to the share at Rs. 10 (for which you got a brokerage of Rs. 2) and the management PROMISED that the share would be listed at Rs. 20 and you could sell it in the market.
NO LOCK IN, NO NOTHING â AND YOUR CUSTOMERS GOT 100% RETURN.
Only problem was it was in the fish business which meant my Jain clients would not touch it. Fine with us, we were not in the elite brokers who were doing this fixing.
However a few friends jumped at the opportunity and put in the money. True to their word the share got listed and MOST of the people sold it off for Rs. 20. Many of them held back and sold it at Rs. 50, Rs. 60, etc. after holding it for a few years. Company also paid dividends and it did not look like a bad company.
I too tracked the company for a long time (but with my no Hyderabad rule!!) I did not hold more than 1000 shares of this company at any time. I remember i sold off at a nice profit. Was never serious about this company, till I saw the price recently at Rs. 500!
)- See more at: http://www.subramoney.com/2014/04/avanti-feeds-a-blue-chip-in-the-making/comment-page-1/#comment-129037
In the late 1980s Avanti feeds came out with an IPO and the issue was about to bomb at the IPO. So the company approached one of the best fixers in the IPO market and asked him to fix it.
So he approached a few âMumbaiâ brokers who could EASILY fix such failing IPOs. Coming from a Hyderabad promoter with a TN fixer was not unusual, and the negotiations began. I was offered Rs. 2-3 per share. All one had to do was subscribe to the share at Rs. 10 (for which you got a brokerage of Rs. 2) and the management PROMISED that the share would be listed at Rs. 20 and you could sell it in the market.
NO LOCK IN, NO NOTHING â AND YOUR CUSTOMERS GOT 100% RETURN.
Only problem was it was in the fish business which meant my Jain clients would not touch it. Fine with us, we were not in the elite brokers who were doing this fixing.
However a few friends jumped at the opportunity and put in the money. True to their word the share got listed and MOST of the people sold it off for Rs. 20. Many of them held back and sold it at Rs. 50, Rs. 60, etc. after holding it for a few years. Company also paid dividends and it did not look like a bad company.
I too tracked the company for a long time (but with my no Hyderabad rule!!) I did not hold more than 1000 shares of this company at any time. I remember i sold off at a nice profit. Was never serious about this company, till I saw the price recently at Rs. 500!
)- See more at: http://www.subramoney.com/2014/04/avanti-feeds-a-blue-chip-in-the-making/comment-page-1/#comment-129037
Promoter buying continues on Avanti, they have bought about 0.7% of total sharesin last 2 months. Hope its a sign of good things to come.
Oops! Apologies. Copy/paste went berserk.
Admin please edit my above post
The story continues for Indian shrimp cos & seems little threat of disease too thanks to stellar steps taken by MPEDA. Bravo india govt agencies for a change.
Promoter bought good stake off market.
http://www.bseindia.com/xml-data/corpfiling/AttachLive/Avanti_Feeds_Ltd_090514_SAST1.pdf
Hi everyone,
This is my first post on the site so please pardon me for any mistakes. Since many of you have been tracking shrimp industry would welcome your feed back on Water base ltd. The company has seen a steady increase in revenues and profitability post the decline over FY09 to FY10. Revenues for the company have increased from Rs28crs in FY10 to Rs157 crs in FY13. For 9MFY14 the sales for the company already stands at Rs170crs with NP of Rs11crs. On an annualized basis the company shall be able to do NP of ~Rs15-16crs for FY14. The promoters had recently done a rights issue by which they increased their stake in the company. In the offer document it is mentioned that the money from rights issue would be used to pay off loans taken from promoters and also repay some portion of short term debt. The stock looks attractive at current valuations as the market cap of the company currently stands at Rs68crs. Appreciate views and comments on the same.
Regards
Avanti has corrected 20% from its high in last 1 month. Majority has been i guess due to appreciating INR.
PFA daily chart for Avanti. 50 dma has been a support for last 1 year now. It has corrected to 50 dma again. I guess its a good buying opportunity. Hiteshji, and other seniors pls comment your views.
Its listed peer Waterbase has corrected 40% from its recent high.
Also shrimp prices have been dropping recently. May be that has resulted in the drop.
http://www.shrimpnews.com/FreeReportsFolder/NewsReportsFolder/USAdcShrimpPricesFallingSackton.html
Dear rohit,
Shrimp prices are still higher as compared to last year. April, May are slack season due to summer and demand and price bound to pick up. Expecting fantastic results from avanti.
Any idea when r the results?