Last concall has some info
Govt levied 5% GST on fishmeal after Sept 2019. We are asking govt to remove the levy. If it is levied, cost will go up. By and large price is 89-90rs. Season has started and catches are normal. We can raise price if GST comes.
Price hike more than offsets the 5%GST on fishmeal. Next concall will give more colour on the impact on margin expansion because of the hike. Soya is moving up though
Latest Corona virus outbreak is apparently being linked to a seafood market in Wuhan city of China. Chinese government has shut the seafood market of Wuhan. This may be a bad news for shrimp exporters as USA, EU and China may pause import of shrimp from Asian countries for some time.
Source:
Are there any other details on the impact of the virus on seafood exports from India
Essentially, as per the article, the virus is suspected to have originated from Bats. I don’t know if there is much migration to seafood. More likely, it would have to do with a person, who frequents the seafood market, that is contagious.
Given this, one would not expect more then a short term reaction as facts become clearer to us.
Cheers.
Interesting data driven post on sea food growth & opportunity -
now all of a sudden this corona virus
prices of sea food to remain subdued
good levels of Avanti feeds should come
@ayushmit being an early investor here, any comments on the results specially the significant margin contraction?
Also, any views on the impact of China virus issue on near term outlook for the company?
Disclosure: Invested
Sales growth was ~10%, which is good enough (expected was ~15%). Operating margin came down to 7% (expected was ~12% if you take Q2 as reference). This is because of higher Soya DOC prices in Oct and Nov, which came down in Dec and have now stabilised. Avanti’s increased feed prices by approx 8-10% two weeks back as well.
So, Q4 looks like a quarter where the cost pressure and realisation pressure won’t be an issue atleast. Will get a better understanding from the management concall.
I’d focus on 9M numbers. Avanti’s short-term gross margins would be volatile (on both sides) given many uncontrollable variables involved, especially until processing business becomes as big as feed business. 9M numbers look decent. Top-line growth is impressive.
Need to understand from management about 1) Corona virus impact on the industry and inventory surplus situation 2) Farmer’s reaction on hike in feed prices taken by Avanti 3) View on upcoming culture season
I think there are two three important things:
If true then it will be positive in the longer term. Infact in case of sharp fall (more than 20% or so), it may be an opportunity to buy a very strong franchisee on a one off qtr.
Q3 is the weakest quarter for the industry and the key season (start of shrimp farming) starts from February or so. As per some of the feedback, there are expectations of strong growth for the industry for the coming year. This needs to be tracked.
Cheers,
Ayush
PS: Just sharing current thoughts. I may change my opinion/views if needed and may do the required buying/selling.
The Corona Virus outbreak has already impacted the lobster exports from New Zealand
Looks like a lot of headwinds in the short term atleast.Stock price too started to reflect this negativity.But if long term story holds,this might provide good accumulating opportunity
Marine Products Export Development Authority (MPEDA Chairman K.S. Srinivas told The Hindu on Friday said there was no alert from any country on seafood exports and shrimp and live items were being exported to China and other countries.
“The impact of coronavirus on seafood exports is minimal. There is no need for farmers or exporters to panic. The demand for shrimp and other varieties remains unchanged at the global level,” Mr. Srinivas said.
“We are exporting shrimp and fish from all major ports across the country. Exporters need not fear the spread of virus as the produce is being exported through containers, and India is not importing any product,” the MPEDA Chairman said.
Interesting stat on processing business, has more profits than feed business this quarter.
when shrimp prices are down, processing profit go down but ability to raise feed prices go down.
when shrimp prices are high, processing pfrofit go up but ability to raise feed prices is good.
Shrimp exports to US in Dec increased by 10% yoy. Overall for the full year, total exports from India increased by 14.5%
https://www.st.nmfs.noaa.gov/apex/f?p=169:2:::NO:::
Spoke to a friend who is into shrimp farming in Rajole, Andhra. Below may not be indicative of the overall industry scenario:
Separately, water base results yesterday reflect the overall cost pressure in feed segment.
Need more such data points to gauge overall industry scenario.
Disc: invested. No transaction in last 3 months. Not a buy/ sell reco. Pls do your own due diligence.
Good presentation released by Avanti. As mentioned previously the processing business is on faster track, clocking in the highest quarterly volumes and revenues till date and is operating at 72% capacity only !!
