@ayushmit would be very helpful to know your views from the concall?
From the management commentary it seems margins would be under pressure in Q4 given continued higher RM prices
Board to consider Interim Dividend
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Things look ok and it was good to know that co has raised prices which should lead to margin normalization in a quarter or two. I think in strong stories like Avanti, which have proven market leadership and reach to farmers, market would be a bit patient if they know that steps have been taken to protect margins. Infact in future margins may expand too when RM prices fall.
I think the bigger concern in near terms would be impact of corona virus. Shrimp sector can go through volatility and if prices fall off globally, there can be some problems in near term.
Good to see management considering interim dividend.
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1)Due to the situation in China many seafood exporters such as from Ecuador and Canada etc are already diverting their exports to USA at a discount.There seems to be an excess supply of different kinds of seafood to USA.
2)Many of the Andhra farmers might have started stocking after Sankranti.So this will come into the market in April/May into an already oversupplied market,even if Coronavirus eases up by end of March.
So there is high probability of massive panic among shrimp farmers until June or July.
But long term favorable factors of Avanti remain intact.So the question we need to consider is can the prices go even significantly lower in the next 2 months?
That would provide a good opportunity to add.
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Empacadora del Pacifico’s export manager Marcelo Velez said March is expected to be “a tough month” for the firm. However, he also revealed to Maria the Chinese shrimp market was reactivated this past weekend and that some packers are now able to sell their products to the Asian country.
Not sure upto what extent the markets are open
With nationalism finding favour across the globe, this will sound as music to Trump’s ears…
Fundamentaly negative for export oriented Indian Shrimp industry
https://www.bloombergquint.com/markets/thailand-s-richest-family-considers-setting-up-u-s-shrimp-farm
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Jan 2020 shrimp exports to US remain strong:
a) YoY total exports to US increased by approximately 20%- last year, adverse weather conditions led to lower number. This year, I guess winters r not so severe
b) exports from India grew by ~ 31%
However, will need to wait for Feb & Mar numbers to see if there is any impact of Corona on volumes exported from India( like diversion from Ecuador to US instead of China)
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This subsidiary had negative reserves and was loss making since 2012. Turnover was also zero Only positive thing is that it represented minuscule proportion of Avanti’s balance sheet. Hence, smelt something fishy here and was more of a question to fellow members. Here are my other observations from FY2010 to FY2012 ars:
- Srinivasa Cystine § Ltd. had given a loan of 1.3Cr to Svimsan Exports & Imports Ltd. on which it paid an interest of Rs 3,131 (almost interest free). Not clear whether Avanti Feeds had extended the loan to Srinivasa Cystine § Ltd.
- Svimsan Exports & Imports Ltd. is in the business of purchasing shrimps and selling them after de heading to the local exporters. Seems like this subsidiary company is paying upfront and Avanti Feeds then pays to the subsidiary. Liabilities are greater because of ‘creditor for expenses’ and ‘creditors for other finance.
- 20.75 Lakhs of Avantifeeds borrowings were used to repay borrowings of Svimsan Exports & Imports Ltd
- FY2012:Svimsan Imports & Exports Limited has obtained a corporate advance of Rs.90.10 lacs (Previous year Rs.130.10 lacs) from Srinivasa Cystine Private Limited, an Associate Company. This advance does not carry any interest. It’s written off now.
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So fishing and aquaculture have been exempted from the lockdown. First ray of hope for avanti…
Disc: started nibbling during the current fall
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Thanks for sharing the news but in AP Fishing and Aqua exports are added as agriculture associated units so their exports are running as usual during lockdown and govt came forward to do purchases at MSP.
But don’t consider everything as is in AP during this lockdown period there are some issues in this sector.
Sir where did you get the information that exports are running as usual. The godavari district aqua farmers are in huge loss. I am from that area. No one is willing to buy their prawns. They are selling it for 50/100rupees pathetic situation
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Moreover the bigger issue is of transportation
Companies are not able to get raw materials and supply the finished goods
Yes, there are issues in this sector and govt trying its best but due to shortage of storage facilities and Export restrictions it not possible for Govt to purchase everything available in the market
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AvantiFeeds-Analysis.pdf (671.5 KB)
Attached is my Analysis of Avanti (had completed the analysis 2 weeks back).
Please let me know
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- Your assessment about quality of earnings can be improved, you might want to see this detailed post on Avanti’s quality of earnings.
- Company did a bonus and split in 2018 which is why their share capital increased, not because of equity dilution.
Any one post March export figure. How it was from Avanti?
Hi Harsh,
I agree with you that they might not be faking the earnings and they are paying the correct Tax. But my point is the company’s receivables days have been decreasing over then past decade, if you see the past 5 years its single digit. This means they are getting instant cash for the products sold.
So going with this approach for the last 5 years its CFO must be greater than Net Profit. But that is not the case. I am still not clear on this aspect of the business.
Ravi