Two attractions for fishing stocks. Firstly, a great source of protein so very popular, and secondly costs are tied to the oil price as diesel is the big cost. So, lower oil prices and a stronger rand is good for the industry. Inversely higher oil or weaker rand increases diesel costs.
Late last year we got the news that Premier Fishing would be listing on the JSE in February and I was keen to get into the IPO, if possible. With news that it was being priced at 450c I was certainly interested. Not so much as a long-term investment but definitely as a spec buy with the intention of selling shortly post listing.
But now we have Sea Harvest coming to market in March and that may well take some of the shine off the Premier Fishing listing as investors now have two option for a new fishing stock and some of the Premier Fishing excitement will instead flow into Sea Harvest diluting the Premier listing.
This also brings into play a third option, Oceana. They’ve been listed for an age and I like the stock but they always seemed overpriced. However, the new fishing stocks listing may see some money flowing out of Oceana into Premier Fishing and Sea Harvest finally creating some value in Oceana.
The concern over Oceana right now is the 2015 Daybrook Fisheries acquisition in the USA and while it was a great deal the stronger Rand will be hurting earnings and this would mean a lower valuation for Oceana is to be expected, even without the new listings.
Bottom line I am waiting to see final listing details for the two new entrants and if we’re going to be offered any stock on listing (keep an eye under special announcements as you log into OST for details). Both are likely to be private placements rather than IPOs meaning not everybody is offered a chance to get involved and the company can then allocate as they see fit so even if we get the chance to apply we may not get any stock.