Sea Harvest: What goes best with fish? How about cheese?
Operating a fishing fleet must be quite a different kettle of, you know, to running a company that churned out 9,000 tons of cheese and butter last year
It is not an obvious combination but fishing outfit Sea Harvest’s decision to add the Ladismith Cheese Company to its business is hardly an insignificant dabble in another food group. At R527m, the purchase price represents over 13% of Sea Harvest’s own market cap of R3.9bn and marks its first major foray away from the business of fishing.Sea Harvest was unbundled from BEE investment company Brimstone in 2017 and it is Brimstone which will be helping Sea Harvest pay for the deal by issuing shares to its one-time parent, worth R300m.
Sea Harvest’s stated investment strategy has been acquisitive growth in “complementary” sectors of the SA food and agricultural industry where it is able to “leverage its core competencies and strengths”.
Yet operating a fishing fleet must be quite a different kettle of, you know, to running a company that churned out 9,000 tons of cheese and butter and 7,500 tons of dairy and non dairy powder in the year to end January. And the cheese and dairy business is anything but easy, if you consider how listed dairy products group Clover has struggled to deliver consistent earnings growth since it went public in 2010.
Still, it may be somewhat more predictable than a sector at the mercy of changes to the cost of fuel, and fishing patterns.
Ladismith’s R57.7m profit after tax for the 2018 financial year also puts it on a price-earnings multiple of around nine times, considerably cheaper than Clover, whose historic p-e multiple is 21.4.