Analysts still hard on MHG after €200 Mn spree

William Stoichevski

Norway-based Marine Harvest’s acquisition of Canadian salmon farmer, Northern Harvest, on Dec. 22nd, 2017 has failed to upgrade its stock’s status with aquaculture watcher, SpareBank 1.

The CAD 315 million (EUR 200 million) acquisition was “accretive”, added volume growth and gave the world’s largest salmon farmer added scale near crucial U.S. markets, but Sparebank refused to budge in its investor guidance on the company. “There is a lot of long-term value in the company (and the sector), but in the short term expectations are still too high and we continue to find significant downside in both consensus among analysts and forward prices seen at (clearance index), Fishpool.

“We stick with our Sell recommendation,” wrote Tore Tonseth in a note to investors. He said, however, that SpareBank 1 Markets was still “positive to the acquisition”, but the deal “will have a limited impact on our valuation of MHG”.

Northern Harvest, a well-run, profitable company from the east coast of Canada, owns its own broodstock, hatchery operation and smolt production and already boasts leads to the U.S. market. Northern is expected to harvest 19,000 tonnes of salmon in 2018 from its 45 farming licenses in Newfoundland and New Brunswick.

Northern has 13 farming license applications, as well, but Tonseth said that would only lower the company’s enterprise value per kilogram of farmed fish. He admitted, however, to not having Northern’s financial forecasts or, presumably, a figure for the company’s debt.

On Wednesday, the first day of trading after the Christmas break, Marine Harvest shares were up over 1 percent in the first two hours of trading on the Oslo Stock Exchange.


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