Valuation of SalMar: An investment case

Henning Aarstad & Lars-Folke Fyrileiv Moseby

Student thesis: Master thesis


Price Supply and demand expected to increase. The new MAB regime recently introduced, combined with improved license utilization will increase supply by 3-4% annually towards 2020. Population growth, increased focus on including fish in a healthy diet and changes in preferances in the EU and Asia will continue to drive demand growth at a faster pace than supply.Salmon prices set to declineThe imbalance in supply and demand has driven prices to recordhighs in recent years, creating profits throughout the value-chain. The market cannot sustain this price level in the long run. We expect prices on alternative sources of protein to decline. We estimate salmon prices to increase in 2015, before declining and stablizing at 38 NOK/KG.Feed and biology costs projected to increasePrices for marine feed ingredients remain high and on an upwards trend, feed producers consolidate and gain more bargaining power. We expect a cost increase related to feed of 2 NOK/KG in 2015 and 0.5 in 2016. Biology costs relalated to fighting lice and PD will increase by 1 NOK/KG in 2015 and 0.5 in 2016.SalMar remains highly profitableSalMar still struggles to realize VAP potential at their new processing plant thus generates less revenue/KG than peers. However, their cost structure enables them to create superior returns even on less revenue. We project SalMar to remain highly profitable and continue to create value for shareholders.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2015
Number of pages185