Valuation of Marine Harvest Group

Majo Selimovic & Andreas Skårsmoen Øyo

Student thesis: Master thesis

Abstract

Expected increase in supply: Recently revised regulatory systems governing the Norwegian aquaculture industry and advances in technology allows for further growth in Norwegian harvest volumes. However, the industry’s production level is close to the biological capacity and consequently, growth is expected to be modest. Chilean production is rebounding following last year’s deadly algal outbreak. Nevertheless, future growth in this region is curbed by regulatory changes aimed at preventing disease outbreaks and persistent biological challenges. Growth in the Canadian production volume is expected to be low due to increased social concern regarding the impact farming salmon has hos wild populations of other incumbents of the production areas. Scottish production volume is expected to remain fairly close to current levels due to unfavorable site locations. Thus, total expected supply increase over the next two years is in the range between 4.69%-5.95%. Continued rise in salmon prices: Since supply is capped and evidence is found in support of continued strong demand, the salmon price is expected to continue to rise. In fact, an increase in the salmon price of more than NOK 15 is expected. Feed cost decline, while biological costs increase: Lower USD prices for vital marine commodities used in production of fish feed, in combination with promising outlooks for a subsequent strengthening of the NOK suggest that feed costs on per unit basis will decline. In addition, progress in feeding technology and equipment used to combat biological challenges provide confidence that the industry will manage to maintain solid margins in coming years. Marine Harvest The fair share price is estimated to be NOK 166.25. This represents an upside potential of 10.1%, relative to the current market valuation.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final ThesisMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages158