By Jenny Ruth
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Friday 4th June 2010 |
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"Despite the depressed first-half earnings performance, the interim dividend of 9 cents has been maintained, signalling a recovery in second-half earnings," Cairns says.
"Demand for most fish species remained subdued in the aftermath of the global financial crisis resulting in restricted flows of product and a consequent buildup of inventories. Fish inventories increased by $7 million over the period to close at $57.1 million .This inventory build has subsequently been cleared post balance date."
Cairns says while greenshell mussel prices fell from more than $US2.14 a pound a year ago to less than $US1.35, and the decline was further exacerbated by the strong New Zealand dollar, there are signs prices are starting to recover with prices in May around $US1.45 a pound.
While Sanford's significant quota holdings are a unique asset and it has extensive interests in aquaculture, "we consider the Sanford share price will remain under pressure until a recovery to across-the-cycle earnings becomes more assured."
Recommendation: Reduce.
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