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Your assesment of several stocks

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Your assesment of several stocks

Hi Team, Congratulations on being right most of the time __________and admitting it when you're not. Such candor is rare. About a year ago I asked you about MCA , a Murray Cod fish farmer and you gave guarded though favourable assessment. Moreover, the news about the company is usually good and a recent article in 'The Weekend Australian' very positive. Yet, the price keeps dropping. I have spoken with a director on the telephone several times and was told the base cause of their difficulties is that they cut production during Covid. Therefore when Covid passed there was a shortage of stock that could not me remedied for about 2 years. Last August or September I read that within 6 months there would be plenty of stock to sell and all would be well. All is not well. The price keeps dropping. This company farms this fresh water fish above ground. Therefore, the waste water is full of nutrients that the farmers love and they want the poo too. The Murray Cod is an Australian fish found nowhere else in the world. It has evolved to deal with droughts and hot weather and low river levels. It is the ideal product for any fish farmer to farm. On top of this it is UTTERLY DELICIOUS. They claim they can sell all they can supply and always get a margin they are happy with. And yet the price keeps dropping. They claim not to be short of cash. And yet the price keeps dropping. The world famous chef Heston Blumenthal owns stock in the company and sells Murray Cod in his restaurants. And yet the price keeps dropping. I wonder if you could have another look at this company and with your superlative analysis provide an opinion. Who knows you may wish to look at it for consideration in the Emerging Companies Portfolio. Also, are you still keen on TWE or has the wine glut put you off? Thank you, Paul


HI Paul,

Firstly, we’re still keen on Treasury Wines (TWE).

Secondly, the ASX is littered with Ag related stocks that simply don’t live up to expectations, it’s a hard industry, as many subscribers with farming interests can no doubt attest. A few points to make here:

  • Their last quarterly update showed revenue of $3.7m and costs of $6.1m, they’re not profitable and cash levels are going in the wrong direction (from $17m to $11m in 3 months).
  • Debt has risen to $20m at the end of the March quarter. They do have still have cash ($11m at the same date) on the balance sheet however, given cash burn there is growing pressure on their balance sheet.
  • Servicing the debt actually cost them 700k in the quarter and when compared to revenue of 3.7m, that’s a huge chunk
  • Gut feel is, they need to sure up the balance sheet.
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Murray Cod Australia (MCA)
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