Is This One Of Best Operators in the Recirculatory Aquaculture System (RAS) Industry That You Haven't Heard Of?

Is This One Of Best Operators in the Recirculatory Aquaculture System (RAS) Industry That You Haven't Heard Of?

As the planet faces new threats to the global food supply, (climate change / pollution / war / supply chain bottlenecks) the world may need to rely on producers that can create food for the population without the danger of these more common disruptions.  Over the last 5 years, a new and innovative technology called RAS has really taken off, and is revolutionizing the way the seafood industry delivers marine protein to consumers.

What is a Recirculatory Aquaculture System (RAS)?

A Recirculatory Aquaculture System (RAS) is sealed off from the environment and replaces the natural flow of water in a sea or a lake with a water filtration and a recirculation system. As a result, they can be placed on land – and are referred to as land-based farms.

There are many advantages to RAS, including being a fully controlled environment for the fish, has low water use, is an extremely efficient energy and land use, and has full disease control.

RAS facilities were built initially for hatchery and nursery purposes, but have recently been designed to include full-cycle production.  It is estimated that by 2030, up to 40% of total global aquaculture output could be coming from these facilities according to recent research. At present, only about 5% percent of global aquaculture output is supplied by RAS.  

Who are the major players in the space?

There are several public companies that are leaders in the space, including Atlantic Sapphire ASA ASA, AquaBounty Technologies AQB, Blue Star Food Corp. BSFC and The Kingfish Company N.V. KING.  Some of these trade in the US (on the NASDAQ), and some trade on the Oslo (Norway) Stock Exchange.  There are many similarities between, but also some key differences.

Which of these is the most competitive operator?

 

 

Atlantic Sapphire ASA

AquaBounty Technologies

Blue Star Food Corp.

The Kingfish Company N.V.

 

OB:ASA

NASDAQ:AQB

NASDAQ:BSFC

OB:KING

 

Phase I

Phase II

Albany (I)

Pioneer (II)

Existing

Phase II

Existing

Phase II

 

 

 

 

 

 

 

 

 

Current Annualized Production MT HOG(1)

1,451 

NA

540 

NA

76 

NA

1,380 

NA

Capacity Utilization (June 2022)(2)

17%

NA

54%

NA

76%

NA

99%

NA

 

 

 

 

 

 

 

 

 

Capex in USD (MM)(2)

NA

$287.5 

NA

$360.0 

$1.8 

$46.0 

$34.9 

$75.5 

Capacity in MT HOG(2)

8,618 

8,618 

1,008 

8,400 

100 

1,500 

1,395 

1,860 

Capex/MT

NA

$33,359 

NA

$42,857 

$26,807 

$30,667 

$25,053 

$40,586 

 

 

 

 

 

 

 

 

 

Market Cap.(3)

$99.6 

 

$46.0 

 

$23.6 

 

$101.1 

 

LTM Revenue(3)

$15.7 

 

$3.1 

 

$13.6 

 

$15.0 

 

Revenue / Market Cap.

6.4x

 

14.8x

 

1.7x

 

6.7x

 

 

 

 

 

 

 

 

 

 

(1) HOGS is Head On Gutted.

 

 

 

 

 

 

 

(2) As reported from public documents and corporate presentations.

 

 

 

 

 

(3) LTM means Last Twelve Months (or last 4 fiscal quarters) and market cap as of 11/8/2022.

 

 

 

 

BSFC has the second-highest current capacity utilization rate (behind The Kingfish Company).  That means that they are producing a high number of fish for their existing, already built-out space.  This is key, because it might mean that they haven’t built out space that they don’t know how to use properly.  They are trying to make use of every dollar of facility capacity that they have built.

In Blue Star’s plans for their next-phase build-out, they will spend approximately $30K for each MT they produce, which is the lowest of all of the others companies’ expansion plans.  These engineering plans are very precise and speak to the efficiency of operations that BSFC can deliver for every investment dollar spent.

Lastly, they have the lowest market cap/last twelve months of revenue by far of the other companies. One possible reason for this is that the other companies have been around longer and are more well-known than BSFC which was only listed on the NASDAQ in June 2022. 

BSFC could become more well-known over time as their story of efficiency in capital use and operations spreads, which has been helped by the recent coverage by Roth Capital, which has a BUY rating and $3.00 stock price target - https://www.benzinga.com/news/22/11/29543588/roth-capital-initiates-coverage-on-blue-star-foods-with-buy-rating-announces-price-target-of-3.

 

Image sourced from Shutterstock

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Posted In: Blue Star Foods CorpPenny StocksEmerging MarketsOpinionMarkets