Mowi: Long-Term Compounder, Hit By Proposed New Salmon Tax
(Preview) Initiating Coverage (MOWI NO) (Neutral)
Summary
Shares in Mowi, the #1 global salmon producer, crashed 22% in two days to a 5-year low. The P/E is 11.3x and Dividend Yield is 5.3%.
The salmon industry has good long-term structural growth, and we believe Mowi can grow earnings at high-single-digits.
However, the industry is cyclical, and Mowi earnings have been volatile; Canada was a drag, but issues there have been resolved.
The shares crashed due to a proposed new 40% salmon tax in Norway. We think it will happen and can cut earnings by up to a third.
Adjusted for this new tax, the shares are not cheap enough at NOK 133.55, especially compared to others in the market. Avoid.
Introduction
Mowi ASA, the global #1 salmon producer with a $6.4bn market capitalization, saw its stock crashed 22% in the last two days to a 5-year low.
The crash has been caused by a proposed new 40% “resource rent tax” on salmon production in Norway, which can cut Mowi earnings by up to a third.
The salmon industry has favourable characteristics that give it…