Camanchaca. Initial Public Offer

Transcription

1 Initial Public Offer November 19 th 2010 Sector: Food Prospect Summary Analyst: Edmundo Varela E. will probably be the only IPO in It is a fishing company which has a large portfolio of businesses, highlighting the area of culture, fisheries and industrial salmon production. It is a company that continuously has been integrating new businesses and adding value to each of its products. Today it sells in more than 100 countries, offering fresh and frozen products. Offer characteristics Issuer: Ticker: Retail book deadline: Institutional book deadline: Placement: Current Stocks N : Maximum Stocks N place: Company Drivers: Tax benefit: Fishing Company SA November 29. November 30. December 1. 2,949,720,000 shares. 1,327,372,400 shares. Francisco Cifuentes and Jorge Fernandez Emerging Security: tax-free in capital gains for a period of three years. Use of funds The funds will finance the development plan and growth of the company for the coming years. In the first place, to finance the working capital needed to increase salmon production, and the investments needed in the area of fisheries to also increase production. Additionally, part of the amount will strengthen its financial structure by reducing the level of liabilities. Investment Plan The investment plan has two main purposes: to regain the leadership in the salmon industry and to increase the value added in the fishing area. In the salmon industry the company wants to take up again his position, hoping to arrive in 2015 to more than 60,000 tons of Atlantic salmon. In the area of fisheries, it seeks to expand the range of products through a greater proportion of value-added products.

2 Company Description Company formed 30 years ago by Francisco Cifuentes and Jorge Fernandez. It began operations in 1965, with processed shrimps. During the following years, extended its lines of businesses with the acquisition of new companies. Today, its businesses cover the production of fishmeal and fish oil, fish for human consumption and salmon, abalone, oysters and culture mussels. The current shareholding and corporate structure of the company is the one shown in Figures 1 and 2: Shareholder Structure - Figure 1 Subsidiaries and Corporate Srtucture - Figure 2 Inv. Camancha ca S.A., 90.03% Inm. Camancha ca S.A., 0.59% Inv. Tamarugal S.A., 9.38% Salmones S.A. Fiordo Blanco S.A. Cultivos Marinos Pacifico Its businesses are mainly concentrated in 3 areas: Pelagic species: Production of fishmeal and fish oil, fisheries and processing of horse mackerel, anchovies and sardines for human consumption. Culture industry: Production of mussels, oysters and abalone. Salmon: Production of Atlantic salmon, trout and coho. This area begins with the culture of these fish, going through the process of freshwater and saltwater. The income breakdown is as shown in the following figures: Business Income by Area ( ) Products Salmon, 51% Pelagic Fishing, 44% Fish Oil, 3% Preserved, 8% Crops, 7% Salmon, 52% Crops, 5% Fish meal, 30% Prospect Summary Edmundo Varela E. November 19 th

3 Strengths Global consumption of animal protein has a growing demand, and it is directly related with the population growth, which leads it to an increase in the per capita consumption of these products. Evidence has shown a change in the consumption habits of people, where more are choosing to eat products with higher added value and ready to eat. owns highly advanced processing plants which able them to supply this demand and deliver products to end users with a high added value is characterized as a leader in the markets it operates. It is the 12 worldwide fisheries, with a high product diversification in its portfolio. The company has important license and quotas for the production and fish catch. The company has a highly developed marketing network, within destinations like Europe through Denmark, the United States with his office in Miami and Japan. diverse portfolio is something that highlights the company, since there is no high dependency on any particular market. Weaknesses The company is subject to variations in the price of each of the products it sells, which fluctuate independently given the contingencies of each market. The exchange rate affects directly the revenue of the company, since the bulk of sales come from exports. The recent ISA virus and other diseases that might appear are imminent risks for the company. These health risks are crucial to meet the test of quality in any market. Concessions and fishing quotas are of great importance for the development of the business. Any regulatory change in this area could cause production problems, due to the finite limit of concessions. Oceanographic conditions are of great importance for the development of the fish. Although, Chile has competitive advantages in this area, we do not know the future conditions. A full version of this report in Spanish is available at or in Bloomberg with CORG <GO> Prospect Summary Edmundo Varela E. November 19 th

4 Glossary Term Definition / Translation Calculation EBITDA Earnings Before Interests, Taxes, Depreciation and Amortization Operational Income plus Depreciation and Amortization EBITDAR Earnings Before Interests, Taxes, Depreciation, Amortization and Rents Operational Income plus Depreciation and Amortization plus rent of fixed assets. It is used the at transport industries to reverse the rent of airplanes or ships. EV Enterprise Value Market capitalization plus Net Financial Debt plus EV/EBITDA Valuation multiple. While greater it is, more expensive it is the stock Minority Interest EV divided by Ebitda FCF Free Cash Flow Operational Income plus Depreciation and Amortization minus tax minus capital expenditures plus (minus) working capital variation. Free-float Percentage of stocks that can be freely traded in the market Percentage of stock that does not belong to controller s shareholders. Margin Operational Ebitda Net Percentage of sales Operational Income / Revenue Ebitda / Revenue Net Income / Revenue P/E Price / Earnings Market Price divided by EPS P/B Price to Book value ratio Market price divided by the accounting value of the stock. Dividend Yield The return in terms of dividends of investing in equities Dividends distributed in a year divided by the market price. FCF yield Free Cash Flow Return. FCF / Market Price ROA Return on Assets Net Income / Total Assets ROE Return on Equity Net Income / Accounting capitalization EPS Earnings Per Share Net Income / Shares outstanding YtD Year to Date Percentage variation year to date x Times Stocks recommendations: these are established according to the stock yield relative to the IPSA. We recommend Hold, when we expect the share to have a yield in line with the IPSA; Buy, when the yield expected for the share is above to that expected for the IPSA; and Sell, when the yield expected for the share is below to that expected for the IPSA. We define a yield to be In line with the IPSA when it is within a range whose scope is equivalent to a third of the variation expected for the index, with a minimum of 5%. CorpResearch Prospect Summary Edmundo Varela E. November 19 th

5 Álvaro Donoso CorpResearch Director Economic Research Sebastián Cerda Economic Studies Director Nicolas Birkner Economic Analyst Andrés Vicencio Economic Analyst Daniela Game Economic Analyst Equities Research Cristina Acle Head of Equities Research. Sector: Energy Camila Pindar Senior analyst. Sector: Forestry Gutenberg Martínez Analyst. Sector: Retail Juan Carlos Parra Analyst. Sectors: Mining, IT and Telecom Edmundo Varela Analyst. Sectors: Foods and Beverages Jorge Ríos Analyst. Sectors: Banks, transport and construction Rosario Norte 660 Floor 17, Las Condes, Santiago, Chile. Telephone: (562) Prospect Summary Edmundo Varela E. November 19 th