norwegian-russian business forum vinrbf2018.com/wp-content/uploads/2018/11/nrbf-vi-lars... · 2018....

Salmon Farming: A Never Ending Supercycle

Norwegian-Russian Business Forum VI

Lars Konrad Johnsen, Equity Research Analyst – Aquaculture

[email protected]

+47 22 93 64 69 / +47 95 90 31 46

mailto:[email protected]

| 2

The Astrup Fearnley Group

Fearnley

Securities

www.fearnleyoffshore.nowww.fearnleyoffshoresupply.nowww.fearnleyprojectfinance.nowww.fearnleysecurities.no www.fearnleyenergy.nowww.fearnleys.no

Equity and Debt Capital

Markets

Advisory

Asset Backed Financing

Equity and Credit Research

Corporate Access &

Operations

Sales & Trading

Project Finance

Direct investments in real

estate, shipping and

offshore

Equity Syndication

Business Management

Leasing

Mezzanine

Investments

Offshore Supply

Providing shipbroking

services to the offshore

sector

Chartering

Newbuilding

Sale & Purchase

Advisory Services

Market Intelligence

Offshore

Leading international

advisory, consulting and

brokerage firm within

offshore oil services

Chartering

Newbuilding

Sale & Purchase

Project Development

Advisory Services

Fearnleys

Leading shipping

brokerage within all core

shipping sectors

Libra Fearnley

Energy

International oil broker,

serving more than 200 oil

and petrochemical

companies

A global group of companies dating back to 1869

LPG Tankers

Dry Cargo RoRo

LNG

Consultancy

S&P/NBs

Research

Oil Trade

- Naphta

- Gasoil

- LPG

- Refinery Feedstocks

- Residual Fuel Oils

OTC Derivatives in Naphta

and LPG

▪ Maritime footprint since 1869

▪ Global group of companies owned by

The Hans Rasmus Astrup Foundation

▪ Ability to draw on a wide array of

international resources to provide our

clients maritime and financial services

across all time zones

▪ The Astrup Fearnley Collection and

Museum - world leading modern art

centre

A leading investment bank

with a concentrated focus

on maritime and energy

industries

http://www.fearnleyoffshore.no/

http://www.fearnleyoffshoresupply.no/

http://www.fearnleyprojectfinance.no/


http://www.fearnleyenergy.no/


| 3

Fearnley Securities

Fearnley Securities represents the investment banking arm of Astrup Fearnley Group

▪ Fearnley Securities AS established in

1987

▪ Fearnley Securities Inc. established in

2015

▪ Shipping, Offshore and Energy is What

We Are and What We Do

▪ Investors Recognize Our Integrity

▪ Unique Insight Into Maritime Industries

Leading independent, full-service investment bank focusing on

the Maritime and Marine segments

~70USD 7.5bn+

Research

coverageEmployees

100+

Capital raised

since Jan. 2016

in equity and bond

financing

Equity and Debt Capital

Markets

Public Offerings

Private Placements

(incl. OTC)

High Yield Bonds

Convertible Bonds

Advisory

Mergers & Acquisitions

Restructuring and

Planning

Valuation and Fairness

Opinions

Asset Backed Financing

Lease Financing

Bilateral Lending

Equity and Credit

Research

Equity Coverage

Credit Coverage

Shipping, Offshore,

Aquaculture and

Energy

Corporate Access

& Operations

Investor Outreach

Strategy and Execution

Legal & Compliance

Risk Management

Middle Office

Finance, ICT, HR

Sales & Trading

Equity Sales

Credit Sales

Block Trades

Equity Repurchases

Investment Banking Division

publicly listed

companies globally

at the Oslo and New

York offices

| 4

Fearnley Securities – Focusing On Core Norwegian Industries

Oslo Stock Exchange has a leading position in the energy, shipping and seafood sector

Covering the complete value chain from

Seismic via Offshore Drilling to Oil

Services

Offshore & Oil Services

Official coverage of all OSE listed E&P

companies

E&P

Covering all the major shipping names

across the Tankers, Dry Bulk, Containers,

LPG and LNG space

Shipping

Coverage includes all the listed seafood

players at Oslo Stock Exchange

Seafood

GLOBALLY✓ 12 listed companies

✓ USD ~35bn in Mcap

#1EUROPE✓ Norway is the 3rd

largest exporter of

gas and 5th largest

oil exporter in

Europe

#2 EUROPE✓ Norway is the 5th

largest maritime

nation

✓ 25 companies –

Mcap of ~USD 10bn

#1EUROPE✓ Europe’s largest

exchange in terms of

both mcap and # of

companies in the

space

#1

| 5Sources:

Note:

A Never Ending Supercycle

0

100

200

300

400

500

600

okt.

13

apr.

14

okt.

14

apr.

15

okt.

15

apr.

16

okt.

16

apr.

17

okt.

17

apr.

18

Ind

ex (

Oct.

13=

100)

Seafood vs. OSEBX/Shipping/Energy

Seafood Energy Shipping OSEBX

Seafood sector has significantly outperformed the overall market over the last 5 years…

+381%

+83%

+64%

+35%

| 6Sources:

Note:


...And we believe that the supercycle is not ending any time soon

1

Limited growth capacity

in existing regions –

and unconventional

growth initiatives are

only contributing with

minor growth over the

next 5-8 years

✓ Both Norway and Chile (80% of total supply) are closing in on maximum biomass capacity.

✓ UK, Canada, Faroe Island and USA predicted to grow by 80-90k tonnes over the next 3-4 years.

✓ New regions (Iceland & Russia) expected to double over the next 3-4 years.

✓ Unconventional growth initiatives (landbased and offshore farming) only contributing with limited volumes over the next 5-

8 years.

2

Demand growth

outpacing supply

despite prices in the

NOK 60+ region

✓ YTD supply growth of c. 10% has not been sufficient to send prices below the NOK 60/kg mark.

✓ Continued annual growth of 10% suggest that we need c. 250k tonnes each year in new volumes. And since 2012 we

have supplied a total growth of 430k tonnes.

3

Regulations limiting

long-term supply

growth above 3-5%

✓ Continued biological pressure in Norway are limiting growth as the “Traffic-light” regulation

✓ Increased fear of another biomass wipe-out in Chile has forced them to implement stricter regulation on the number of

smolt being released.

4

Regulatory/Political risk

in Norway and Chile

✓ Change in current regulatory framework

✓ Increased taxation

5

New technologies

✓ Landbased farming

✓ Offshore farming

| 7Sources:

Note:


Supply growth has significantly slowed down since 2012…

244

263

252

316

384

447

541

621

682

788

875

989

1059

1145

1208

1256

1298

1393

1469

1512

1453

1627

1992

2036

2206

2309

2222

2261

2419

2514

2583

2684

0

500

1000

1500

2000

2500

3000

1990

1991

1992

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1999

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2002

2003

2004

2005

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2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

'000 T

on

ne

s W

FE

Global Salmon Supply'000 Tonnes

| 8Sources:

Note:


…Resulting in higher and higher salmon prices

25

32

25

26

31

37

31

26

40

40

41

63

60

63

64

63

65

0

10

20

30

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2005

2006

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2008

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2012

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2016

2017

2018E

2019E

2020E

2021E

NO

K/k

g

Salmon Price OverviewNOK/kg (FCA Oslo)

| 9Sources:

Note: *Middle class only


What is the demand potential?

US Consumption = 485kt

1.5kg per capita

EU Consumption = 1062kt

2.1kg per capita

Japan Consumption = 61kt

0.5kg per capita

China Consumption = ~150kt

0.35kg per capita*

| 10Sources:





1.5kg per capita


2.1kg per capita


0.5kg per capita


0.35kg per capita*

What if US demand per capita increases to EU levels?

| 11Sources:





1.5kg per capita


2.1kg per capita


0.5kg per capita


0.35kg per capita*

What if US demand per capita increases to EU levels?

And, Chinese middle class consumption increases to Japanese levels?

| 12Sources:

Note:



2 5062000

2200

2400

2600

2800

3000

3200

Current US China Total Russia EU+RotW Demand

'000 T

on

ne

s W

FE

Global Demand

| 13Sources:

Note:



2 506

210

2000

2200

2400

2600

2800

3000

3200


'000 T

on

ne

s W

FE

Global Demand

| 14Sources:

Note:



2 506

210

240

2000

2200

2400

2600

2800

3000

3200


'000 T

on

ne

s W

FE

Global Demand

| 15Sources:

Note:



2 955

2 506

210

240

2000

2200

2400

2600

2800

3000

3200


'000 T

on

ne

s W

FE

Global Demand

| 16Sources:

Note:



2 955

2 506

210

240

72

2000

2200

2400

2600

2800

3000

3200


'000 T

on

ne

s W

FE

Global Demand

| 17Sources:

Note:



2 955

2 506

210

240

72

99

2000

2200

2400

2600

2800

3000

3200


'000 T

on

ne

s W

FE

Global Demand

| 18Sources:

Note:



2 955

3 126

2 506

210

240

72

99

2000

2200

2400

2600

2800

3000

3200


'000 T

on

ne

s W

FE

Global Demand

| 19Sources:

Note:



2 955

3 126

3 000

2 506

210

240

72

99

2000

2200

2400

2600

2800

3000

3200

Current US China Total Russia EU+RotW Demand Supply

'000 T

on

ne

s W

FE

Global Demand

| 20Sources:

Note:


What about Russia?

| 21Sources:

Note:


Geographically there is a potential of 100kt+!

| 22Sources:

Note:


Geographically there is a potential of 100kt+!

2 4 4 7 10 13 12 9 8 8 12 17 190

2

4

6

8

10

12

14

16

18

20

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

'000 T

on

ne

s W

FE

Russia: Annual Salmon Production

| 23Sources:

Note:


✓ Industry knowledge

✓ Norway has 50+ years of experience within the

salmon farming industry

✓ More than 700 public and private companies

within the aquaculture space

✓ Access to capital

✓ Equity and debt capital markets

✓ Asset backed financing

✓ Advisory Services

✓ M&A / Strategy

✓ Vessel Sales & Purchases

✓ Newbuilds incl. Whitefish trawlers, live fish

carriers and offshore farming constructions

What could Norway and the Astrup Fearnley Group offer?

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