Pescanova Group has a significant capital, even though its securities may be undervalued now. (Photo: Stock File/FIS)
Pescanova -- What is really worthwhile is not valued at the stock market
Friday, July 13, 2012, 04:20 (GMT + 9)
The sharp drop in value of Pescanova's securities that occurred on Tuesday (18.36 per cent) reflects the concern that many investors feel right now about papers in general and the trend in the Stock Market in Madrid, in particular.
In a context in which Spain is undergoing its worst economic crises with an unemployment rate that has reached unimaginable levels, and where the banking system as a whole requested a billionaire bailout that is unlikely to improve the credit lines that banks have with companies and individuals, it is logical that the shares of a company with heavy debt can see their value fall.
However, the reality may be different and could only be seen by a few who know the business and are inside the company handling certain decisions with a different vision and future prospects.
At present, Pescanova has probably become the biggest company in Europe and one of the largest worldwide. Its level of turnover is very high and its structure is very competitive. But the weight of its indebtedness and the difficulties in finding support from the banks that supported the group in the past make it necessary to achieve a genuine increase in capital largely with personal resources from its own partners and managers. If they invest and run risks in the current context means that Pescanova is much better than what others consider.
What could be the reason to justify that their securities might be undervalued right now?
Throughout the years, Pescanova group has been taking positions in different fishing grounds and at present it has a fleet that is virtually present in every continent. In some cases, such as in Mozambique, it has even come to dominate a business with a strong commitment to investment in fleets. It is well known that a fishing license is often more valuable than the vessel exploiting it.
How many fishing permits does the group currently have? What value does this have on the market? How much would it cost in the near future where the distribution of permits has reached its limit?
It is likely that the answers to these questions are not available to someone who considers certain numbers before deciding whether to invest or disinvest. For this reason, it would be interesting to follow the footsteps of the managers and support those that really make a further assessment of the situation.
Regardless of the permit issue, the increasing participation of Pescanova in aquaculture and the firm’s strategic acquisition have absorbed a lot of investment. Therefore, it is believed that Pescanova Group does not really need much investment in ships or in aquaculture projects or in acquiring marketing companies, but it simply needs to get rid of the financial burden that prevents the good results, showing that in a not too distant future it will reached.
What the Galician group has is a tremendous assets whose value will undoubtedly grow given the strong demand for fishing grounds and the access to the markets it has already mastered.
- Pescanova shares collapse on the stock market
By Laura Fasano