Our opinion on the current state of OCE

Oceana (OCE) is Southern Africa's largest fishing business which also has significant fishing interests in the US through its Louisiana-based subsidiary Daybrook Fishing. It is listed on both the JSE and the Namibian stock exchange. The company produces canned fish, fish meal, fish oil, hake, and mackerel as well as lobster and squid. It is subject to quotas which are issued by the government periodically and as such can be affected by moves towards Black economic empowerment. It is also subject to weather conditions which can have a significant impact on the size of the catch. In its results for the six months to 31st March 2023 the company reported revenue up 48% and headline earnings per share (HEPS) up 123%. The company said, "This performance highlights the strength of being a diversified Group across species, geographies and currencies. Higher opening inventory levels of canned fish, fishmeal and fish oil, strong demand for canned fish and continued price improvements for most of its products, particularly fish oil, enabled the Group to counter the effects of these tough operating conditions". In a voluntary trading update for the 11 months to 27th August 2023 the company reported Luck Star canned sales volume up 8% and US landings of fish down 5%. Horse mackerel sales were unchanged. Technically, the share has been rising since July 2022. It trades on an earnings multiple (P:E) of around 9,81. In our view this is a solid blue chip, which has been made more volatile by its exposure to weather conditions and regulation. The new CEO says that the company is looking to make an acquisition in aquaculture but is precluded from doing so in South Africa because of competition restraints. It is a good, but potentially volatile counter. On 30th May 2022, the company announced that its external auditor, PWC had resigned. On 27th March 2023 the company announced that it had obtained a secondary listing on the A2X exchange.