SSC's earnings for the first 9 months of this year were 21.67 million British pounds or £0.102 per share. Using the GBP-NOK exchange rate of 9.27 I get 0.94 NOK per share. Today's closing price was 4.89 NOK. Assuming that SSC can earn at least 2 pence during the fourth quarter, P/E with the FY2010 result will be <4.5. Next year's slaughter volume is expected to be below this year's(22 million kg vs. 24 million kg) and salmon prices will most likely be below this year's average prices, but even if the earnings drop 50% the P/E would be less than 10(the earnings can of course drop more than 50%, but will they?).
The valuation looks very compelling(as it did in November, October and September). At least to me it does. Maybe there's something that I'm missing. I added to my position again yesterday. SSC looks clearly undervalued when compared to its peers: Marine Harvest is trading about 7.7 times this year's earnings, Salmar 7.3 and Cermaq about 9.
Some headlines related to salmon farming:
Scots salmon farming in the pink, says study(10 December 2010)
Dutch catch Scots salmon breeding firm(12 December 2010)
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