Risky investment.
The downgrade comes after an “incident” at the company’s fish farm in Denmark, which caused a loss of 400 tonnes of fish.
The investment bank’s probability of success has been revised down to 60 per-cent, from 70 per-cent, according to TDN Direkt.
“Such operational events give the company a real uphill battle to win back the market. The recent USD 120 million share issue does not suggest any immediate financial risk, which will allow time to deliver in the U.S. business, which is key to the investment case,” wrote DNB Markets.
DNB Markets is also lowering its price target on Atlantic Sapphire to NOK 120, from the previous NOK 140, and reiterated a BUY recommendation.
When asked about DNB’s analysis, Atlantic Sapphire founder Johan Andreassen told SalmonBusiness that it “never comments on analyst reports or stock prices in general”.
“We see continuous improvement internally and are confident we will get to stable operations with the guided harvest volumes. Unfortunately, we have had too many incidents the last couple of years and our mission is to eliminate these over time,” he said.
“I can not comment on the specifics on the maintenance work. In general, the challenge is that we have to perform maintenance work with fish in the system. It’s like maintaining an airplane that is flying in the air. It requires extreme attention to detail and risk assessments,” said Andreassen.
He added that the company sees no reason to change the production plans of Denmark (2,500 tonnes). “We know that the systems can handle the designed volumes,” explained Andreassen.
