Massive profit potential as Mowi is ready to sell wellboat stocks

News
1928

There are great values ​​at stake when Mowi wants to take a profit in DESS Aquaculture Shipping.

Earlier today, it was announced that Mowi will put its 50 percent ownership interest in the wellboat company DESS Aquaculture Shipping up for sale.

“DESS Aquaculture Shipping has now reached a critical size and is well positioned for further growth,” Mowi wrote in its quarterly report.

Gain
Now is the time to take a profit, the Mowi management believes. It’s the Swedish investment bank SEB that has been given the mandate to sell Mowi’s block of shares in DESS.

The salmon farming giant, which owns the shipping company 50/50 together with John Fredriksen’s Hemen Holding, has made significant investments. According to Mowi’s annual report, DESS Aquaculture Shipping’s vessels were booked at a value of 190.4 million euros at the end of 2019. After the turn of the year, the company has contracted boats for a further 72 million euros. In today’s report for the second quarter, it is stated that the company will soon also contract two new buildings.

That provides a total fleet, including new contracts, of 14 boats.

Of this fleet, eight of them are wellboats. Ship broker Nils R. Blakstad, of Atlas Shipbrokers, estimates the market value for these at NOK 2,370 million (EUR 224 million).

“I must make a reservation that I have not examined all the details, and that I can not verify what equipment is on board and which may be included. This can be delousing equipment such as Therlolicers, Hydrolicers, FLS, processing equipent and so on,” said Blakstad.

He emphasized that he has not assessed the values ​​in the rest of the DESS fleet here.

New builds
In addition to the wellboats, there are be three service boats and three processing boats in the fleet. The last two processing boats, and the currently unconfirmed newbuildings, have, according to other market sources SalmonBusiness has spoken at a cost price of around NOK 500 million (EUR 47 million) each.

This means that a rough estimate of the market values ​​of the 14 boats is between EUR 400 and 500 million.

Can Mowi “make a killing” here?

“Yes, I believe so. Now it’s at all time high. They will get a good price,” said Blakstad, who highlights a fiery wellboat market.

“We could probably have sold ten 1,800 cubic meters if we had them on hand. But there are no wellboats to be found. It must be the only shipping segment that has increased in price in the last decade,” he added.

Potent
Players such as NTS, Rostein, Sølvtrans, Intership and Aquaship are mentioned by other industry sources as possible buyers. They are all potent. All the shipping companies, with the exception of family-owned Rostein, have stock exchange capital, private equity or hedge funds behind them.

Sølvtrans CEO Roger Halsebakk is aware that the DESS post is for sale, but answers somewhat cryptically whether his company is a potential buyer.

“I see that Mowi is considering selling its share,” Halsebakk says to SalmonBusiness. “We at Sølvtrans have contracted seven boats, where the first will be delivered in a couple of months, and we have several options we will use until 2025.”

Intership’s CEO, Ole Peter Brandal, does not want to comment on whether his company could be a possible buyer of Mowi’s DESS shares.