Sanford touches record high as value-add strategy may be garnering interest

Trading is extremely light with only one trade at the $8 level.

Fishing company Sanford shares hit a record high Monday as the company's value-add strategy may be gaining some traction, although trading was light.

The stock recently rose 3.3. percent to $7.95, having climbed as high as $8 earlier in the session. It has gained 14 percent so far this year.

Last week Amalgamated Dairies, an investment vehicle for the Goodfellow family, said it had raised about $21 million reducing its holding in Sanford to 24 percent from 27 percent, creating a new pool of investors.

"They have been slowly selling down their stake for some time now. So the stock has gone from being very, very illiquid to having a modicum of liquidity and retail have been a part of that buying so it creates more ongoing liquidity, which makes it a more interesting and viable story for other investors," Forsyth Barr analyst James Bascand said.

Bascand said investors may also be digesting recent changes in the company: "There's been a large turnaround story here. People had ignored Sanford for quite some period of time because it was tied up by a few major shareholders and hadn't really been any structural change for a very long time and it was underperforming from a return on equity perspective," he said. "People are getting their heads around it and are liking what they are seeing."

New Zealand's largest listed seafood company lifted its first-half profit 25 percent as the benefits from selling more higher-value fresh seafood offset the impact of lower prices for frozen commodity products and disruption from adverse weather. Sanford is turning its focus to extracting more value from the seafood it harvests through its inshore and deepwater fishing boats and salmon and mussel aquaculture units. It is investing in new fishing boats, developing higher-value brands for its products, and selling more fresh produce to top local restaurants.

Bascand said trading is extremely light with only one trade at the $8 level. There was a trade lodged at $8.72, but it was immediately withdrawn. Bascand said it was likely one trader putting in an "opportunistic selling price" which was cancelled when the market didn't see it as a fair representation of value.

He rates the stock as 'outperform' and has a 12-month target price of $7.80. The next news flow would like come at its annual result, due in mid to late November, he said.