Canada: Key questions still unanswered in BC aquaculture transition plan

Introduction to the salmon sector

This report provides an overview of the dynamics, companies, history, challenges and opportunities of the salmon farming industry. Biological challenges and stricter regulations over the past decade have curbed the supply of salmon, a globally consumed product with a strong ESG angle. Significant infrastructure investments made by the companies to solve these challenges have not yet yielded materially higher supply, leading to continued high salmon prices. Despite higher EBIT margins the sector is trading at lower multiples than other protein peers.

Seafood - Fat Trout Weekly

Seafood - Fat Trout Weekly

Vitrolife (Buy, TP: SEK280.00) - Underlying trends set to continue

Vitrolife stock has recovered nicely since its Q2 report (up c33% since the day before the report). We believe most of the Q2 trends that triggered the revaluation of Vitrolife remain, heading into the Q3 results. For the quarter, we are c1% below consensus on sales and c4% below on adj. EBITDA. We have increased our forecasts from 2025 and our target price to SEK280 (250). We reiterate our BUY.

Pick your contender

Following our ‘investment company weeks’ at DNB Markets in Stockholm, we give a brief update on our view of the sector and summarise our impressions from lunch presentations with 13 investment company CEOs. From a broader perspective, we note the increased investor interest in the sector, as well as the structurally lower discounts to NAV, albeit not in the VC-oriented companies. We continue to have Investor as our sector top pick, with additional BUYs on Latour, Kinnevik, VEF and Flerie.

Storytel (Buy, TP: SEK78.00) - Gross margin momentum

We are 7% above Modular Finance consensus Q3e adj. EBITDA on positive content mix and the full impact of recent cost actions. We have now seen the long-awaited shift in the investor base, but acknowledge that investors could still take a wait-and-see approach to Storytel’s new CEO (starts 1 October) and likely strategic review before there is a re-rating. We reiterate our BUY, with a trimmed SEK78 (80) target price; we continue to see a step-change in profitable growth and FCF generation at an undemanding valuation at a 2025e EV/EBITDA of 5x, P/E of 13x and OpFCF yield of 12%, whilst Storytel’...