Ocean Grown Abalone Limited (ASX: OGA) has developed world's first commercial greenlip abalone sea ranching business in the pristine waters of Flinders Bay and is primarily involved in producing wild, ocean grown greenlip abalone under its Two Oceans Abalone brand.
OGA has developed proprietary ABITAT ‘sea ranching technology’ enabling it to establish “wild abalone” populations on the artificial reefs created by the company.
Ideal areas where the company applies its sea ranching technology include:
- Areas of suitable habitat on which to locate reefs - (sand/seagrass);
- Close proximity to a Marina, hatchery and export supply chains;
- Protection from large swells.
The company is currently focused on commercialising ocean ranching of abalone in Australia and growing the Two Oceans Abalone brand as a high-end product in Australia and Asia.
The company is soon going to start its operations at its new processing facility in the Augusta Boat Harbour which will increase the abalone harvest volumes, other value-adding products, including live abalone exports and other processed and packaged abalone products.
FY19 Financial Performance
In the last financial year, the company witnessed significant improvement in the sales numbers as well as in its harvest volumes.
For the year ended 30 June 2019 (FY19), the company reported an operating profit before tax $2,370,024, compared to a loss of $3,046,512 in FY2018, driven by the increase of $5,078,577 for the fair value of the abalone biomass and an increase of 106.9 tonnes of commercial-grade abalone above 90mm.
During the year, the sales increased by 53.1% to $2,837,250 and harvest volumes increased by 44.4% to 55.0 tonnes. In the last quarter of FY19, Ocean Grown Abalone achieved its highest ever production in a 12-month period.
In FY19, the biomass value increased by over 68.3% to $9,910,705. Commercial grade abalone above 90 mm increased by 106.1% to 207.6 tonnes in FY19 as compared to 100.7 tonnes in FY2018. This stock puts the company in a strong position to meet future customer demand.
During the year, the company was also able to decrease its diving, vessels and operating expenses by $599,556 as the business moved from a construction to an operating phase. And it also reduced its Corporate and administration costs by $64,918 to $1,019,724.
The company recently completed the construction of a processing facility in the Augusta Boat Harbour. Once the processing facility is fully operational, the company will be well-positioned to continue to increase future sales volumes, which is supported by 234.6 tonnes of underlying abalone biomass.
Below is the snippet of major activities undertaken by the group during the year:
How is OGA Well placed for future growth and Profit?
- A new processing facility to handle greater harvest volumes,
- A new development in the pipeline at Esperance,
- Substantial increase in abalone biomass at its Flinders Bay Ranch,
- Increasing brand recognition in Asian markets.
It is expected that the Synergies with the Esperance development will add value to the company’s existing Flinders Bay ocean ranching activities and provide further access to growing international market.
In its outlook mentioned in 2019 Annual report, the company has informed that it will continue to focus on growing the company, by continuing to optimise existing operations; increasing brand recognition in Asian markets and increasing revenue.
The company believes that it is well-placed to achieve this with the increased abalone biomass, the recently completed processing facility and the ongoing development of the Esperance abalone hatchery and grow-out facility.
In the coming years, the company will utilise information and experience it has collected and analysed on items like topographical and tide patterns to further optimise existing ranches and in turn increase growth and production yields.
Activities Planned for the September Quarter
- Harvest – will continue into and beyond Q1FY20
- Juvenile Seeding – OGA plans to seed 535,000 juvenile abalone in the September Quarter
- Export Processing Facility – fit-out completed in Q1FY20, and operating out of the new facility
- Esperance – Feasibility study will commence for the development of an abalone hatchery and grow-out facility in Esperance.
In the last one month, the company’s stock has soared by 36%. At market close on 25 September 2019, OGA’s stock was trading at a price of $0.170 with a market capitalisation of circa $29.65 million.
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