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Throw another prawn

So Australia’s out of the Cup. We can stop pretending that we’re a soccer nation and get back to the real footy! The winter solstice has passed and we’ll be throwing prawns on the barby soon enough! Speaking of prawns, did you see the update from Ridley (RIC) this week? 

As you might recall, Ridley’s standard animal feed is getting more exciting with the development of their Novacq product. No, not the tennis player. That’s Novak! This Novacq is an additive to prawn feed. There’s a lot of science behind it. Not that I can explain it, but the fact that it’s a 50/50 JV with the CSIRO should tell you that it’s not just a kid’s science experiment (Disclaimer: I blew one of those up on the weekend).

The key thing is that Ridley reckons the stuff accelerates prawn growth. Now this is a natural product produced from algae, so don’t worry about seeing 3-headed prawns at the deli next week. That means prawn farmers can grow bigger prawns, or more prawns more quickly, thus making prawn farms more profitable. 

The results from the first trials at three separate Aussie prawn farms are now out and they look good. Two of the farmers have agreed to buy more, which always the real test.

The clever bit for Ridley is that they are planning to share in the value creation that this product delivers. It’s not just another stream of feed revenue. It could be reasonably significant as Ridley shares in the upside of those farmers that use it. If a few do, they all have to right?

I’m pretty interested in this. Mainly because it’s flying under the radar as far as the market is concerned. But that’ll change once the revenue starts coming in – Call me before then!

If you don’t want to put that in your pipe and smoke it, then how about this? I know where you can get some top-grade weed. There’s a production facility going in at Melbourne Airport. No, I’ve not gone all Breaking Bad on you. This one’s legit.

Cann Group (CAN) took a step further down the path of becoming Australia’s leading producer of medical cannabis in the nascent industry, with a doubling of its production target through the planned facility. Co-location with an airport is sensible, providing easy access to export markets. This is the way the big boys do it in Canada (where the industry/market is substantially more developed).

Cann is a higher risk proposition than Ridley for sure, but there’s been a lot of interest in the space and significant developments like this one prove that it’s not all just smoke and mirrors. Peering through the haze, Cann could actually be profitable in FY19 and the longer-term growth is potentially huge. “Potentially” is the key word. There’s still plenty of development, regulatory and execution risk. But if you’re looking for a bit of herb to spice up the portfolio, then a sprinkling of Cann might do the trick…Now pass that over to me…  

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