Business Valuation and Analysis of Tassal Group †Free Samples

Question: Discuss about the Business Valuation and Analysis of Tassal Group. Answer: Economic environment of Tassal group In Australia, the aquaculture industry has constituted a strong growth over the last five years. The industry has accounted a growth rate of 5% per annum. Growth of the industry continues despite interruption in fish production following outbreak of disease in 2014-2015. Tassal group captures the largest market share with share being 16.5% (tsga.com.au 2018). Economic environment of Tassal group is characterized by existing tax rates, stability of global and domestic economy, market size, public investment in research and development and sustainable growth rate. The company has experienced a low barriers to the market entry. However, steady growth has been maintained by company with its unique product supply. The relationship with partners and suppliers play an important role in performance of the company. The global economic environment that affects the aquaculture industry worldwide plays an important role for Australia and for the concerned company. The relatively high value of Au stralian dollar has put limit on export penetration (aussiefarms.org.au 2018). However, the low level of export penetration suggests a considerable scope business expansion in the international market. The value of Australian dollar has declined providing an opportunity for export in future. Performance of the company over the last five year The company is in a path of continuous growth. The per capita consumption of salmon in Australia is growing. The company is committed to meet the growing demand for consumption. Tassal group provides continuous support to salmon industry with its continuous growth (tassalgroup.com.au 2018). The company offers a wide range of variety to its customers from the perspective of both product and brand. Being dependent on agriculture, the company often face agricultural risk. Salmon involves a growing cycle of 3 years. Therefore, there are high possibility of supply shortage. To address this issue and maintain Salmon stocks throughout the year the company has focused on imported stock of Salmon. The Tassal group is expected to be leading brand in this future following its diversified growth strategy. Figure 1: Revenue of Tassal group in the last five years (Source: tassalgroup.com.au 2018) Figure 2: Net profit of Tassal group in last five years (Source: tassalgroup.com.au 2018) As shown from the above figure, revenue of the company has increased in the last five years. This indicates growing profitability of the company. Economic indicator affecting the company The macroeconomic factors such as gross domestic product, inflation, saving, interest rate, foreign exchange and business cycle volatility affect aggregate demand and investment of the economy (tsga.com.au 2018). The five major economic factor that have influenced performance of the company include GDP, inflation, interest rate, consumer demand and foreign exchange rate. The GDP growth rate in Australia has declined in recent years with an accounted growth rate that is below the expected level. The declining GDP generally is not a good sign for business. However, tassal group has not affected from a slowdown in GDP because of a steady growth of consumption. The household consumption grew at a rate of 1.1 percent (tradingeconomics.com 2018). The inflation rate in Australia has remained at a relatively stable level. The cost of food and non-alcoholic beverages fell from -0.2 percent to -0.7 percent. The declining food price in turn raises peoples affordability of sea food. Tassal group being a leading company in the aquaculture industry is benefitted from increasing affordability as reflected from increasing revenue and net profit of the company (tassalgroup.com.au 2018). The interest rate in Australia has settled at a historic low level. The RBA has left the cash rate to a rate of 1.5 percent. The low interest rate has contributed to an increase in the business investment along with a strong export. The interest rate has been kept at the low level due to raise Australias growth rate in line with other advanced economy. The prosperous economy in turn implies a healthy environment for business of Tassal group. Consumer demand for seafood in Australia has continued to grow. The per capita consumption is expected to grow by 3.7% between 2015-16 and 2020-21. The per capita consumption is expected to be 19.0 kilogram by 2021 (ibisworld.com.au 2015). Increase in peoples income coupled with increasing health consciousness and health benefits from specific seafood especially Salmon has raised demand for companys product causing the business to grow. The competitiveness of the company influenced by the movement of exchange rate against its competitors and trading partners. Australian dollar has recorded a strong appreciation from 2001-02 to 2007-08 against both US dollar and Japanese yen. The appreciated currency reduced the import cost, helping the company import Salmon from its trading partners. In 2013-14, the Australian dollar depreciated by 10 percent (aussiefarms.org.au 2018). This puts a downward pressure on export price. The export revenue of the company has increased by 32.3% reaching a volume of 1172 tone in 2016 from 886 tons in 2015. References Aussiefarms.org.au. (2016).Australian Fisheries and Aquaculture Statistics. [online] Available at: https://www.aussiefarms.org.au/uploads/documents/2090-000000199-43a87df513-australian-fisheries-aquaculture-statistics-20.pdf [Accessed 7 Apr. 2018]. Ibisworld.com.au. (2018).Soaring seafood consumption fails to deliver significant growth for Australias fishing and aquaculture industries : Media Centre. [online] Available at: https://www.ibisworld.com.au/media/2015/12/15/soaring-seafood-consumption-fails-to-deliver-significant-growth-for-australias-fishing-and-aquaculture-industries/ [Accessed 7 Apr. 2018]. Tassalgroup.com.au. (2018).Tassal Group Annual Reports. [online] Available at: https://tassalgroup.com.au/investors/reports/annual-reports/ [Accessed 7 Apr. 2018]. Tassalgroup.com.au. (2018).Tassal Group Tassal Growth Continues. [online] Available at: https://tassalgroup.com.au/tassal-growth-continues/ [Accessed 7 Apr. 2018]. Tradingeconomics.com. (2018).Australia Interest Rate | 1990-2018 | Data | Chart | Calendar | Forecast. [online] Available at: https://tradingeconomics.com/australia/interest-rate [Accessed 7 Apr. 2018]. Tsga.com.au. (2018).Economic Impact Assessment, Tasmanian Aquaculture Industry. [online] Available at: https://www.tsga.com.au/wp-content/uploads/2014/11/TSGA15-Economic-Impact-Report.pdf [Accessed 7 Apr. 2018].