The Clean Seas Seafood Ltd (ASX: CSS) share price has continued its strong run and made a notably big gain today.
At lunch the commercial kingfish producer's shares have jumped 9% to 4.7 cents. This means its shares have now gained 34% since the turn of the year.
Why have its shares jumped today?
This morning the company provided a full-year sales update and its FY 2018 sales guidance at a presentation to institutional investors at the Curran & Co Aquaculture Conference in Sydney.
According to the release, full-year sales volumes were 2,287 tonnes. This is a 13% increase on FY 2016's result, or 29% higher on a normalised basis which excludes the impact of one-off clearance sales.
As a result, full-year sales revenue is expected to be $35.4 million, an 18% increase on FY 2016.
What's next?
In FY 2018 management expects sales volumes to rise significantly to between 2,650 and 2,850 tonnes. This equates to a 16% to 25% year-on-year lift in sales volumes.
On the top line this is expected to generate sales of between $43 million and $47 million. Which is approximately 21% to 33% higher than in FY 2017.
In light of this, the company expects to return to profit in FY 2018.
Should you invest?
I've been very impressed with the way management has turned around the company's performance and believe it could prove to be a great investment at the current share price.
If the company delivers on its targets next year, I estimate a profit after tax in the region of $9.5 million.
This means its shares are changing hands at approximately 7x estimated FY 2018 earnings, putting it at a significant discount to industry peers Tassal Group Limited (ASX: TGR) and Huon Aquaculture Group Ltd (ASX: HUO).
