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Here’s why the Huon (ASX:HUO) share price is rocketing 7% today

Huon shares have bounced strongly off record lows. Here’s what’s driving the jump today.
The post Here’s why the Huon (ASX:HUO) share price is rocketing 7% today appeared first on The Motley Fool Australia. –

The Huon Aquaculture Group Ltd (ASX: HUO) share price is on the rise today after the company released a market update this morning.

At the time of writing, the salmon farmer’s shares are up 7.43% to $2.89.

Prior to today’s announcement, the market hadn’t heard from Huon since its February half-year results, which saw Huon shares tumble 15% to $2.63 on the day of the results being released.

Let’s take a closer look at today’s announcement.

Huon responds to unsolicited takeover offers

Within Huon’s half-year results, the company revealed that it had “[attracted] interest from potential strategic partners and investors over a sustained period”.

The board announced a strategic review to assess such corporate level transactions and offers for the benefit of its shareholders.

In today’s announcement, Huon revealed that it is currently “facilitating due diligence by select interested parties in order to explore whether a transaction could be consummated for the benefit of shareholders”.

While the company is certainly exploring its options, it also advised that there is no certainty that a binding transaction might eventuate.

Upbeat outlook for salmon market

Pleasingly, Huon advised that it had experienced a recent steady increase in demand from the domestic wholesale market.

The improved market conditions were driven by the reopening of hospitality and food service businesses, and the general easing of COVID-related lockdowns in Australia.

The company said that pricing and volumes in the wholesale/food service market had recovered to pre-COVID levels.

It also highlighted that exports markets (before freight costs) were generally back to pre-COVID levels.

Huon believes it is currently trading in line with its previous guidance, and expects a harvest of around 35,000 tonnes for FY21. The company reaffirmed its previous FY21 earnings before interest, taxes, depreciation, and amortisation (EBITDA) guidance of $15 million to $20 million.

Huon share price jumps 16% this week

Things were getting pretty dire for Huon shares, hitting an all-time record low of $2.25 on 16 June. This represents a 50% dive from its February 2020 pre-COVID price of about $4.50.

The Huon share price has made a strong bounce off lows, potentially influenced by a significant new shareholder last week.

Today’s market update has provided another boost of confidence for Huon shares, rallying 7.81% to a 5-month high of $2.90 in intraday trade.

The post Here’s why the Huon (ASX:HUO) share price is rocketing 7% today appeared first on The Motley Fool Australia.

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More reading

The Huon (ASX:HUO) share price is up 7% today

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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