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Sino Agro Food, Inc. (SIAF) is a vertically integrated, fast growing and technology-focused Chinese agriculture firm whose subsidiaries build and operate beef, sheep, aquaculture and produce farms. It follows many organic principles, and aims to create products as naturally as possible. Managed by an experienced international team, the Company has operations in three provinces and sells throughout China.
SIAF's strategy is to work towards full vertical integration, from farm to table, by expanding production and processing operations, while at the same time creating brands and restaurant outlets (via joint venture) for its products. The Company is currently active in aquaculture, cattle farming, livestock feed and fertilizer manufacture, produce farming and restaurant design and development. It is developing brand names in aquaculture and beef products, adding processing facilities, and is now involved in sheep farming. Though the Company sells throughout China, and even exports some of its products, its principal operations are in Guangdong Province, Qinghai Province and Hunan Province, as is shown in chart below.
The Company's agricultural projects generally begin with formation of a Sino Foreign Joint Venture Company (SFJVC) between one of its subsidiaries and a Chinese joint venture partner (or partners), with the SIAF subsidiary initially owning 25% of its equity. The Chinese partner acts as the project principal, initially owns 75% of the joint venture and usually contributes funding and land to the venture, while SIAF provides technology, construction and management services for a turnkey solution. The SIAF holding companies that undertake these projects are mainly located outside China, in Belize, Macau and Hong Kong, while the joint venture entities are Chinese companies. An important part of the development process is forming alliances with the farmer cooperatives that raise SIAF's cattle headcount requirements; SIAF provides them with infrastructure and education. Once a project is operational and profitable, SIAF typically increases its ownership in the joint venture from 25% to 75% and consolidates the project's operations into its financials.
The Company divides its fast growing operations into four standalone business units; fishery, cattle, HU flower plantation and fertilizer, enzymes and livestock feed. The commonality between the divisions is that each is operating in a comparatively slow growth consolidating market; SIAF has a strategy of targeting niches of these markets with their high quality products. The Company has described its strategy as wanting to be the highest quality with high margins, but not the largest firm.
In P.R.C. the rapid progress of industrialization of the last decade has unbalanced the needs of developments and activities of the agriculture industry, (i.e. diminishing of agriculture land, scarcity of farm laborers, industrial pollution and the generally over usage of chemical etc.). Therefore the P.R.C. Government has in recent years directed many incentive schemes and policies with the aim to revitalize and to modernize its agriculture industry. (i.e. Protection of agriculture land, stringent laws in governing the ownership and usage of agriculture land, tax free incentive applying to incomes generated from the industry and enforcing environmental friendly developments etc.)Management of the Company has many years of practical and professional experience in various and many sectors of the agriculture industry and decided in year 2004 that it was the right timing and there would be many opportunities available to develop agricultural ventures in P.R.C.
|Contact Information: |
Tel (China): +86-20-38880923
Fax (China): +86-20-22057863
Tel (USA): +1 (775) 901-0344
Sino Agro Food, Inc.
Room 3801, Block A, China Shine Plaza
No.9, LinHeXi Road, Tianhe District
Guangzhou, 510610, CHINA
Phone (USA): +1 (775) 901-0344
Investor Relations - Nordic Countries
Phone (Sweden): +46 (0) 760 495 885
Company Lawyer (USA): Sichenzia Ross Friedman Ference, LLP
61 Broadway, 32nd Floor
New York, New York 10006
Company Auditor: ECOVIS David Yeung Hong Kong
14/F San Toi Building
137-139 Connaught Road
Phone: +852 (258) 17 500
Mr. Lee Yip Kun (Solomon Lee)
President, Executive Director, Chairman and Chief Executive Officer. A Pioneer of Modern Fishery Projects in the South Pacific Region, who has over 35 years experience in the Fishery Industry and Food Industry created various sizable projects in the Asian region.
Citizen of Australia
Dr. Anthony C. Ostrowski
Chief Scientific Officer. Dr. Ostrowski is an accomplished scientist with broad international background and experience in the field of aquaculture and process certification. He was principle investigator on multi-million dollar research projects, directed a multi-institution research consortium, and led the internationally recognized aquaculture research and development organization, Oceanic Institute, as president & CEO from 2009-2012. Most recently, he was General Manager & CEO of Wanshida Ocean Bio-Tech, LTD., a Chinese aquaculture research and development firm located in Yangjiang, PRC. He also served on several boards and technical committees within the aquaculture community providing both scientific and strategic direction that helped establish local and international standards for the field. Dr. Ostrowski will bring considerable experience towards implementing the Group’s product traceability and certification division with research development programs key to our competitive position in the seafood segment of the protein food industry. Dr. Ostrowski holds a Ph.D. and M.S. from Michigan State University, USA., and a B.S. from Penn State University, USA.
Citizen of the United States of America
Mr. Tan Poay Teik (Peter Tan) Mr. Chen Bor Hann (Michael Chen)
Executive Director and Chief Marketing Officer. Mr. Tan has 28 years of experience in the food Industry and has much practical experience in accounting, strategic planning, merger and joint venture matters and financial management having held directorship in several private limited and public listed companies.
Citizen of Malaysia
Manager of Fishery, Executive Director, and Company Secretary of SIAF. Mr. Chen has 13 years of experience in the Fishery Industry, one of the pioneers of CA and RAS Projects in Asia.
Citizen of Taiwan
SINO AGRO FOOD, INC. (“SIAF”):
Mr. Soh Lim Chang (Anthony Soh)
Member of the Board of Directors Mr. Soh is a partner in the law firm, Edwin Lim Suren & Soh, in Kuala Lumpur, Malaysia. Until October 31, 2013, Mr. Soh was Deputy Managing Director of Pontian United Plantations Berhad, a Malaysian plantation company in the business of cultivating oil palm on 39,000 acres of land on a group basis, and operating an oil mill. Appointed Director in 2005, Mr. Soh served as Executive Director from 2007 until promoted again in 2009. He holds an LL.B (Hons) degree from University of Hull, England.
Citizen of Malaysia
A POWER CO. AGRICULTURE DEVELOPMENT CO. LTD. (“APWA (Macau)”):
Mr. Peter Rosta
On May 14, 2015, the company announced that Mr. Peter Rosta has accepted the position of Chairman of the Board of A Power Agriculture Development Co. Ltd. (Macau), also called "APWA (Macau)," the holding company of Qinghai Sanjiang A Power Co. ("SJAP"). Mr. Rosta has a wealth of experience and relationships in both Sweden and China, where he has resided for the past 20 years. He is a partner in Euro China Capital AB in Sweden, and Director of the Swedish Chamber of Commerce in China. He also serves as Director of several companies based in Europe and Asia, both private and public. Formerly, for five years, he served as Trade Commissioner and Head of the Swedish Trade Council in China and Hong Kong.
Citizen of Sweden
Mr. Colanukuduru Ravindran
Global Business Leader with 36 years of experience in strategy, finance, fund raising, techno commercial expertise having worked for IPOs across India, Singapore and USA successfully. Have also covered running and operating as Chief Executive in traditional industries, Oil & Gas, Power and IT.
Recognized Business Development Specialist having established strategic partnerships and trading network with companies and trading boards in over 20 different countries spanning APAC, Western Europe, Africa and the Americas.
Demonstrated global trade expertise managing foreign trade and currency volatility across APAC, Middle East and European markets.
Fund raising and expertise in managing listed companies in India, Singapore and USA.
Citizen of India
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|The fundamental aim of a carve-out spin-of (COSO) is to provide a foundation for a successful sector of a company to establish its own Board of Directors, provide audited financial statements strictly focused on its operational performance, all in effort to attain a “truer” valuation, both intrinsically and subsequently reflected in its market value, once listed. Sino Agro Food, Inc.’s (SIAF) role / main goal then becomes one of offering strategic support and as a purveyor seeking financial as well as other resources necessary for the COSO to succeed. |
In this respect, the Company (SIAF) is seeking to derive the greatest return to its shareholders by (i) issuing a substantial portion of its holdings in the COSO to SIAF shareholders of record prior to the COSO IPO, and (ii) providing pre-IPO investors an opportunity to buy into the COSO to help establish / solidify a pre-IPO market valuation to levels at 3 to 4 times the COSO NTA, which is projected to provide a market valuation range at 12 to 16 times earnings.
SIAF expects its holdings retained in each COSO as well as COSO shares distributed-to / held-by SIAF shareholders to result in a higher return on investment than currently or possibly even potentially provided under current conditions along with systemic headwinds experienced by SIAF over the last five years. The Company has announced that it has begun the first of three or four contemplated divestitures. The Company is currently exploring various opportunities for reorganizing or restructuring some of its current assets into new companies by means of mergers and / or acquisitions with the aim to establish higher independent fair market values for said companies (or respective related assets) by either listing each of said companies on a suitable stock exchange or selling them in a receptive market (or to a receptive buyer).
Triway (Aquaculture) The first carve-out (Tri-way) is comprised of aquaculture operations. The new company holds one single share class and shall conform to corporate governance standards assigned by the Hong Kong Securities and Futures Commission as well as the potential Stock Exchange targeted for its listing. The Company’s aquaculture operations, namely the C&S Project farms are as follows:
· Jiang Men City A Power Fishery Development Co., Ltd. (Fish Farm 1);
· Enping City Bi Tao A Power Prawn Culture Development Co., Ltd. (Prawn Farm 1);
· Zhongshan A Power Prawn Culture Farms Development Co., Ltd. (Prawn Farm 2), and;
· Zhongshan New Prawn Project (ZSNPP) Phase 1 as well as an opportunity to acquire additional phases of the project as development continues. The ZSNPP is targeted to reach an annual production capacity of at least 200,000 metric tons over the long term.
Establishing the proposed new company would in management’s view expedite several strategic objectives:
· Simplify the structure of the Company by creating a rapidly growing, profitable aquaculture company focused on the production of seafood with unique expansion potential;
· Create a company with an independent board of directors, a shareholder nomination committee, a single share class, a separate management team and auditors, dedicated reporting and investor relations functions;
· Expose the new company to institutional investors with in-depth knowledge and high appreciation of aquaculture businesses. Facilitate funding to increase ownership in existing aquaculture facilities, and;
· Create an independent company to secure funding for the future development of additional stages at the significant Zhongshan New Prawn.
Beef & Cattle Project and other carve-out projects
Text from 2016 annual result conference call prepared remarks
These operational enhancements are designed to position us to carve out and subsequently spin off the cattle business in order to maximize its value, using the aquaculture COSO strategy as a blueprint.
To this end, SJAP’s COSO strategy requires more work than the Aquaculture COSO plan for the following reasons:
1. SJAP is working in conjunction with the Chinese Government to promote certain economic and social responsibility objectives.
a. Firstly, to promote economic development in the region, the Xining Government is regrouping Xining’s abattoir operations by cancelling various existing abattoir permits within close proximity to each other, with the aim of centralizing all slaughterhouse operations at SJAP’s abattoir facility and turning the Huangyuan district into Xining’s main cattle and meat trade center. This is expected to significantly benefit SJAP as it will provide it with extra land adjacent to its existing sites to accommodate and develop two abattoir operations. It will also provide additional land at another location for SJAP to move its existing operations to, including the cattle farm, the fertilizer factory and the concentrated feed manufacturing factory. To this end, SJAP has been closely coordinating with the Xining Government in recent months.
b. Secondly, on the Social Responsibility front, the Government’s aim is for SJAP to lead and to group the regional growers and farmers into a united mass, with the aim of helping all regional poor farmers and growers out of poverty by the end of 2018. This exercise mirrors the same Co-op System SJAP has been employing since its inception
2. The Government has agreed to support SJAP in an effort to procure listing on the main board in China, either in Shanghai or Shenzhen, subject to SJAP’s performance. This, as opposed to seeking listing on China’s 3rd Board, the NEEQ. If SJAP does list on the main board, it will have “domestically listed foreign investment shares” available to enable our foreign shareholders to trade their shares, globally.
The Management of the Company are proud that the Government is recognizing SJAP for its efforts and counting it among an elite group of agricultural companies.
Tri-way Industries Earns Strong Credit Rating
Sino Agro Food Advances Spinoff Strategy
Jul 10, 2017
GUANGZHOU, China-- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), a specialized investment company focused on protein food including seafood and cattle, wishes to announce a key milestone toward the financing and spinoff of its former subsidiary, Tri-way Industries. Through its regional Hong Kong office, Dun and Bradstreet (“D&B”), assigned its strongest credit rating, 5A 1, to Tri-way, in which Sino Agro Food, Inc. holds a 36.6% ownership interest.
In March 2017, Sino Agro Food, Inc. announced the successful carve-out of its aquaculture joint venture assets into Tri-way Industries Ltd. The transaction resulted in a $56.9 M deemed capital gain for SIAF while retaining a 36.6% equity interest in Tri-way. The transaction is expected to be accretive to SIAF’s earnings per share in 2017.
As part of Sino Agro Food’s larger carve-out and spinoff strategy (“COSO”), the company aims to unlock value in its major subsidiaries by creating stand alone companies, each better positioned to procure debt and equity capital before applying for separate initial public offerings on Asian stock exchanges that currently trade peer group companies with established valuations.
After the carve-out, the strategy entails several major milestones toward an IPO, each involving multiple planned steps, in addition to third-party contingencies. The milestone categories include regulatory approvals and organizational restructuring; procuring debt financing and pre-IPO equity financing; establishing post carve-out operating history; and applying for listing.
Dun and Bradstreet Issues a 5A 1 Rating for Tri-Way Industries
Tri-way is currently in negotiations with several financing institutions, one of which commissioned a credit and risk rating from D&B, a leading international business rating services company headquartered in the USA. Tri-way received a rating of 5A 1. The 5A refers to financial strength representing the strongest net tangible worth classification of over 450M RMB or 300M HKD. The “1” refers to composite credit appraisal, on a scale of 1 to 4, where 1 is the strongest.
The report also provides a financial Risk Predictor (“RP”), with a scale of 1 -10, and a Financial Stress Percentile (“FSP”). Tri-way’s RP was 9, with 10 being the highest. This compares to the industry median for 5,536 companies of 6.1. Tri-way’s FSP is in the 99th percentile, equating to a 1/10th of 1% failure rate, having financial distress in the next 12 months.
While the D&B analysis had been commissioned under one financial institution, Tri-way and the Company are permitted to utilize its results when negotiating lending with other financial institutions, improving Tri-way’s position to procure financing on more favorable loan terms than otherwise.
Of note, the D&B corporate profile for Tri-way reported its tangible net worth at 3,007,347,794 HKD, or 385M USD, about 45M USD higher than reported from the certified fair market value as of December 31, 2016, reflected in SIAF’s annual audit report (10-K).
CEO and CFO Commentary
Sino Agro Food’s Chairman and CEO Solomon Lee provided perspective on Dun and Bradstreet’s report.
“The carve-out and spinoff strategy for our aquaculture assets is a long and complicated process. The carve-out was successfully completed and announced in March. Subsequently, we have worked diligently with advisors and regulatory agencies toward advancing our plan to distribute half of our equity in Tri-way to SIAF shareholders, and to obtain financing to accelerate Tri-way’s aquaculture development, capacity, and sales. We are confident that these efforts are proceeding in accordance with our aims. We are gratified by D&B’s report, as it validates our confidence in Tri-way’s ability to secure favorable financing.
“We look forward to reporting additional anticipated milestone achievements in the upcoming weeks.”
SIAF CFO Dan Ritchey elaborated, “Owing to the nature of Tri-way’s business which has far reaching potential in the arenas of food supply, security, and safety, our discussions with financial institutions in several Asian countries often take the form of developing a strategic relationship, as opposed to finalizing a single transaction. We have established a stance of non-exclusivity in these discussions, as we see the potential advantages of such relationships.
“The D&B report verifies Tri-way’s credit worthiness, highlighting a clean balance sheet, its risk averse approach, and other attributes sourcing the 5A 1 rating, providing additional confidence to these institutions throughout the decision making process. In relation to the D&B report and progress in other areas, Tri-way intends to issue follow-up announcements within this month, pending forms and signatures having been processed and completed.”