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Analysis: Meat prices add to China's inflation, policy risks
Food prices typically rise ahead of the Lunar New Year holiday -- which occurred in February this year. But since the holiday ended, meat prices, especially for beef and lamb, have stayed elevated.
http://www.reuters.com/article/2013/03/10/us-china-economy-inflation-idUSBRE9290GM20130310
The answer to the question about how much land in hectares that SIAF owns.
Zero
All land in China is owned by the govt. They sell, or grant, land use rights to companies and individuals, but never pass title.
This is programmed trading, not financing share dumpage. You can tell by the fractional bids. VERT, SUNR and the others love OTCBB stocks that are highly liquid (lots of shares traded each day) that also have a large shareholder base that they can panic. It all plays into the scenario of driving the price down, then letting it rise. The only way to stop this is to dry up the float. Otherwise, I would just suggest that you average down your average price. My avg price is now $.565.
Programmed trading doesn't care about the story. Saving a penny on the buy side and squeezing a penny on the sell side is all a computer cares about.
Last year, the 10-K was issued on Apr 12. IMO, this year should be about the same, sometime during the second week of April.
I don't think I have seen this before now. It looks like the line has been expanded into ducks and geese. I doubt that SIAF is growing their own, it is more likely they would process and market from local cooperitives.
It shoudn't be surprising to see govt participating in agricultural projects. This is still a communist country and the goal of the govt seems to be to put as much land as possible into food production.
The concept of partnering with local farmer cooperatives and also having the govt participate is interesting. I think what it means for SIAF is that they have a market for the propietary feed technology and supplies and also a supply of cattle that can be proessed in their slaughterhouse. All that without the cash outlay to build additional facilities.
Does anyone that was on the investor tour last fall have an idea of how many seats each of the restaurants will have? There is a big difference between a 100 seat restaurant and 1000 seat restaurant. A 100 seat restaraunt can be expected to sell a maximim of 200 dinners per lunch or dinner. At a $10 profit per meal, the profit per week is $4000 per day or $1.46 mil per year per restaurant. Times the number of restaurants comes to more profit than they now make on all other operations. Or am I missing something?
This trading action is called "shake the tree" to see what falls out. IMO, not much. Bounce up in less than 100,000 shares.
Sell the news is common, and should not be considered an opinion on the content of the PR. The low volume of trading (all selling) is an indication that the MMs are the traders and the share price should rebound when the bargain hunters realize the value.
IMO, the number of cattle we have discussed on the message board seems to be answered by the utilization of farmer cooperatives to make up the difference.
It really doesn't matter what the number of OS is if he can meet or exceed the yearly earnings guidance.
IMO, S is doing a major juggling act creating so many new projects at once on a limited budget. Hats off for all the ambition.
Finally, I still maintain that there will be an IPO share sale in association with the FN listing that will solve the financing issue.
The average American "investor" is totally in the dark concerning the stock market. Sophisticated investors are risk takers and risk evaluators. The average guy buys 10 shares of Apple at $600 and watches it drop to $500 and wonders what to do next.
Crackdown on pretend Kobe beef
http://usa.chinadaily.com.cn/china/2013-02/05/content_16200177.htm
It would be interesting to know what price SAIF's aromatic beef fetches in an up-scale restaurant. This has to be a niche that Solomon is aiming toward.
In China, Horse With a Side of Poisonous Fake Mutton
http://www.bloomberg.com/news/2013-02-19/in-china-horse-with-a-side-of-poisonous-fake-mutton.html
IMO, a supplier of food products with an impeccable reputation will clean up in the Chinese marketplace. It seems to make sense that a clean reputation will add up to asking and getting premium prices in the marketplace.
Sly
Nothing wrong with creating a basket of food industry/agricultural type companies to compare with SIAF. Panera is an excellent example. I liked Yum since they say their greatest growth area is China.
Someone has a comparison of the gain of SIAF compared to Apple. I would suggest two other possibilities that might be more comparable to SIAF.
McDonalds and Yum Brands (KFC, Pizza Hut, and Taco Bell)
These fast food franchises are somewhat vertically integrated since they have centralized provisioning for the franchises so that the product is consistent throughout the world. The difference is they are mature companies with their fast growth period behind them.
Diggg
Look at the business model. Very important to note that the company is vertically integrated. Also note that the company relies on joint venture partners to provide the rapid growth. I would compare this business model in some ways to a franchise holding company. SIAF provides local farmer coops with technology support, animal food, etc then buys the semi mature cattle from them, finishes the grow out, uses their own slaughterhouse and markets the product in their own wholesale and retail operations. On the fish, prawn, eel side, they use JV partners in the same manner in order to participate in all stages of the supply chain. The marketing is aimed at the upper middle class and higher end of the economic scale by selling superior products that have high profit margins.
I agree. The MM's see something coming and don't want to get trampled. All the trading today is retail. Volume is down and will probably stay low until the PR.
IMO, there is only one purpose for the detailed letter. Raise the price as high as possible BEFORE the FN listing. You'll all see why when that happens. Hint: financing will no longer be an issue after the FN listing.
You don't eat the prawn flies. They go to owners of grow out pools so that they can restock and grow them to full size.
On the topic of price differences that will occur between the Swedish and US markets, there shouldn't be much difference unless the company issues a major PR that happens when one market is open and the other closed. Then, when that other market finally opens, there would be a quick gap in order to catch up. I expect most PRs will now be issued when both markets are either both open or both closed, to eliminate differences. I think there is a few hours of overlap each day when both are open.
One tip-off that machine or bot trading is happening is to look at the bid/ask. If the reading is in hundredths or thousandths, it is from a bot. The programs work by trading high volumes at incredibly slim margins. They expect to make their profit when humans make their buys/sells at whole number prices.
If the price on the Ask is something like .6301, the way to place a market order that I have used before is to place a limit order for the next higher whole price (such as .64) but do not specify that you want it filled as an "all or nothing" order. That way the MM can fill your order at any price lower than the upper limit you have set that is equal to or higher than the current ask price. You might not get the whole amount you order, but you should get something at a price in between.
On another topic, I think you can throw out all the conventional wisdom from the past about what makes a stock price move higher. There has been so much money created from the years of quantatative easing that there are now massive pools of money that are chasing any available way to invest. The one key to unlocking access to this money is the current price. It has to be over $4 to make it comply with the standards set for so called "safe investments".
A pause in the price rise at this level is healthy for the future.
Speaking on those contamination issues, I bet the Chinese market for hamburg would present some interesting results.
Some may not realize that Guangzhou was formerly named Canton, the third largest city in China with a population of over 4.5 million and probably 40 million in the surrounding area. Guangzhou is the home of both the HQ of SIAF and the retail and restaurant operations. Lots of mouths to feed, and most of the competition has probably targeted the Shanghai and Beijing markets.
I expect Punch 3 to be the release of the quarterly report before the FN listing, not after. The reason being that the trailing twelve month earnings will be higher than now. This is important because one way for the individual to do a quick evaluation of a stock as being overvalued or undervalued is to multiply the TTM number by the anticipated PE multiple to get an estimation of a fair market share value. Example: TTM = .65 and anticipated PE = 10 would result in an estimated fair value of $6.50.
On another topic, that article about the environmental disaster in China makes one thing crystal clear. SIAF has to insure the water supply for all of its operations remains uncontaminated or the whole "organic" branding will fail.
I was under the impression that new joint venture partners would be brought in to create new operations, such as fish farms or cattle pens. Therefore, the consulting revenues would continue to grow along with the sales and services revenues, such as retail operations and restaurants.
From my past experience with stocks priced under $1, MM's post 1000 to 5000 shares on the ask as their market making duty, rather than any real interest in selling. Anything above 5000 shows a market trend.
The Chinese govt heavily subsidizes any agricultural activity that turns marginal land into productive land. Sheep farming is the perfect solution for this use, as long as the sheep don't fall off a cliff.
On another topic, the prospectus should follow the same type of presentation made in the 10-Q and 10-K reports, so you should have some idea of what to expect.
There should be built in buying interest in Sweden just as soon as trading begins on FN. So far Penser has been buying for their own account. IMO, just as soon as trading begins, Penser starts buying for the accounts it manages for rich clients (called trust accounts in the US).
Penser has their reputation on the line to be bringing a growth stock to the FN listing. I think they will take any and all steps to see that the trading is successful.
According to the PR dated Mar 28, 2012, the first delivery of aromatic beef was made during Q4/2012. That should add approx $4 mil to $4.5 mil to quarterly revenues.
http://www.businesswire.com/news/home/20120328005485/en/Sino-Agro-Food-Awarded-Aromatic-Beef-Sales
I don't expect a bond issue. What I do expect is a share tender of between 5 mil and 20 mil in the form of an IPO for FN trading. I expect the buyers of that issue to mostly be market makers in Sweden. Issue price will depend on two factors: the current share price in the US and the demand for shares in Sweden. The higher the share price in the US, the better for the company. Since Penser is the major backer of this offer, I expect them to take the lead in raising the share price just before the start date. In other words, they are just biding their time until the FN listing is imminent. If the share price jumps higher, the listing is coming up within the next two weeks.
Ironridge SEC filing yesterday.
Ironridge now declares they own less than 5% of shares. They are the dumper.
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001144204%2D13%2D009112%2Etxt&FilePath=%5C2013%5C02%5C14%5C&CoName=SINO+AGRO+FOOD%2C+INC%2E&FormType=SC+13G%2FA&RcvdDate=2%2F14%2F2013&pdf=
In order to escape HFT, the trading has to shift from the bots to the funds that will buy and hold. Once the free float dries up, the trading volume will drop like a rock.
SNOA seems to be the symbol for the F shares.
Yes, Scottrade in US has just posted the F shares. They don't give a value and they are coded so that they can't be traded.
The other day I noticed a small OTCBB stock with A/S of about 13 mil. That day's trading totalled over 15 mil shares traded. How can this be unless there is naked shorting, programmed trading and other techniques of share manipulation?
It could be that UBSS and any other of the Swiss or European banks might be trading for their own accounts so that they can be MM's for SIAF on the FN.
Look at the banks, funds, money managers who are the market makers on the FN to find the buyer of that big block. All the big market makers on FN will have to create an initial position in order to participate.
Catch 22 right now.
The share overhang keeps the price in a narrow range under $1.
The share overhang will not be absorbed by large funds until the price reaches the $2 to $4 level.
A way has to be found to get the share price to a level where the large funds feel comfortable investing. There are a few different ways, I think. One is a reverse split. Another is to create an outrageously high profit margin.
Actually just thinking from past experience. In order for shares to be traded on FN, there have to be a supply of shares readily available. Revising my thoughts about an IPO, Penser would create a prospectus offerring X amounnt of shares (ie: 20 mil) at a proposed price (ie: $.50). Then the Penser managers would solicit other funds to sell these shares to. If Penser gets bids for more total shares than the offer, they have two choices. Offer more shares, like Facebook did, or raise the price, or both. Let's say they raise the price to $1.00. That would mean that the opening price on FN would be $1.00, and the opening price on OTCBB six hours later would be the current price on FN, whatever that would be. Trading on the following days would follow that pattern. FN would set the daily price, and OTCBB would follow.
There will most likely be an IPO of shares offerred in conjunction with the FN listing. Right now, I would guess something like 20 million shares priced at $.5o or the equivalent amount of Euros. That is why the current price seems to be hovering around $.50 cents. The bet among the MM's is that they shouldn't pay up for shares now when it seems a safe bet that the price will be set in Europe in a few months.
At least the IPO dilution will take care of the financing shares needed for next year, and further dilution won't be necessary.
I will accept apologies from those who thought the dairy issue was dead.
On another topic, weeble and others should learn about programmed trading. NITE and the others they keep citing as dumpers are just using the trading range and good volumes to rake in some small cash. They buy in at under $.50 and sell between $.60 and $.65. They make an easy $15,000 or more with no risk on each round trip.
Part of the reason why the stock price doesn't move on good news has to be the past association with the Chinese dairy industry. Some of the business news sites still list SIAF as a dairy producer. This could be the main reason why SIAF is ignored.