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So, easy, read both boards. Why not give an option for those who don't want to read 100 posts per day?
Agree about personal attacks and arrogance, for arrogance sake.
To moderators:
Is there any way to have two SIAF boards on I-Hub; maybe one for SIAF-st for short term, TA, market maker, breakout chatter snd one SIAF-lt based more on fundamentals or strategic operational info or summary share count or exchange information.
Thinking about it, maybe a third board, SIAF-i, for idiotic statements about how bright the poster himself is, and the like?
It's way after I sell 90% of my shares, because I wouldn't know what to do with that much money.
The existing WSPS will distribute to other provinces.
Well, the First North initiative is designed to get new shareholders. So, we will see on that front, as time goes by.
I'd view announcing new independent Board members as the first step, and that should be this month.
There should be more information forthcoming, as all the moving parts are progressing. What they choose to release before Qs is their decision, but will obviously be more than issued before the last Q.
I'd view completion of and first sales at PF1 and WSPS as important milestones, as well as any new contracts (though we've learned that these sometimes are necessarily pr'd after construction commences).
There are regulations about ownership provisions dictated province by province. And there are agreements between SIAF and JV partnerships that govern these things.
I don't think we should even post about these, because we don't really know enough details. Likewise, third hand information.
SJAP is scheduled as the first spin out, but won't occur in the next 20 months. So, we have plenty of time to see where we're at wrt revenues, profits, Dragon Head status, etc.
Don't recall any $400M.
Their projections need to be based on conservative assumptions.
I can confirm the $65M RMB profit being mentioned.
It was at the very end of a presentation, and we did not get to question it. On its face, doesn't make sense.
Viking,
Yes, basically, everything you're saying is what was presented.
Personally, I view the restaurants as a bonus; at least in those kind of numbers. they also represent an enormous investment, so in my view should be opened in a temperate way. If there's a way to fund company owned restaurants using franchise fees after the first 5, would be great.
But the main take away is that SJAP would book wholesale and distribution and retail prices for all cattle sold through to restaurant customers, however many there might be.
For now, I'd wait on including restaurant revenue, until new restaurants are established. The 15,000 head of cattle was indeed the figure mentioned, though it really depends on the local farmers and the government delivering the cows to SJAP and to the abattoir, which will clearly add value.
I'll stick with $50M for WSPS, but hopefully revise upward as results come in.
Privately, I'm hoping they open a second WSPS later in 2013, if and when they reach capacity sales, as this seems like one of their better ROIs. Again, they have to measure where they spend money.
Sly,
I don't remember that timing -- end of Q1 2014 -- for $500k NTA. Where did you get that, and are you sure?
Does not seem possible, as the last presentation shows $3.05 or $3.10 per share on 78M weighted average EOY 2012. That's $240M +/-. Even at $1.25 income in 2013 on 90M shares raises it to $350M. Can add maybe another $.25 Q1 on 100M = $375M.
Can add loans, maybe bond, and grants, but can't see $500M, unless it includes revaluation of LURs.
This cannot happen until there is a spin out, as far as I know. But the discounted value of the LURs, booked at cost on the balance sheet is like a hidden asset.
The exchange they are talking about is a sort of first step, I think equivalent more to OTCBB in Sweden. This itself may be a stepping stone to AMEX, possibly a sort of ping pong approach. It would be the fastest way to get trades in Sweden. Someone else will have to say what the trading restrictions are.
I don't know the timing for this or any bond offering, just that both are being pursued behind the scenes.
Having seen operations, and meeting Solomon, many of his managers, and the Swedish contingent, I am more bullish. It would be hard not to be, as I believe was the unanimous consensus, including the Pensar bank officials.
There's a whole lot going on. And there are very competent people running it. They know more than anyone on this board.
I think both concepts are under consideration.
The one you're referring to is a major endeavor; tho, Solomon did mention a property developer partner.
I think that from now on we can expect a lot of happenings on a whole lot of fronts. Not all divisions will make numbers, and not all initiatives will be undertaken, or undertaken "on time."
But there will also be units that beat projections, and possibly some initiatives started early (like WSPS).
As you saw, an exciting company indeed.
My general impression from the trip is that the company is executing very well on a five year plan to integrate wholesale with distribution and retail. It's perhaps 70% of the way there in terms of the time it takes to create and integrate all three, and to achieve $500M NTA +/-.
Generally speaking, the operations were impressive in scope, as befits the projected revenue numbers. All are growing works in progress, producing either construction or sales revenues or both, and all with ongoing expansion, or expension probabilities.
I came away very impressed with management, starting at the top. Solomon is incredibly hard working, energetic, positive, and friendly to shareholders, in the context of rapidly building a fast growing, sustainable, important company. Likewise, the company has some likely helpful, influential shareholders.
As discussed, what's new now are several real possibilities, including listing on the Swedish OTC equivalent as a first easy stepping stone, rather than AMEX or Nasdaq, and issuing a bond offering with one and two year warrant options above market price. Both are aimed at expediting realizing Solomon's visions, and limiting both future dilution and overhang. I'd think that both of these options create vulnerability for sellers, as the train leaving the station now has more and earlier catalysts.
The company has legal constraints on what it can and can't publicize. But announcing the new independent Board members should provide the first step. Expect this in September.
The distribution center build out will be 2,000 s.m., triple the originally announced size. The fish portion is scheduled to be complete at the end of this month. It already has a freezer with a capacity of 100 tons of fish, currently stocked with 20 tons. The cattle portion should complete by the end of the year. They will build a restaurant on the second floor, where buyers can sample goods for purchase. Would not be surprised to see $10M+ revenues from this outlet in Q4. This is the start of the second leg in the wholesale/distribution/retail food chain chain. The ROI on this leg is huge, and would serve well, imo, as a clearly articulated example of investment well spent.
The third leg will take many forms over time. One form is restaurants, which have three separate possibilities: the Leonie's restaurants (already started, and both company owned and franchised restaurants in the north and separately in the south. The Xining cattle farm projects 850M RMB revenues in 2015, not counting their plans to start 150 restaurants, 50 company owned. Of major note: without expected inflation for beef, this sub headed for Dragon Head and spin out status, expects to sell head of cattle for 22,000 RMB each wholesale, but 46,000 RMB each to its restaurants.
There are two other retail modes being considered, like restaurants, with required investment in mind. These are small retail "health food" outlets, and one large 10,000 - 15,000 s.m. marketplace (3x - 4x the size of the average Whole Foods store) that will house company branded stores and others in a mix of old and new China selling mode, though all certified organic. Expect the smaller option starting this year. It wouldn't surprise me if the second option is tied to any bond offering.
The checkboxes sure get a lot harder now.
BOL on all of them, for all of us.
Do you know how many are in the contingent? Also, is Mr. Sandberg going to be there?
Also, do they have any forward moving agenda, vs. purely information gathering?
I'd guess that $7.5 of the $10m will come in q4, and all from WSPS and retail. There will be a full 13 weeks of revenues in q4 vs 5 or so in q3.
Will be very interesting to see the ramp for distribution and retail projected. Even $7.5m in q4 could portend $50m in 2013. Hopefully, we get projections well in advance.
And the Dragon Head prawn :)
Already seen two press releases after the q2 numbers.
So the hibernation is evidently over, and indeed was probably intentional.
Hope more releases are coming, as the company is moving fast in many, many areas.
Look forward to the actual new ff and cf contracts; perhaps, $40m in construction work, and new import export contracts, as well as first new retail outlets and start of the first indoor grown prawns ever.
Look for the next prawn farm to be huge, like the baby prawn farm.
Don't think the new technology cost much, as SIAF has been coordinating with the researchers and providing Financial assistance since 2010.
The biggest potential impact is reducing the grow out times, which correlates more than one to one with sales..
For instance, if grow out took 4 months before the new feed, that,s 3 turns per year. If the feed reduces the grow out time by 25% to 3 months, that's 4 turns per year, or 33% more fish and 33% more revenues. -- more if mortality is reduced, and an even higher increase in profit, as costs are reduced as well.
Will be interesting to see the pf1 ramp, as ops are scheduled to start in q4. I suspect it will be faster than ff1, but we'll see. Another good question for the investor tour.
The new presentation verified or unveiled some pretty weighty news:
1. Revenue of $145m was reiterated for the first time
2. NTA is expected to grow about 100% from $122m in 2012 to $235m in 2013
3. WSPS triple original estimated sm to 2,000 s.m. This is where a whole lot of revenues will emanate in q4
4. Green and Natural chains to start q4. (assume these are company owned), so WSPS distributes to the 3 rd sale of fish and beef
5. Franchised ops to start in q4. Assume this is retail, tho Solomon said they were still exploring on the last call
6. Launch of value added beef and seafood in q4 will increase margins
All these point to distribution and retail adding VERY significant revs and income in q4 and 2013. Would love to nail down an estimate of q4 revs at the investor tour just for these divisions, as this is what has the potential to make 2013 revs blow away current guesses
Thanks for this value added update, Chad.
The plan is to dual list, not uplist just to delist.
The idea is that a higher valuation in Sweden would create a higher valuation on the US exchange; otherwise, a ridiculous arbitrage opportunity would arise. This is surely true; the values would converge immediately. Also, trading would happen on both exchanges; therefore, easier than now.
Prediction
When 2013 targets or guidance is given, revenues will surprise everyone, even the most optimistic number crunchers, on the upside.
The reason for more share issuance than anticipated at the beginning of the year is that WSPS and import export were accelerated.
They said that the opportunity arose earlier than they'd planned in one quarterly release. And in the latest conference call, Solomon answered a question about more WSPS facilities commencing in 2012 or 2013 saying something like they are capital intensive.
So, from an operational and eps sense, we will see the wisdom of this decision when we start seeing the import export and retailing revenues and profits. But by all indications, it's a slam dunk.
Still, mitigating any further dilution, if plausible, would be the best of all worlds.
A variant on an HU sale would be for SIAF to sell enough to retain a 51% stake, so that they still guarantee themselves supply, and as part of the deal agree to buy back the stake for a premium, say 50%, in two or three years.
Essentially, a debt deal structured as an equity sale.
Very much agree with RD's point about MUCH better uses for cash right now than retaining all of HU, his overly optimistic valuation notwithstanding.
Again, would love to know if it would be possible to sell a master license to the RAS fish system for a particular province for cash and a percentage.
This would also mitigate or eliminate 2013 financing without sacrificing any asset.
Not sure how that boosts the diluted eps. The fully diluted shares would be the same, whether he retired common or diluted, right?
The actual good news is that apparently the $.68 will be met on more shares than originally estimated.
If he were retiring common shares, then if they now make $.68 FD, it would have been $.74 basic.
In other words, it's not the retiring of preferred shares that raises the FD eps, it's really that they are just going to make more money, if they do indeed meet $.68.
For now, there's a total disconnect between operations and share trading, as all the posts relate.
There must be some reconnection, I'd think, as the issued shares are accumulated, and as dual listing milestones get ticked off.
Again, would love to see some concerted strategy to help the marketplace; for instance, announcing looking into a strategic asset sale. Like a reverse split, I think this is something Solomon instinctively dislikes.
But also perhaps like the reverse split, it is something the new board members may favor.
Didn't Viking get confirmation from IR?
I would say there will be no time delay, and no compromise between the exchanges.
As to the p/e multiple ultimately realized, really don't know, but a whole, whole lot higher than now, and against higher TTM earnings and 2013 projected earnings.
PEG will still be irrelevant, imo. But who cares?
It won't take months. US will not follow Sweden. The shares on both exchanges will trade within pennies of each other immediately and always.
Interactive Brokers trades foreign exchanges, and many other brokerages I'm sure. I would not be the only one to short Sweden, buy US from day one, if Sweden was a p/e of 4 and US a p/e of 3.
That will never happen. I'd rather that it would, as it is free money.
Yes.
Share issuance has never been a problem for dilution per share, as eps is growing so fast anyway. Now, it appears that remaining shares to be issued in 2012 can be absorbed more easily that in the recent past.
So, perhaps the focus turns to operational highlights and the dual listing process. We will get more and more evidence of the importance and synergy of the company becoming vertically integrated with import export, WSPS, retail, and restaurant, all ahead of schedule.
JF signaled that the Board of Directors (ie partially itself) will have an influence toward a well articulated reverse split, if needed. This seems pretty major to me, as it keeps the dual listing time table intact -- and with it, the likelihood of a more proper earnings multiple valuation, at the same time
1) earnings approach or meet $.68,
2) 2013 is guided $1.00 - $1.20,
3) share issuance diminishes
4) company becomes cash flow positive
All this could be expedited, and possibly a reverse split rendered unnecessary, if a strategic asset sale were contemplated.
Where did Chad say that they purchased a set amount of PRs?
That can't be a reason; how much can they cost?
Yep, worth finding out.
Actually agree with RD on this.
How do we know Solomon didn't mean fully diluted shares when he said 90M+.
We can all agree that a strategic asset sale to eliminate some share issuance would be VERY welcome. I suspect it's not that simple, though I don't see why.
$75M for HU is pure lunacy: 3x NTA is a value simply not received for very small Chinese assets, let alone in cash. And SIAF owns only 75% or 78% of the HU plantation.
But if I'm wrong, and a simple ad on Craig's list for "rich Chinese businessman wanted" gets you $75M, they might as well just get $1 Billion for the whole company, which has far greater prorated growth ahead.
I would love to see a strategic asset sale, or even an announcement of one being contemplated; most particularly if accompanied by the purpose being articulated as eliminating any need for 2013 share issuance, or to buy back stock on the open market.
To suggest that that sale might be HU for $75M -- a figure that would value the entire company at least 12x its market cap -- does not pass a sanity check.
The whole point is that the company has work to do to get value recognized, via dual listing, etc. It's not going to magically happen, and it's not going to jump 12x in one big fell swoop.
Here are a couple other ideas:
Sell 25% +/- of the HU business, retaining 51%, for $5M -$7.5M, much more in line with current valuations, yet enough to cover 2013 indicated share issuance. Frankly, I'm not sure that that money would be freed outside the JV, but should be.
Another idea would be to sell a geographic master license agreement (e.g. Beijing province) for the fish farm technology for the same $5M - $7.5M, plus a % of future revenues.
Perhaps whether these types of ideas are viable, or are or would be considered can be ascertained at the investor tour.
OT; on topic to follow
That's why I said "uplisting/dual listing."
Not sure why you'd quote half of a two word phrase.
You taking lessons from RD?
Important development, as uplisting/dual listing more likely on track:
This is probably the most telling JF report ever.
They will be on the Board, and they are announcing that the Board can influence toward a proactive approach to a reverse split, citing both an example, and implying that surrounding PR explain the dual listing reason in advance.