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I think the dividend policy was meant to help shareholders, because no scam company would pay a dividend. It didn't work; probably because it looked weak compared to the share issuance prior to becoming cash flow positive. We can't blame Solomon for that. At this point, he has no choice but to keep the dividend.
It most certainly turns into a positive when the company is cash flow positive.
If the company realizes its goals, positives collide. Institutions surely likes dividends, but they are not going to pile into an OTCBB company. Likewise, they would prefer an end to share issuance, and free cash flow.
All of these major changes -- uplisting/dual listing/cash flow positive/end of share issuance -- are scheduled for mid 2013.
By May 15th, 10 months from now, we will have seen 4 more quarterly reports; 2012 revenues approaching or meeting $145M with $.60 in FD income; NTA over $3.00; 2013 guidance of $250M - $300M, with eps north of $1.00/share; 100%+/- growth two years back and two years forward.
As long as these major milestones are tracking, long term holders will be fine, in the long term; in this case 10 months, imo.
A major factor through the Q2 conference call is a direct statement about why share issuance is needed, how it has succeeded, and how it will be implemented in 2013. Solomon addressed half of this in the last call.
If share issuance is complete for 2012, as appears the case, and if share issuance for 2013 is undertaken opportunistically -- meaning after dual listing -- and that is part of a clear statement, then I think we simply sail into the collision of positives, assuming operational and financial success even approaching guidance.
Q2 results and cc are about a month away. Given the still heavily seasonal revenue realization, could also seriously use a reiteration of guidance. I expect we will get a results press release like the last one, which did a great job outlining progress and plans.
The investor tour -- a week long -- follows Q2 results by just two weeks. Only makes sense that Solomon has positive announcements beforehand; possibly on hand, as well; otherwise, why subject himself to such concentrated scrutiny?
Also, it's "it's," not "its."
If people on this board never buy at the ask, who would? And if no one buys at the ask, we get what we get.
Just seems that no matter how low the price goes, there are still only stink bids, at least here.
So, there's only one way for the price to go, until ...
it goes so low, the psychology changes, or there's fundamentally strong news or results.
A few "maybes" to your post, I think.
But if you're right, this should be clarified on the Q2 call; namely that share issuance is over for 2012, and the 2012 capital development budget is funded by internal operations, grants, a loan, etc.
Likewise, some unlikely statement that further 2013 issuance will be pursued only if opportunistic (i.e. after Q4 reported in April and dual listing guaranteeed) would be very helpful.
Perhaps the most major catalyst, rarely talked about here, is turning cash flow positive.
You can't generate $100M in profits without substantial tangible assets and infrastructure. That's what SIAF is fast growing toward 2013 when cash earnings start to outweigh capital development.
Hope they address the possibility of skipping a US uplisting.
Why not equity interest in the restaurant chain?
Okay, sorry about the misunderstanding.
I'm pretty much with you on the guesstimates.
Hoping for some news beforehand; regardless, the results verbiage and conference call should shed a great deal of light on the real progress toward second half revenues and earnings 2.5x first half.
Loved Eagle's post about the Jordan group. The September demonstrations are over a week long, and will surely verify fast expanding facilities all around, not to mention provide endless opportunities to learn the game plans, operationally, financially, and exchange planning and timing.
Wayne,
Do you and Mike know that SIAF made $.08 basic, $.07 fully diluted in Q1 on revenues of $16M?
What do you think the Q2 revenues will be to earn at most $.03?
I suppose I am presenting a world view, as you say, with some implications about rationality and fundamentals willing out in the end. If I didn't hold this view, I'm not sure how I'd invest in anything.
Maybe just become a day trader.
What you are presenting is a correlation that has no more cause and effect than any other correlation. If the sentiment toward Chicoms in general doesn't change, then I don't believe a change in any commodities index will help. The sentiment is a better correlation than commodities or gold imo, especially in the long run.
Better yet, in the very long run, the far better correlation is the company's performance. Because, using even your example, no matter how bad every other corollary is, if the company earns $2, the share price will at least double.
Of course, it may also increase 10 or 20 fold.
In general, I prefer to look at independent variables that are closer to the dependent variable, because it is intuitively more reasonable to me.
imo, the validation of 2011 projections came with the Q3 results of $20M revenues. Same will happen for 2012 with revenues of $50M. Bad news is that release will be in mid November. Good news is in mid November there will be lots of concurrent news relating to the establishment of distribution and retail, creating the vertical integration always envisioned, as well relating to uplisting/dusl listing progress.
Maybe this is when the share price makes some move toward the minimum AMEX share price.
That $50M quarter will require construction revenue from the new cattle farm, presumably already contracted, and from both new fish farms projected. It will also require that fish sales from FF1, the open pond, and the baby shrimp FF#3 all be on track. And it will require good revenues from HU, and some distribution starting.
Because this validation will not be evidenced until mid-November is why it's so important that every step toward that $50M quarter is publicized.
Surely would rather see the share price have to move from $1.00 to $1.50+ in December and early 2013 to meet the listing requirement, rather than from $.48.
The added huge advantage is that if the 10% of marginal capital development expense from equity can be delayed until say q2 2013, it's effects would be minimal, even positive, if the dual listing were known imminent, or better yet done.
Agree with TF here.
The real catalysts involve progress toward fundamentals overcoming sentiment.
Primarily, most importantly, this is becoming cash flow positive. Beforehand, it is communicating that the company is making enormously large investments in itself toward cash flowing, and then "cash rich," and that these capital development expenses are indeed paying off. This will be evident by announcements of milestones reached, and revenues tripling in 2012 and doubling again in 2013.
The 2011 financial results were right on target, adding credibility to 2012 guidance. The Q1 result press release and conference call laid out an extensive and optimistic road map, by which 2012 numbers will be met or exceeded:
new cattle farm contract imminent (probably already happened)
2 new fish farm contracts to be signed
baby prawn sales already started; phase two construction to commence
dreamatically enhanced fertilizer capacity
grants and loans received and sought
green housing HU and asparagus fields
new restaurant equity deal, with guaranteed customer for beef
expediting import export business
moving forward with distribution; lease signed
6 retail outlets to be commenced
All ambitious; all happening in 2012; all requiring capital; all creating the critical mass to support $300M in 2013 revenues and $500m in 2014.
Parallel goals include new directors, corporate governance, AMEX (I hope) application, Sweden fast track dual listing; Asian exchange spin outs.
As a shareholder, I'd just like to see press releases for each and every major item above ticked off. Because that is what I think will slowly overcome the pall of negative sentiment, share issuance notwithstanding.
Hopefully, we'll see a meaningful announcement or two before the Q2 release.
But if not, the Q2 release and conference call will validate progress tracking goals, and will be followed very shortly by confirmations from the investor facilities demonstrations, presentations, talks, etc. in early September.
Viking,
I understand that they've announced contracts after the fact before. I just don't think that's the best way to go forward. Why not issue a release that an mou has been signed, and work commenced. That way, the marketplace is better informed in a timely manner. With so much going on on so many fronts, i'd think it easy to have at least one press release per month.
Material events include new ff and cf either starting or contracts signed; loans being agreed; grants issued; operations milestones, like any ff or cf first sales, establishing any retail outlets, first import contract signed, restaurant hitting a revenue target, etc., etc., etc. I could name 5 more possibilities off the top of my head, toward financial,operational,strategic, corporate structure, uplisting/dual listing.
The most optimistic q2 numbers will not show a skeptic that they are on track for 2012 guidance. And those numbers will not be released until mid to late August. It simply behooves the company and its shareholders to notify the investment community of markers toward their goals, IMO.
Lucky,
I'd prefer to hear each milestone being met. It is pretty worthless, as a shareholder to hear that new nominees have been appointed, after the next annual shareholder meeting, as the target date for uplifting is beforehand.
Fact is, there are prerequisites toward uplifting and dual listing, so to inform the marketplace that those milestones are being met, after the fact is just bad investor .
Likewise new contracts.
Ready for some news.
On May 18th, they expected a new cattle contract "in May.". Might have happened then, and the paperwork is slow, as with the last baby shrimp farm, but would be nice to hear some news.
Likewise, independent board members were scheduled for announcement by July 1.
And they expected two newish far contracts to commence this year.
Am sure that these new contracts are included in the $145m guidance.
Am pretty sure that no pr is included in the share price.
Yes, that's the second half of the very sentence you quote.
That contract had work and revenue in Q4 2011 even tho it was announced in 2/11. Fact is, we don't know the timing of new ff contract revenue. I was suggesting that for me, the only possibility of answering "D," is if the new ff contracts did begin in q2.
But again, we don't know.
So the explanation of the numbers likely will be more important than the numbers.
C.
Hoping D, bt would take a healthy contribution from the expected new fish and cattle contracts. There's been no press release, so it's hard to count any revenue; otoh,, the last fish contract was officially announced after the fact.
The number is less important than the explanations, further description of current business operations and impending business, and perhaps reiterating guidance.
Don't think well see a $60m quarter this year, but $50m, and $80m+ next year.
Hope the q2 cc is more about up listing and dual listing than new shares.
I think the HU business would have provided massively needed cash the last two years, had the weather cooperated. same may be true this year. HU is a cash business.
I would certainly favor selling it instead of issuing shares. Problem is, I doubt it can be sold until it shows real reliable ebitda; meaning, when the green house is up. My guess is that when the green house test works, the business may be bankable, so the need to sell disappates.
The other Bakue of the business is providing a diversity of wholesale goods, including asparagus for the retail outlets.
Hope we see some press releases soon.
The exponential growth in revenues and eps stemming from the fish triad:
More farms
More capacity per farm
More equity per farm
lucrative as it will be, applies only to the wholesale business.
Solomon's vision, the one for which he is spending $100m per year, will sell these vastly growing numbers of wholesale fish and cattle to his own wholly owned marketing and distribution network, which will in turn distribute the fish and cattle to his owned, franchised, or partnered retail and restaurant outlets, who will again sell the fish and cattle to end consumers.
This vertically integrated " food chain" is just starting. The wholesale had to be established first, for obvious reasons.
Would any shareholder want Solomon deterred from this vision?
He has chosen to issue shares equal to 10% of cap ex to realize this vision. It's hard to argue with the progress, as frustrating as the share action is. I believe he iis borrowing as he can, and will more in 2013. There is quite arguably no dilution in eps from the marginal $10m cap ex. Even if there were in year one, there would be accretive earnings in later years.
More importantly, the wholesale, distribution, retail triad is being established in a really short amount of time. It is clear that Solomon views this as a significant competitive advantage, and for good reason.
In the meantime, $100m +/- cap ex spent will increase NTA by double or triple the current market cap.
Starting in 2013 the exponential growth in the wholesale businesses will be buttressed by incremental growth in distribution and exponential growth in retail, as the outlets are deployed in increasing numbers.
When the growth rate of the fish business slows from the current 500% to maybe 50% in 2014 or 2015, the retail revenues add ANOTHER 50%, itself growing at 50% to 100% in 2014.
I think this overall strategic scenario is what is to be measured against the increase of shares, along with the first mover advantages of each business, enhanced by their horizontal and vertical synergies.
Since eps are increased, I think dilution is the wrong word for the issuance.
LUR is not much different than leasehold property in the US or London, where it is a tangible asset.
When posters refer to "rights granted," I think this a little misleading. It's not like the government gives SIAF a right to use the land and can take it away. The plots of land have long lease lives, and are usually bought from or sold to private entities. Zoning may be changed and value changed as a result.
Viking,
I haven't had a chance to look at your calculations, and probably won't, as I'll be traveling for two weeks.
But your post did trigger the discussion that the weighted average share calculation regards retired shares as deducted from the overall count as of the first of the year, even if deducted the last of the year. Not too intuitive to me.
But that does refute some of my post about dilution being over this year, and so I take your numbers as right.
Points remain that any remaining 2012 share issuance is not necessarily dilutive to earnings, and that 2013 capital development will have positive impact, as will any more share issuance, if they can uplist/dual list first.
Not much fun to see the relentless hammering daily, regardless.
As Chad says, fundamentals almost always win out in the end.
Chad, when does the end start?
Has anyone considered that the dilution may be over, effectively?
The share count is above the projected weighted average share count for the year, indicating that shares will be retired from this level in 2012.
The plan is to uplist in Q1 2013, probably needing a share price greater than $1 or $1.5, and then dual list in Q2, where many expect buying interest.
At this point, the company will be midpoint in
1) projected revenues of ~$300M
2) projected earnings of ~$1.20
3) many operations will be significantly cash flow positive, if not operations in total
4) TTM earnings will be about $.90
5) two year history and one year forward projections with CAGR > 100%
So, even if new shares were issued in this dual listed, cash flow positive company, growing at 100%, the price might well be (should be) at least triple where it is now.
So, even if 10% of 2013's cap ex budget of $100M were financed in the second half of 2013 at $1.50 -- 1/3 the effect of past dilution -- two things would happen:
1) the financing would truly be accretive to earnings per share going into 2014, and recognized as such, and
2) the smaller number of shares issued -- 1/3 per $1 raised -- would be much more easily absorbed, not only because there were far fewer of them, but also because SIAF will be trading on institutionally acceptable exchanges, presumably with much higher volume befitting a $300M revenue company, with announced spin out plans approaching
This does seem to be the company's strategy. We'll see ...
Thanks for the clarification.
What implication do you think this has on AMEX/NASDAQ formal application, if any?
As I recall, they were shooting for the uplisting the first part of next year, with the dual listing 2-3 months hence.
In fact, didn't they already announce two new proposed Board members, one of which is the head of the Jordan Fund?
Hopefully, less than a year. It's the stepping stone to dual listing that provides the greater potential, imo. Then, another year for spin offs to Hong Kong. Doing the first surely helps make the second credible.
But, however long, IR needs to let us know the steps along the way and tick off the milestones as they happen. First are the independent board members, audit committee, and corporate governance. Believe the new Board members are expected to be formally announced in the next 10 days.
Hoping they will also announce when they plan to file formal application.
Then, of course, we have the thorny issue of minimum pps.
Hoping they will issue a broad ranged 2013 guidance with the release of Q3 results in mid November; something, like:
"We reiterate or 2012 guidance of $145M and now provide our initial 2013 guidance, to be refined as operations materialize. We expect revenue growth of 80% - 110% in 2013, with net margins of 30% - 35%."
Q2 results 8/15 to 8/20.
Too much to teach you. Remember that phrase?
Don't want you misleading the board with your ridiculous puerile assertions, like:
1) $30M cash investment in the restaurant chain
2) PEG ratio has relevance
3) $500M 2014 retail revenues
4) Solomon lied
Every now and then you say something worthwhile, even if it is tainted by your emotional rantings or uncivil behavior.
Simple solution is you put me on ignore.
The 2011 Sweden presentation estimated $1.8M revenues per retail franchise. They also projected 20 new outlets per year for the first two years. Now we have heard 6 in 2012.
Yet you seem to think there will be 275 retail outlets in 2014.
$500M in retail in 2014 is absurd.
Viking made a math error on the cattle, but he presents projections that make sense, and have some back up.
Viking,
5,000 (head of cattle) x 4,000 ($ per head) = $20M, not $200M.
Maybe you can find the $180M difference elsewhere?
Thanks, Chad.
I think we're on the same page, then, with respect to letting all constituents know a timetable for uplisting/dual listing, and reporting milestone achievements/progress in that and operational/financial directions.
Okay, fair enough.
Chad,
Assume the plan is to populate the FB page with content. Otherwise, why bother?
Any time table for that?
There have been multiple references to seeking analyst and institutional interest. Can you comment on these?
I would like to commend you on these IR efforts, realizing that everything doesn't happen at once, especially in a small, growing company.
With respect to valuation; of course, we are all disappointed, and all efforts arguing a turn around are appreciated. If organized, this board probably has more power to paint the price higher than others lower.
The PEG argument is Don Quixote-like at best; particularly without mention of cash balances nor statement of cash flow.
However, I definitely agree that setting milestones and time based goals for operations, financial results, and uplisting/dual listing -- and then regularly reporting progress on all -- would be very valuable.
Good idea. Maybe the graph should be at the top of the intro and posted as a sticky.
Better yet, somehow people outside this board could be made aware of SIAF's business models and growth.
Yep. Good post. In your quiz, for some reason, I was thinking sales only.
The baby farm starting production so early is a massive benefit; hopefully, one of the new contracts is a second baby prawn farm, for this reason.
Couple quibbles: some service rev may have been recognized in 2011, and sales are projected at $8M - $10M.
You quote 500MT for FF1. Where does this projection come from? I believe a later projection was 800MT -- admittedly verbal, but said twice at the Sweden presentations this year. Anyone else hear this on the recordings or in person?
Curious what other number you use to get to or over $145M, particularly assumptions regarding restaurants and retail?
Totally agree.