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Thanks, Swede.
Cattle Farm ?
From what I can discern, this board is 99% long; 80%+ long term shareholders; some decent percentage are adding to their holdings; yet, not one puts in market orders.
At some point, the psychology will change: the sellers will not accept any price, and the buyers will not reason that they can always get lower prices. They will see a risk in being left without shares.
This may take running through some overhang, or some truly eye popping fundamental breakthrough, or dual listing nearing, or random factors.
Chad has already said the new web site is being readied (did not say when, which would be nice to know), and publicly asked what shareholders would like to see. You're not going to get IR at this sized company more responsive.
They will PR events material to the company compliant with the SEC and reg FD.
But I guess if you're prone to blaming and defaming; posturing as pedantic teacher, that's just what you do.
Curious what revenues you project for both years for FF construction and sales, and cattle construction and fertilizer and beef sales?
$300M seems too high without new FF and Cattle contracts (which there surely will be).
Solomon said. "at least 800MT." He also said "800MT to 1,000MT."
Listen to the Sweden presentations.
Of course, I might have heard it wrong, what with being deaf and all.
Agreed.
Your calculations also jive almost exactly with the yearly projection of 250MT - 300MT. At $25.45/kg, $7M is the exact midpoint, 275MT.
FF1 was projected to "at least 800MT" for 2012; FF at 250 MT; and the baby prawn farm at $8M - $10M.
The chances of SIAF investing $30M cash in the restaurant chain are even lower than the shares being valued at a PEG multiple this year: maybe 100 million to one.
Seeing the actual contract will be very interesting.
HU revenue can be much higher than 50% growth, if weather cooperates, and lower if it seriously does not. So far, so good. The 2010 projections were extra conservative, having already been burned by weather. In any case, Q2 HU revenues will be minimal, if any.
I believe revenues from fish farm construction should increase Q2 over Q1 because of Chinese New Year, among other reasons.
As a long term shareholder, I'd surely favor any drop in liquidity caused by fewer sellers.
SIAF will trade approximately 70M shares in 2012.
I'm curious what multiple of float this represents, when subtracting shares held long term.
And more curious if 50% of issued shares are sold into the market over a year in which volume is 70M, what impact does that really have? Is that easy to absorb, or difficult? Or both, just choppy?
Chad,
The helpful answer here is to educate those who say the declines are due to the overhang created by share issuance (you often call them conspiracy theorists).
"Markets are markets." "Markets can stay irrational longer than most can stay solvent." Etc. Etc.
Question was, whether the share issuance creates sellers or not -- let's assume it does -- how long does it take to wait out the shares, per million issued, given 300,000 shares a day?
Fundamentals will "will out" in the end. Probably can agree on this last point. Also, can probably agree that we don't know when the reconciliation is.
Assuming some shares to repay debt, be they Ironridge or otherwise, do become shares for sale, I am curious:
1) What % of issued shares are indeed sold within months vs. kept for investment?
2) With daily volume of 300,000 shares, how long does it take to go through a million shares of overhang? In other words, for all those who are sure on a daily basis that sellers are recipients of diluting shares, what is the average % of daily volume they represent?
Opinions?
The dividend isn't paid on fully diluted shares, only basic, right? Solomon's 7M preferred shares are not due a dividend, as I recall.
Still good, just not as good.
Hard to see going from 16M in Q1 to averaging 50M the last three, but, we'll see...
Ditto Viking,
And show Solomon taking back all the shares he issued as vouchers for his food.
Good news. Thanks for updating us.
I'd like to see two parallel road maps with milestones and projected time lines for:
1) uplisting and dual listing (e.g. independent Board, AMEX application submitted, etc.)
2) operational and financial goals (e.g. three cattle farms operational, 6 fish farms in operation or under construction, first retail sales made, etc.)
Basically, it would be great to track progress toward stated growth targets on a regular basis.
Look forward to seeing the new site.
Hope that the parallel effort on the institutional side is making progress, as well.
Compared to what the stock earned in Dec, an eps of 0.23, that's a low of about 1.5 P/E that the market assigned to SIAF. It's a fact. Today, 6 months later, the stock earns 0.29 per share.
Chad,
We keep hearing about a new website; use of social media; road shows; operationally material p.r.
And I'm talking about hearing about the first three for over a year.
So, in light of your post about summer, why wait for what you think a seasonal sellers' enslaught is over? Why not an on-going, concerted, multi-pronged approach to get this company's story in front of as many viable constituencies as cost effective?
If this is your view, I don't see why you'd cede the summer.
If the fall's better, it's in the company's interest to see the shares rise from $1.00 to $1.50, rather than $.50 to $.75.
And for you to post publicly about summer swoons -- before the summer even officially starts -- with the shares at this price; well, I'm not sure what to say about that.
Almost -- but not quite --makes me think about Dutch type language wrt civility-- but that kind of Dutch ain't much.
Syl,
First, I think and hope that we reallyagree, more than anything else.
I simply think that it's irrelevant to talk about gigantic many, many orders of magnitude growth and valuation (PEG), when the projected numbers are so much more realistic, and plenty fine. We have miles to go to get there anyway.
But here's what I mean:
With about 25 retail shops in 2013, SIAF is projecting $300M revenues; say, $100M net. that's plenty fantastic. With a dual listing and spin outs, maybe we get a p/e of 6. So, that's a valuation of $600m, or $6 per share with a 100m shares out. That's 12 x where we are now, in 12 - 18 months, based on defensable projections, and the company continiuint to do what it says it will.
To project 1,000 retail outlets, with like growth in businesses that have a head start would logically produce 40 times revenue and profit, and do so with well greater than 100% growth. Using PEG, that would put SIAF's value at 100 x $4B, or $400B, about Apple's value. Either measure -- PEG or 1,000 outlets -- is simply irrelevant, imo.
I'd be happy to start hearing about announced developments coming to fruition, with contracts announced (new cattle and fish farms, restaurant partnership, etc.), and new ones announced in a timely manner, as expected.
I agree with Chad that material operational events should be PR'd. I hope that there is also institutional and analyst coverage being sought, coincident with achieving uplisting/dual listing milestones.
Going from 0 to 6 to 26 to 46 retail outlets is huge scale.
We can combine the idea of thousands of retail outlets with Dutch's idea that fair value is PEG, and we would have shares of a company larger and more valuable than Apple, the first or second largest in the world.
Hope you are right, though :)
Not sure where you get hundreds or thousands of retail outlets. They've mentioned 6 this year and originally projected another 20 in the first full year. So, I think they could sell HU and asparagus. If they ever get to one hundred retail stores, no shareholder will even care about HU, because thry'll be too busy counting their money.
I do agree that HU was supposed to be the first cash flow positive division. It's a shame weather hurt proceeds both of the last two years. I think that has had a possible impact on loans and share dilution. They didn't t just miss out on income; they missed out on cash.
So, hopefully,this year weather cooperates and the greenhouse test works. With both, I'd think they can borrow at that cash flow positive subsidiary level to complete the greenhouse, guaranteeing that business into the future.
HU and asparagus don't fit the franchise model, or any variant. But they will supply the retail stores that are also most probably franchised ( or variant).
Remains to be seen how the restaurants are handled. But in most every case, Solomon is looking for scale.
That's the only way you can grow revenues from $11m to $52m to $145m to $300m.
Who was it who said,
A reverse split will not affect SIAF in a negative way.
One more word about it and I will leave this board.
We can probably all agree that a dual listing will help the share price; maybe, a whole, whole lot.
This would be the real impetus -- and benefit -- of a reverse split.
Careful preliminary PR laying out both what you cite as the pros, and more importantly the purpose and road map toward Sweden would be helpful.
I kind of like talking about R/S today :)
I'm unsure on the R/S issue, but I think you made two strong arguments for a R/S.
1) The AMEX listing triggers a Sweden dual listing. This is the key for better value recognition, and it is a fully different reason to R/S than any other Chinese company
2) Your math ignored that a reverse split doubles the earnings per share. So, in your example, you'd have $250,000 either way
How is it that the TA always looks good, while the shares go nowhere or down?
Does anyone ever buy shares with a market order, or at current ask?
Had to have with the brief jump to $1.00. Lots of speculation about share overhang, but what caused that blip? And what causes that kind of buying to last?
"when will an actual pr be released discussing these important new developments(4 new contracts, and starting 2 new business divisions")"
When they occur and the actual contracts are filed with the SEC.
The q1 release indicated that the first cattle farm contract would be signed within a few days:
"Macau EIJI is negotiating with two groups to provide consulting and servicing contracts to build more cattle farms using our free-range system and SJAP technology; management anticipates entering into a contract with one of them in May 2012."
They still have to file with the SEC before issuing a press release.
Interesting to hear you say that a reverse split is an option.
Indeed, Solomon has been outspoken about never doing another (had a bad experience), which flat out says it's not an option.
I assume that road shows, courting analyst coverage, improved communications are all efforts being or to be undertaken as the uplist process unfolds. Of course, optimal if these steps, in concert with continued stellar fundamental growth, would do the $2.00 ($1.50?) trick.
But, as we are all painfully aware, little has helped any stock in this space.
Are you saying, perhaps, that Solomon has softened his R/S stance? Is it possible that AMEX would issue a preliminary, conditional uplisting approval pending reaching the minimum price criteria, which could be satisfied with a R/S? As a final condition to uplist, might Sololom have a different view?
Imagine this scenario would be favorably received by the marketplace, general r/s perception notwithstanding.
Obviously, all would prefer organic share price increase, but I guess the question is:
Will the company do all in its power to uplist as soon as AMEX allows, or will it wait?
"Most effective bloggers with an audience have shied away from China/US OTC's.
Let's get the Company looking more shiny and polished before we start bombarding the market with fluff PR. Right now I believe the best course of action is on improving the facade and putting out good solid news that is material to operations."
Chad,
I agree about releasing solid news that is material to operations; particularly so, because there is so much good, material news coming, including the issuance of 4 new contracts, and starting 2 new business divisions.
As you note, bloggers (among a many constituents) have shied away from China US OTCs. For that reason I hope that the moves the company is making to differentiate itself from this space -- mainly the dual listing plans, dividends -- also constitute material news. Filling the Board and fulfilling corporate governance requirements within the context of official uplisting application would be cases in point, in my mind.
The company does have an institutional IR counterpart to you, and I believe the company has said that it is seeking out new investor audiences. Are any investor/analyst conferences or road shows currently scheduled?
The thing I don't understand is how the last press release could have been much better in terms of updating corporate developments on all fronts?
http://finance.yahoo.com/news/sino-agro-food-inc-reports-180000057.html
Okay, reiterating guidance would have been nice, and he did that on the call.
Is it possible dilution concerns are over?
It looks like the share issuance for 2012 already happened; at least according to the report of current shares outstanding.
If shares are issued in 2013, don't think many would mind, if the shares were priced > $1.50.
It appears that this is at least the company's intention, as they target an uplisting by eoy 2012.
They are also trying to gain institutional support as an uplisting approaches. Again, this will coincide with November's Q3 press release updating corporate developments (just like Q1) and reporting > $40M sales and $.20 eps.
So, we would need a backward p/e of 7.5x quarterly earnings, forward annual p/e of 1.25 +/- .
Would be fantastic if in Q3's press release in mid November they issued preliminary, or even minimal 2013 guidance, to be refined over time. Might as well try to meet the uplisting time table, as much as possible.
Rest assured, this is my last exchange with you; perhaps this board, if it degenerates into or silently endorses personal insults.
So. I repeat.
They just did exactly what you asked for. They issued a press release that updated every business division, all with up to date, new and vital information, as well as prospects.
And you will see press releases when the contracts come, milestones reached.
If you want it better propagated, propagate it.
Update on Corporate Developments
What you're asking for is exactly what the Q1 press release just provided. In fact, it was WAY more informative than the update you cited.
Personally, I view the Sweden presentations as a bonus. They are like an annual meeting and analyst/investor road show rolled into one. How many companies give that level of access?
I would like to see quarterly guidance, as well. But that they are on track to meet yearly -- which Solomon confirmed -- is really what I want to know.
Why don't you write a Seeking Alpha article; better yet, feed info to someone with a following?
It's pretty clear that we will get a steady diet of favorable press releases in the near future. They will probably take a conservative approach on issuance to comply with SEC and FD regulations, effecting timing.
But we can expect 4 separate contract announcements, 2 new fish farms, 2 new cattle ranches. We will see a restaurant deal signed and announced this year. We will see more retail outlets established in the second half. We will see various corporate steps toward uplisting. I would expect formal application to trigger a press release.
So, with the quarterly results and conference calls, we'll see more than one communication per month for the rest of the year.
I naive or uninformed investor would look at SIAF and say that there was minimal growth 2011 over 2010, because 2010 included the dairy business.
It's as unfounded and exaggerated to say that just because SIAF traded down from a forward p/e of 2 to 1 that it will trade down again to .5 (maintaining price) as to say that with 100% growth SIAF will trend toward a "proper PEG" ratio.
"Now it will be interesting to see how the company wants to get the stock price up to the required levels to uplist."
Yes, this is critical.
If Solomon has specific reasons to think that his shareholders will help move the shares up, he absolutely cannot say publicly what those specifics are.
He may well have assurances of JF and institutional interest when an uplisting/dual listing becomes more clear, assuming the fundamentals stay the course. This will happen as the independent board is intact, the audit and compliance committees formed, the application filed and being reviewed, etc.
Apparently, they do have the impression that the $2 minimum will be relaxed. For no justifiable reason, I interpret this as $1.50.
Imo, it simply stands to reason that a dual listed SIAF has a chance for a p/e of 6, maybe way more. If that chance is even 33%, SIAF is a great speculative bet, at the very least.
Keep in mind that in 6 months, when all these preconditions are met, the company will report Q3 with revenues over $40M and basic eps somewhere around $.20.
And if on schedule, they will be only about 3 months shy of that dual listing.
Not sure if "flagrant" is facitious, but it's "fragrant." They also call the beef aromatic.
Listened to the conference call a second time. It's chock full of good news:
Two new fish contracts to be announced, one this quarter, which means within 5 weeks
Two new cattle contracts to be announced, one this quarter
One new equity stake in restaurant operations, with guaranteed customer for beef
Distribution and marketing network, retail, and import export all commencing
$.68/ basic share used conservative assumptions
$145M Revenue essentially reiterated (2.5x - 3.0x 2011 = $130M - $156M)
Equity stakes in fish farms bought at cost
Rapid expansion of fertilizer, aiming at much higher prices (and margins?)
Upgrading IR efforts
to name a few.
The most encouraging may be Solomon's confidence in the share price getting to AMEX minimum acceptable -- perhaps $1.50. I just wonder if behind the scenes he's not only confident of long term shareholder retention, but also may have positive feedback from JF and other Sweden groups as well as other institutions, as uplisting/dual listing nears.
The ROI on the marginal cap ex coming from equity financing may or may not be what we'd hope, but the overall ROI is simply phenomenal. So, I don't see dilution as a problem to share price; I'm not too sure that dilution is even an appropriate word, particularly strategically.
Share overhang may or may not be a problem, as well. We simply cannot be sure if new shares will be sold; in fact, Solomon gave some support to the notion that they won't.
Clearly, many people don't see it this way; maybe they should just sell, leaving more shares in stronger hands.
All Board of Directors anywhere in the world would fire any CEO who directed 50%-100% growth with no share issuance, when they knew he could get 300% with 10% or 15% more shares issued. That simple; not debatable.
Shareholders own the company, but they don't control it. They are more like voters who elect leaders to represent them. By buying shares we've endorsed the vision and execution of the leader. In this case he's been quite straightforward about his plans and how he will take the company there. And he has followed through.
You don't have to like everything about the plan.
If there's a conflict between short term share price and long term financial health, it's the CEO's obligation to act in favor of the later. In a more rational world, if he does that well, the conflict should not arise.
The distribution, marketing, and retail divisions were always integral to Solomon's vision. He reiterated that in today's call, citing them as a distinct competitive advantage over possible future competitors.
He also said these divisions not only provide vertical integration, but also arm the import export branch, starting right away with the Norwegian fish imports.
Solomon saw an opportunity to initiate these vital segments a little quicker than anticipated at the outset of 2012, imo.
I think this may explain the timing of share issuance vs. shares being retired.
I think this also explains why the vast capital development expenses are necessary.
This is a company with $50M in sales, spending $100M to grow sales to $150M in one year!
Share overhang may well be an issue. We just have to trust that adding liquidity and new IR efforts -- as well as phenomenal fundamental performance -- will eat up shares.
Dilution may well be a completely inappropriate term. In fact, even at a p/e of 1, the share issuance may be accretive to eps. Total cap ex obviously generates mega return on investment. Even if the marginal cap ex funded by share issuance is not directly and immediately accretive, it is fairly clearly strategically accretive.
"btw, did he reafirm guidance or not?"
He said he was cautiously optimistic about revenues; also said that they would be 2.5x - 3x 2011, which is $130M - $156M, basically right on.
At one point, he also said projected income guidance was conservative.
Conference Playback Instructions:
Toll Free Number: 1 (800) 704-9804
Direct Dial Number: 1 (404) 920-6604
Conference Code: * then 574559#
How do you get on the call?
Chad,
What happened to the 2012 weighted average share count? Wasn't that quoted at 70.5M?
I think people will live with the dilution, as long as the growth is there. New share overhang is the second issue. Who are these shares going to?