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Thanks.
Of immediate note, the company size is comparable to SIAF, yet their website is in a different league.
You could probably build a similar site for SIAF for about 1/3 of a part time IR coordinator's salary.
Regarding these comparables to SIAF on First North, beyond eps, what are the companies' cash balances and cash flows?
Surely, SIAF's eps multiple will be depressed by these until it bolsters each.
OTOH, their multiple to book value may compare favorably; as certainly growth rate will.
Hopefully the new Sweden IR rep will deal directly by phone with funds and retail investors, answering questions forthrightly -- not defensively nor with pablum -- actually promoting the company, particularly its past and projected growth rates.
Perhaps IR functions will mature as the company does: professional presentation materials, road shows, updated web site, etc.
And, of course, the company must have better snswers and policies for financing.
Remember that total cap ex is about $100M, but 100% of the dilution comes from the last $15M only (30m shares at $.50). Seems likely that the same share performance can be expected from the same share issuance policy in 2013.
The past is the past. Hopefully 2013 brings the FN listing and a higher share price. If the share price is $1.00+ then half the shares issued get the same $15M. Obviously, a big difference in eps dilution and share overhang.
The bond deal would be better. And finally to answer your question, here are some possibilities much, much preferable to more shares, imo:
1) suspend the cash portion of the dividend, as part of a well articulated cap ex plan without new shares
2) sell a master license to the APM technology to one province in China
3) sell any non strategic land use rights
4) delay equity investment in one fish farm or cattle farm
5) sell an interest in HU, with an option to buy back at some % increase
6) build a fish farm for cash, without an SIAF equity position (or perhaps bought later, for a higher price)
7) provide incentives to accelerate a/r collection
8) slow the implementation of the HU greenhousing
Sure we could come up with 8 more.
Do any Swedes have an educated guess how much volume SIAF will get on First North?
Also, what the lowest current p/e on the exchange is?
Agree about Nisse.
Before becoming a board member, he did say that there were alternative plans for financing, even beyond a FN listing and bond deal.
The FN listing is a month or two away. The bond offering figures to be another month or two (just a guess). And any other possibility including slower growth second half.
Now we have to eat through the last share issuances. And we are.
Hard to predict a bottom; also hard to see we are far from it, if and until these new financing factors work.
Reflexive cheer leading loses credibility, imo.
It is in the company's interest for the share price to be higher. The shares are the company's currency for acquisitions, cash, etc. The higher the share price, the lower the capital cost. This is vitally important until the company is cash flow positive.
So, yes, the company does not look at the share price day to day.
But if they issue new shares every month, they would be crazy not to care month to month.
Whether this is a "long term consolidation" is a matter of perception. But even granted that it is, the conclusion that the longer it lasts means the higher the share price will go is conjecture or semantics, imo.
I believe we are seeing the supply demand for shares now dominantly influenced by excessive share issuance in the later part of 2012. If there is similar issuance in 2013 that "long term consolidation" may well last another year, plus.
If the FN listing happens (to increase demand for shares) and a bond deal or higher share price (to limit supply) happen in the next couple months, the dynamic should shift for the better, so shares rise, irrespective of any consolidation, again imo.
Nice video. Thx.
This is on SIAF topic, as the analogy is up from difficult pps circumstances, beaten by dumpers and dumping rehashers?
Fair enough.
But if SIAF can offer some incentive to accelerate collections, the pay off could be enormous for shareholders, as it offers a real cash flow boost; therefore, obviates the need to finance through equity.
Think that the receivable from the dairy sale is land, not cash.
Handlamera,
Thanks for your kind words. Of course, I'm in the red for years in SIAF, and also don't feel comfortable giving advice, especially buy or sell points.
That said, and having been on the investor tour, I believe that Solomon is steadfast in his determination, and does care about his shareholders. I think that the excessive share issuance up to now was probably somewhat unavoidable, at least unanticipated. All it really would take is an HU and/or other cash shortfall while obligations came due.
The danger going forward for shareholders is that lessons have not been learned, that 30% dilution at any p/e will continue, maybe even beyond 2013. If so, I would expect little from the company shares.
Even so, I think the risk reward profile has never been better. I have much more confidence with the new board members, who figure to promote financing alternatives, and the FN listing we see in progress. I think the listing itself should insulate the company from shorts and from such remarkably low valuation metrics; therefore, I see any significant downside from here -- if there is any -- as short lived, as this tranche or another tranche of shares is sold.
The flip side is a an announcement that equity issuance is over, which would be multiples better on the upside, imo.
EPS will increase because the return on the overall capital development expense is very, very good -- pretty much, tied to the speed of building equity in high margin businesses.
But EPS will not be as high as it would have been without the share issuances at $.60, plain and simple.
Share overhang is a separate, frustrating issue, the only issue about the financing that short term traders care about.
The response should have been more forthcoming.
For instance,
The company's 2012 capital development plan projected limiting funding from new share issuance to 10%-12% of $103M. This level of capital development for a company the size of SIAF is truly remarkable, a testimony to its extraordinary growth rate and immediate opportunities.
Not only is NTA dramatically increased, so are earnings, as the businesses, their speed of development and margins warrant very fast growth. On top, the plan for vertical integration solidifies a competitive advantage.
When the 2012 plan was committed, the company did not foresee such a low share price; therefore, unfortunately more shares than anticipated had to be issued to pay debts incurred. Nonetheless, thus far, the company has met its earnings projections, also part of the plan.
Understanding the situation for loyal shareholders throughout 2012, in the third and fourth quarters of 2012 the company initiated steps designed to both continue to realize ongoing growth opportunities and to finance the same more opportunistically. These steps include applying for listing in Sweden, which when realized will be the only Chinese stock traded there. It is sensible that a large new audience will add interested investors. Concurrently, there will be new PR/IR efforts.
In addition, if and when traded in Sweden, alternative financing mechanisms are expected to be available to the company in 2013.
Sly,
Or moderator.
Sly's post 27105 should be deleted. It appears this is the CEO's personal email address. It should not be posted publicly for obvious reasons.
Not to say Traderfan should not be able to email, but just get Solomon's okay and/or do it privately, or go througfh company channels.
OT
Must say I find it funny that you keep risk in a buy zone, as the CEO looks more like a scam artist, as if that can be gleaned and quantified day to day.
On topic, have you looked into the backgrounds of the two new members of the Board, and their experience with the listing and alternative financing plans the company has stated?
Do you factor that into your daily scam index?
OT
OT
Out of curiosity, how do you assign a "buy level" rating for the three categories of risk, impression, and stability, when you think the CEO is a pathetic, savage loser?
Also, out of curiosity, what does "impression," mean, particularly in what appears designed as an objective, quantitative system. What does it entail that the other categories don't? For that matter, what is "priority."
They don't issue 8% of shares for the dividend. The guideline for the total dividend is 8% of income. This includes the F shares. The cash dividend for 2011 paid today is $.01 per share for holders 12/26/12.
That's a total of about $980,000.
I've been of the opinion that they must make these dividend payments, as a matter of credibility.
But I would prefer next year's 2012 cash dividend being cancelled, if and only if it were coupled with a solid statement of how new share issuance would be minimized.
Next year, the 2012 dividend will be declared with perhaps 4% being the cash portion. That's about $3M depending on outstanding shares at the time. If curtailing that expenditure for a year meant 6M less shares issued in 2013, and if it were coupled with other changes to financial/financing plans, the dilution problem could pretty much end.
This may have been one aspect the JF alluded too about possible changes, instead or in lieu of the bond deal.
Financial changes could include slowing growth; delaying one or two FF/CF equity purchases; selling any non-strategic asset (land?); licensing APM technology; building one FF without the equity buy back provisions, among others.
He has given himself the option to further dilute with the additional shares imminently available.
But if he does before FN and efforts for a bond offering, it simply indicates to me that he did not delay the immediate need for cash, giving himself a chance to dilute at >$1.00 or with debt.
And that's the crux of the problem.
Half of the value of the FN listing is to provide a new, major demand source for shares. But the other half is to afford a better chance to halve the eps dilution by issuing shares at double the price, if other alternatives fail.
This is the foresight and flexibility that should have been an obvious need, imo.
Dilution after FN -- if needed -- is much preferred to dilution before.
Great post, Viking.
Question is, will this change in 2013, as more than implied by Nisse thru the JF message, before he became a Director.
The magnitude of share issuance in 2012 was higher than advertised, and executed at these very low prices anyway. That this has economic impact is mathematically axiomatic. (more shares = lower eps).
My guess is simply that expense commitments became larger than anticipated, and/or cash income smaller, so there was no choice. There are no new shares needed for the FN listing.
It is this lack of flexibility well after the Chinese stigma and low share price were well established that I find so frustrating.
2013 brings some new thinking, it appears. The five year plan will continue, but there are efforts to spur share demand (FN listing); to limit share issuance (bond offering); and hope that they will alter plans (financing and/or business) if the first two don't work (Nisse's message).
If they can get the $20M cap ex over and above cash income, grants, loans, etc issuing bonds and/or higher share price for 10M+/- new shares -- the supply demand character for the shares will shift dramatically in favor of the longs.
If 2013 is cash flow positive, and the last year of share issuance, just think about how the posts here will change: less market maker talk, more operations talk; losers become winners; savages, geniuses, etc.
These markers ought to be fairly clear, starting with the FN listing.
Does anyone have a reasonable estimate of the trading volume SIAF will see from FN?
Are there comparable listings, or an average shares traded per day per listing?
Round figures, SIAF trades 6M shares per month, and issues 2.5M new shares, all of which are sold some time.
I don't see any compelling reason to believe that will stop for now unless or until we hear differently, via FN listing and a subsequent bond deal or private placement.
However, if there is a flexibility to put the brakes on the issuance, and the dumping abates concurrent with the new listing, have to figure that the trading dynamic without 40% of volume coming from financing sales would be dramatically different.
That's the current hope; that the FN listing catalyst in March coincides with an abatement of dumping so that even if there is no bond deal, new equity financing can be done at some non utterly ridiculous p/e.
Alternatively, or in addition, I suppose we could see a jump to 10M-12M shares per month with a lot of days like today, using up the financing shares.
The irony is that SIAF may be a better buy at a higher price, because it means there will be less eps dilution and less overhang, IF new issuance hasn't already taken place in early 2013, before the FN listing.
Have to assume they have taken a hiatus in issuing shares, because they say that a potential bond offering would be after the listing.
2013 is forward earnings, and will be in two days.
It is the better measure, imo, for a growing company. But there are plenty of other even more important factors for pps for SIAF.
End of March, reported TTM earnings will still be what they are now. Hopefully, they will pre-announce. The more help for the FN listing, the better for prospects in every way.
By mid-May, the announced TTM should be $.80.
The key to the price will be the Swedish reception vs. new share issuance.
If the company can either find debt alternatives, or take its foot off the dilution accelerator to give the new listing a chance (even encourage), then a p/e of 2.5 seems much more doable.
If they have to issue 10M new shares to fund marginal capital development of $20M, the dilution and overhang would be quite tolerable, imo.
Viking,
How do you figure LTM (last twelve months?) earnings of $.52?
The last nine months earnings were $.51:
http://finance.yahoo.com/news/sino-agro-food-inc-reports-165200318.html
TTM earnings should increase by about $.12 - $.18 each of the next two quarters (depending on number of shares).
A scam is your biggest and safest holding?
That doesn't leave much room for the dangerous, legitimate companies, does it?
Personally, I am underwhelmed by the volume argument; also, bored and a little frustrated that it's become the company's spokesperson's oft (only?) repeated mantra.
The company issues 30,000,000 new shares to folks who sell them at whatever (low) price for whatever (recycling) reason.
So the volume comes from the issued shares, and from the low price it creates. Big deal.
Then the company spokesperson heralds volume as some kind of prize.