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Like the report as a whole, the HU numbers were much better than I expected. I mention this because HU produces cash income. That helps for the cash dividend, where there is some flexibility, and for the option to pay debts in cash.
And take a look at the HU inventory!
More and more parts of the business produce cash income now; that is why there will be less and less need for financing shares, unless or until there is no need. (not to mention the FN listing or possible bond deal)
This trend has always been true, but with negative spikes, primarily because of the low share price. However, now the company is much more mature, taking in much more cash, vs. other committed forms of earnings.
On maturity, we have a company that produced yearly revenues of $11M from continuing ops in 2010, and $49M in Q3 of 2013.
Think we've heard both sides of this argument quite a few times. In a sense, it just boils down to perspective.
But I'd suggest that where the two perspectives may well agree is that the more shares that have been issued limits the number of shares remaining to be issued, and that is bullish. I realize that extending the authorized share count may counter this argument, but that would be a departure and a lengthy process.
If 25M shares were issued into 2012's 75 million share volume, wouldn't 10M to 15M into 2013's volume that will add FN be a far, far better dynamic?
Add to this, that the shares to be issued will continue to decline, even if at $.60. If $1.20, they would decline twice as fast (or add twice the value). On top, the bond deal may happen, eliminating new shares.
Isn't this a dramatically improving supply demand situation for the share price, even in the "dump centric" view of the world?
And, oh yes, this was an exceptional report, virtually guaranteeing full year 2012 results; raising the prospect of bettering guidance; and shining a light on 2013.
Earnings will go up more and more, year after year after year.
Financing shares will be issued less and less, one year only, and maybe not any more.
This was a phenomenal report. Best news imo: multiple distribution centers coming. We will see that income next quarter from just one month, but can perhaps extrapolate to 2013. Good cc line of questioning.
The video revealed the Xining facility as the company's showcase, imo. With 50 franchised restaurant to sell 10,000 head of cattle, t's not hard to see that it could be valued at $250M spun to an Asian exchange in mid 2014.
Yes, you got that right. That was one of two nice items I thought. The other was branding a second restaurant franchised chain as "Bull," aiming for 50 restaurants. This can be a significant supply chain development, as the price of beef to the restaurants is +50% from selling wholesale, profit +100%, as I recall.
Fish sale progress seems slow to me, tho FF1 fully accelerating, and PF 1 & 2 starting.
RD is right about the capex translating to NTA.
TF is right to question why $100M capex with equity raise vs. $90M without. Solomon is not a savage, and he certainly is not unaware. My guess is simply that commitments were made to grow full throttle to develop the full wholesale, distribution, retail chain in a timely and strategic manner. The share price did not cooperate, so more shares had to be issued.
There will be less, and maybe no more, as he is pursuing other options: bond deal and FN listing.
I hope this is addressed directly in the upcoming call. At the very least, any 2013 share issuance as a percentage of trading volume will be very dramatically less than 2012, just as the company earns more; becomes cash flow positive, ceases equity issuance (no matter what); and/or raises money thru debt and loans instead.
I used semi-colons instead of a list. Okay, Sly?
I agree with Sly. Let me list the reasons:
1). He is a self- proclaimed jester,
2). Just didn't think only one was a list.
Oh, just thought of another reason:
Deflation is the enemy of gold. And gold, deflation, and sophisticated technical analysis may or may not correlate, but do comprise a triangle of one sort or another.
Full disclosure: I am partial to fundamentals.
Didn't really think you'd take offense. I actually really liked what you said, particularly as the words you used related to the meaning of those words.
Exactly what use is the price of gold to the price of SIAF, if not correlation? Both can be triangulated?
Wondering if Sly's post 22270 can be made a sticky.
This is stuff you don't get just anywhere. Math that isn't arithmetic; non-apparent resemblances. Gotta love.
Viking,
Curious what revenues, profit margin, and share count you use to get to $.19 or $.20, basic or diluted? A couple cents higher than my guess, but revenues are very hard to predict.
I am expecting on the order of 50% QoQ sequential revenue growth in Q3 and Q4.
Agree that the major catalyst now is a First North listing; more so, if it coincides with an acceptable capital development plan, prospects for a bond listing, growing earnings, significant operational news, and/or preliminary 2013 guidance. All would point toward increased demand for the shares against smaller supply.
Agree with Bear that cash flow progress is paramount. Do not expect any A/R problems, as increasing short term a/r is healthy in a growing company, and last quarter, > a year declined.
RD
You bought a company with a long stated policy of funding growth mostly through earnings, but also small bank loans, credit from suppliers and JV partners, government grants, and repayment of debt by issuing new shares. The policy is to limit equity raise from equity to 10%, and to end in 2013.
You know this; it's been all over the conference calls and this board for ages.
So, you either buy in or you don't. Buying in and then complaining, especially vulgarly, makes no sense.
Good news is this is a company with a market cap of $50M building NTA thru a cap ex budget of $100M per year. Other good news is that fewer shares will be needed in 2012 if a First North listing boosts the share price. Likewise, a bond deal would mitigate or eliminate the need for new equity in 2013.
And number three.
My point to you and TF is that if the shares have already been absorbed, there is no overhang. We just don't know.
I do regard 100m as a limit. I acknowledge that it is not absolute. But the plan has always been that 2013 would be tha last year for cap ex in excess of cash flow; possibly, first half of 2013.
Now, two additional factors argue that 100m is the top, maybe by quite a lot:
Bond offering mitigates the need
FN listing lessens the shares needed
How do you even know if a higher or lower share count number is good or bad, without also knowing how many of the shares have been sold?
I higher number with shares that have already been sold intoi the market is good because less remain possible for the future, when the company is presumably dual listed.
I doubt it.
But I'm skeptical about all these share counts, to tell you the truth. And I'm pretty unsure what good the estimates are, since we can't really determine how many shares are sold anyway.
Whenever someone surmises that we are at an end another claims a new round of dumping what seems like an aggregate amount of shares in access of new shares issued.
In other words, I have no idea.
Just waiting as fundamentals and FN listing and bond offering and limited dilution, and hopefully some news take some effect.
Any guess for Q3 rev., income, new developments, outlook?
SIAF's capital raising plans have been public for years.
You already know the policies you decry every other day. So that begs the question: if you're selling now, why did you ever buy?
The biggest real change at this point is the possibility of a bond offering. Management regards itself committed to sustainable policies; even, some unique plans to build shareholder value.
But since you don't, you might as well sell the rest of your shares.
What do you mean?
I can put in a limit order to buy or sell any amount of shares I want at Interactive Brokers, or any other broker. I can try to buy or sell 100,000 shares 5,000 at a time, or 20,000, or all. Whatever I choose will be what's seen. If my order is 5,000, either buy or sell, how would anyone know my intention was necessarily that sale only or an "iceberg?"
What do you hope to learn?
We will not know how many of the newly issued shares (by 9/30/12) will have already been sold. So a big number could actually be good, as that leaves less shares to issue later, if at all. Or it could be bad, as more dumping shares are out there.
Not even retail investors show the volume they want to buy or sell, so why would MMs?
btw, I don't think anyone denies that the share issuance creates an overhang, and that the consequent sales do come in some waves from certain market makers. I'd even venture that one or two warning post per day that this is happening is widely appreciated on the board.
If there were a way to quantify what the overhang is and how much it's being diminished, that would really, really be appreciated.
But since that appears unattainable beyond pretty sketchy speculation, the minute by minute recounting of Level II watchers and the repeated declaration about knowing what they are doing is very much less widely appreciated, to understate.
Ecuador,
Makes sense that the FN listing would be first, as it will be a lot easier to find Swedish buyers for the bond with a Swedish listing.
If both are pulled off, beyond the direct and obvious benefits, I would hope there would be a huge credibility boost, as both would be firsts for Chicoms and OTCBB stocks, and both hugely shareholder friendly moves.
Wouldn't exactly what you say in this post be a daily running count of finance shares sold?
Andrwe,
What I would find most interesting is a running count of shares you think are dumped, even an estimate.
As long as you're watching level two anyway and see the dumping MMs on high volume days, a running count would be very useful, even starting now.
You agree with others that this is what's holding the shares back, but the supply only seems endless. Obviously it's finite. You'd be doing a real service for board members to show how the financed shares are distributed and how fewer and fewer can be outstanding.
Doable? Interested?
Nice work, as usual :)
TF
Here's what Andgus said:
Probably fine to cut, Google Translate, and paste any worthwhile IHUB posts.
I'll give RD the benefit of the doubt on his last post, meaning it was just stupid and possibly self serving, as opposed to an intentional and stupid outright lie.
That is, what he meant was that throughout 2012, SIAF financed 10% of its capital development using 16M shares, the great majority of which have already been sold back into the market.
He did not mean that there will be 16M more issued before 2013.
(I think)
Stolpen,
I'm American.
I met a lot of Swedes on the investor tour. All were friendly and solid SIAF investors. I hope FN brings many, many, many more.
Hope to meet many from this board at the Stockholm SIAF millionaires' party.
Thanks again, Lucky.
Do you know if or to what extent a First North listing allows or boosts a company's institutional following?
I can't imagine that the dual listing would hurt -- just more exposure. Arbitrage is guaranteed to keep the exchanges priced within pennies, with the only exception being news while only one is open. And even then, they will quickly equalize.
More mature companies on larger, more recognized Swedish and American exchanges carry less risk, so in that sense are a less reliable comps from a the perspective of deserving a higher multiple.
On the other hand, they are highly unlikely to have the growth profile.
Would be interesting to know the not only the overall, average First North p/e multiple, but also sales and book to price ratios.
On first gance, SIAF seems highly attractive within the FN universe. However, tthe trading volume does not seem too high.
Perhaps some Swedes can shed some light on how much attention FN stocks, particularly new ones, h=garner with retail and institutional investors; also, how much value the Jordan Fund and BOD connections might be.
Anyone know what FN premier is, and if that is an initial possibility?
Thanks, Lucky.
This is quite helpful.
On first inquiry, Alpcot Agro appear a very good comp. And the metrics would value SIAF 10x !
Questions about First North:
Are there statistics, or does anyone have some information about First North listings? For instance, the averages or ranges of FN listings in terms of p/e multiple, market capitalization, revenues, + initial trading success, listing histories (before, during, after)?
They've also mentioned that imports from Norway are going to Malaysia. Believe Leonie's also already has restaurant(s) in Malaysia.
Estimating 2013 revenues from both is really not much more than uneducated guess work; at least as far as I know. Retail involves investment, so ...
Would be a good general question for Q3 conference call.
Ultimately, retail will show big revenue numbers, as well as forming the strategic third leg in the business model.
So, to make the list jive with your daily reporting about MBAY, appears they may be on the selling end of transactions reported as NITE. Right?
And what about SUNR?
You mean this list is only buys?
And MBAY, the MM we hear about relentlessly,is the big dumper, always selling on 500,000 and 1,00,000 share days???
Doesn't this list throw a wrench in all the already dubious calculations of how many finance shares are for sale, and who has or will sell them?
Good post, Melehuna.
Solomon has executed perhaps 75% of his vision, creating a vertically integrated, diversified and branded "food chain." And he's done it with very little cash, relative to accumulated net assets.
As Bear points out, it is this large and growing, integrated asset base that forms the money making machine we see now in terms of income, and later next year in terms of cash flow.
He's the CEO, so his primary responsibility is the long term vibrancy of the company, not the short term share price movement for any real douche shareholders.
He advertised that he would limit raising capital through equity to approximately 10% of needs through 2013. That's how he planned and that is what he's done. He retired personal shares, which is about as shareholder friendly as it gets.
Now, as the company is maturing, he's trying alternate means to raise capital, and dual listing shares, further shareholder friendly moves.
Disappointment that these maneuvers have not been recognized in the share price yet is no reason to demonize him.
No.
The more farms, the more revenue. That's an eps growth rate factor, as is SIAF's equity stakes in each farm. Growth rate is different than if the rate of growth itself is growing or not.
They will keep growing, and at a healthy clip. I should probably just left it at that.