I am a large individual shareholder and have consistently added to my position for many years. Started investing when it was a milk company.
My perspective may be different than other shareholders so the context of my observations should be considered.
I have substantial financial and investment expertise.
I have previously visited with SIAF in prior years and have previously been to the different fish farms in prior years.
I have developed a business connection with S and some of the fish farm local managers. My relationship with S and some of the local managers is good and I place very high emphasis in management talent and honesty. They get strong grades.
I spent two full days with SIAF recently in Enping , Guangdong and Zhongshan.
Some observations I might share
1) the fish farm 1 and 2 are steady and reliable operations and will produce nice cash flow. There will be some incremental enhancements and improvements over the next year. Basically self sufficient and positive cash flows
2) Zhongshan project is impressive in scope and scale in real life. While I was there on Sunday the construction crews were working on phase 1. the new designs will be more productive and efficient and more profitable than existing demonstration fish farms. The tanks were larger , deeper and they are adding a new set of super tanks for enhanced sizes prawns
All good on the construction site. Lots of workers on a Sunday and full speed ahead. But capital is required.
3) One might want to think more carefully about the ideas that are being discussed about the Ecab relationship with respect to current and future value added. Things change with business relationships that have their own dynamic.
4) I believe substantial capital remains necessary to fund the Zhongshan project. Substantial. How and where that funding is derived is a factor one might want to fully understand.
That is fine with me since my investment horizon has been years and will be years ahead. Short term no one can predict what will occur, nor how it will occur ,nor when ,nor at what cost. My view is positive that it will work out. But it will not be linear like some prefer to think
5) The two IB ( artic bernham)have different agendas and it remains to be determined what and when they will add value with respect to raising capital. I have work with IB for over 25 years and there is usually a gap between what is advertised and what is delivered with respect to capital raised. I have no view yet but will be engaging with both firms to assess. Expect some good and some unexpected outcomes.
6) It is essential to appreciate the finer points involved with generating an acceptable profit from these fishing farms. It is not so easy as throwing some fingerlings into the tank. There are decades of IP required to incrementally bring about the margins SIAF is experiencing. No smaller or less experienced competitor could replicate the profitability. Solid focus by management in this area.
7) I met and interviewed the investor and general manager of the Zhongshan farm. Understand his competency and commitment. I like him in the two aspects of importance. I , like S , invest in top talent. The project chairman of Zhongshan should deliver on the project but this project is new with respect to scope and scale and we all should expect the normal curves in the road that such a new project of unprecedented scope entails. This is not a straight replication of demo farms. My views are formative given the early status but the person running the project seems bright and capable and should be agile to handle the adversity that arises.
8) As for the perspective of some investors. Those that criticize S might benefit from spending substantial time reflecting on his goals and priorities and appreciating the differences between what he is focused on and what one might prefer him to focus There is no right or wrong when two perspectives begin from two entirely different points of departure and when two entirely different cultures are involved. If one thinks in 2-3 years goals for the business and the other in terms of stock price next month naturally conclusions will differ. As an entrepreneur and person that built a business over 25 years that I still run , my long term perspective is focused on the execution of the business fundamentals. I remain committed as a substantial individual investor. If a CEO cares mainly about achievement of a business getting larger and larger while western investors care about stock prices it seems logical two different conclusions occur
9) Cattle farm- saw the one in Enping. All is as expected
10) The two managers of each of the farms are good , reliable , managers. Not much to worry about.
11) Abattoir- one might want to think about this from the perspective of a longer time frame before critical achievements reached. Lots of opportunity , and much work ahead in terms of operational issues , labor , additions , raising capital. Might be some positives this year but uncertain
I spent two full days with SIAF. One day with fish farm managers and George and one full day with S and the new Zhongshan farm manager. I drew some other conclusions but the above observations I thought some might appreciate.
