Sino Agro Food Inc (fka SIAF)

[The Swede]

I see many focusing on the fertilizer and bread grass receivables/inventories. As long as the sell price of the cattle is higher than the unit price, there is no risk imo.

From what I can see, the main reason is that the farmers are still breading the cattle, but SJAP is not buying back the cattle yet because of the low prices. SJAP is giving the farmers credit on the fertilizer and feed and will not get payed until they buy back the cattle. So as long as the cattle don't die, there is not a big credit risk, the cattle is the security. In reality, when SJAP is buying back a cattle for $2000, the farmer might just get $1000, the other $1000 is written of from the credit, so the profit will not be booked on the sale of cattle, it will be on the sell of feed and fertilizer.

I guess that SJAP could buy back all the cattle and stop giving the farmers credit, but that is equal going out business completely.

SJAP only sold cattle grown in its own farm without any sales from its cooperative farmers