Sino Agro Food Inc (fka SIAF)

[RealDutch]

What we "missed" in the 10-K and what the company was trying to tell us, is the results of the latest version of 3G ODRAS. Trials in Yangjiang, being copied now at AF4. These are small ponds (30m x 30m).

Let's take a look at the cost first. Because I think they told us or at least they gave us an indication.

Cost is $2M for 26 ponds on 8 acres (= 3.2 hectares) at AF4
Or $625k per hectare.
This is what you would expect, again, for the most advanced version. They are NOT doing the cheap 2G or 3G ODRAS here.

Now let's take a look at the yield.

At the end of March 2019, Tri-way has just completed all its civil engineering plans getting ready for the construction team to come in to start work on the open dams as soon as some of the applied financing will be in place. Judging by the engineering information, it will require less than $2 million to complete all retrofitting and reconstruction work as such Tri-way is working hard currently on a small short term loan to come to accommodate said work in progress as soon as possible. At the same time Tri-way has been granted a 60 days credit term by two of the biggest stock feed manufacturers of the country to ease the needs in working capitals to help to fasten the pace of progress of the mega farm.

This decision was influenced by the success of the YangJiang Prawn Farm (“YJPF”) situated at YangJiang District Guangdong Province with about 50 Mu of land for production sub-divided into 26 ODRAS dams that was engineered and constructed using CA’s ODRAS technology in 2017 with trailed runs being carried out through 2018 that has been proven successful. YJPF started its first commercial MWP growing program by starting to stock an average of 230,000 pieces of (PL 7 = Post Larvae 7 days old) per Mu on 21st January 2019 in said 26 ODRAS dams and by April 1st 2019 some 70 days later YJPF sold its 1st batch of MWP from 6 ODRAS dams achieving sales over $140,000 from 18 MT of MWP at averaged size of 10 gram/piece recording mortality rate of 18% and FCR (Feed conversion rate) of 1.03. YJPF will definitely improves here onward and this current performance is good when considering that it is YJPF’s first commercial production

230,000 pieces per mu = 345 pieces per m2. ("Standard" is 150 pieces/m2 for super intensive farming)

Survival rate is also very good at 81%. It used to be in the 60% to 70% range for the older 2G ODRAS in the past (2014).

60 pieces per kg and 4 cycles per year should be doable.
Then the yield per hectare =
10,000m2 x 345 pieces x 0.81 /60 x 4 cycles = 186 MT.

186 MT.... NOT BAD, for a trial. We had been using targets of 100 - 150 MT for 3G ODRAS in the past.

Which is why they are doing the same now at AF4.
Space is limited. So you need an optimal yield.

Another important aspect of this is, that at $625k per hectare (could be up to $1.1M per hectare as mentioned in the 2017 10-K) revenues for CA will go up substantially when TRW/AF3 has the funds to ramp up.

I was wrong. They shouldn't be doing cheap ODRAS. They should be doing expensive ODRAS. At least at AF4, where space is limited.

So what's the payback time then with a yield of 186 MT?
625,000 / (186,000 x $10/kg x 40% margin) = 0.84 years.

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