Current guidance calls for 60% growth for 2011 and 2012. So, 100% growth is not far out of line. If they want, they can book 2010 HU flower harvest as revenue in 2010 or 2011; likewise allocate 2011 harvest across years as they see fit.
It's clear that they can beat 2010 estimate, if they want to. The dairy business is heavily loaded to the fourth quarter, and fisheries and cattle will contribute more than Q3. My guess is that they will manage to optimize profits and show smooth sailing. That would be perhaps $.32 per FD share in 2010, or 10% above guidance.
The flower business is a growing cash cow right now; dairy is well established and growing decently; cattle is the toddler, becoming a child. These three will carry earnings to substantial growth in 2011, until the fisheries REALLY kick in. Fisheries are the key to how big SIAF can become, because:
1) SIAF owns 100%
2) the JV business model provides substantial franchise, construction, and consulting income as the fisheries are built, AND growing equity positions in the fishery operations as they become mature
3) the business model is HIGHLY, HIGHLY scalable, way more so than the others, which grow pretty well on their own
If/when we see announcements that new fisheries are contracted on or ahead of target (4 in 2011 and 8 in 2012), and also projected profitability of the first is realized, the business engine driving strong, strong earnings growth (100%?) will have been proven.
Also, in my opinion, beyond these horizontal integrations of JV wholesale businesses, SIAF intends to grow further by integrating vertically, as well. They will control more and more of the chain, from farming/fertilizing/ranching to wholesale, to distribution and export, to marketing and branding, to retail. This process will reveal starting in 2011, I believe. We can see the start with the exporting dairy products to Malaysia under the Green and Natural brand.
SIAF can own 100% of the operations down the chain, essentially partnering with itself (JV ventures) from the wholesale level.
Any mention of these vertical integrations in Sweden? Perhaps I'm wrong, or perhaps this is a 2012 story. If SIAF successfully navigates this soup to nuts chain in China, new earnings will be incremental, beyond those behind the 60% or 100%.
