Totally agree that honest negative opinions based on facts are fine.
I am very long this company, so I post from that perspective. I try to give my reasons for optimistic posts, and welcome any debate.
I absolutely think the company needs to explain how the dairy sale and new land purchases are linked. I expect much will be learned in Sweden; and more so, if by some miracle the Form-10 review is completed by then.
Frankly, absent these types of explanations of business directions, I'm surprised that the share price has basically held up, given by far the weakest quarter of the year, whether this was known beforehand or not.
Now, we can expect revenues to jump every quarter, from $3M to ~ $8M to $10M in Q2 to an average of $22.5M in the 3rd and 4th, if targets are made. Those targets are replacing dairy revenues from Q1 and $58M in full year guidance. We can also expect qualification for uplisting and increased news releases and investor relations work; e.g., road shows, etc.
Guidance is not given lightly. Solomon doesn't guide $32M+ for the fish business without having a good idea what contracts are signed; what are close, and for what farm capacities, therefore revenues. Does not mean that there isn't uncertainty.
If guidance is made, the company is MUCH, MUCH, MUCH better off than if equal or even somewhat higher revenues were recorded with the dairy. Why?
Because they will have created a much larger infrastructure to drive more scalable businesses, that can be spun out after reaching some critical mass. And because they will have proven those businesses -- fish and cattle -- faster, and with higher revenues than had they not concentrated on them. At least, that's my take.
The gross profit margin for the cattle business in 2010 and the the new sheep houses in 2011 were/are 15%, on small revenues. The gross margin for the cattle business in 2011 is projected at about 30% - 35%. Very likely that the gross margin will increase again in 2012, and the sheep business will follow the same trajectory. Growth is built into the business models, and this is before adding a distribution network on top, and franchising the proven concepts -- 2012 initiatives.
Likewise, the fish business has growth built in. If four farms are built in 2011, then SIAF will receive income from fish sales in 2012 based on 25% equity stake from 5 farms, rather than 1. In addition, in 2013, the equity stake in each farm will bump up, perhaps to 50%. So those revenues double without doing anything.
AI
