Sino Agro Food Inc (fka SIAF)

[Ecuador]

It does not say that implictly on businessweek, but you can figure that out from their personal profile. However i just plowed through more or less all their SEC filings and they ofcourse have some chinese stakeholders:

*The JV partners in the fishery

*In the annual report it is stated that the patent surrounding the enzyme was obviously bought from a Mr. Shan Dezhang. The patent can be found at:
http://ip.com/patapp/CN1653931
I do not understand the chinese in the patent though. This does not say very much, but it at least validates the patent and its actual existence to some degree.

* A Mr. Liu Xuesong also seems to be working on a sort of consultancy basis with SIAF and the cattle rearing according to the latest annual report, page 33. I found a site that mentioned his name at the National institute of Biological Sciences in China.
http://www.nibs.ac.cn/english/?act=view&id=109

The most important thing with these two findings is that they show that SIAF has some industry know-how within the cattle, feed and fertilizer segment. Solomons career has been almost exclusively been in aquaculture according to my knowledge. It also seems that the rest of the malaysian management does not have any previous experience of agriculture.


*Finally I think I also found the australian company from which Solomon originally bought the license for the RAS technology according to page 35 in the annual report.
http://www.infinityenvironmental.com.au/

I guess these links can add a slight bit of understanding and legitimacy to the company.

However from reading the last quarterly report, some questions arose:

* According to page 29, some of the land use rights bought are incredibly expensive. For example SIAF bought 58 acres in guangdong for 7,042,831 USD. This means a cost of 120 000 USD per Acre!! No farmland in Sweden is that expensive, perhaps you can find those prices in stockholm city. Something must be seriously wrong with that information. Has anyone else further info on this?

* Why has Solomon and Management issued B-shares to themselves that are more senior to common shares in case of a bankcruptcy and without any dividend rights? This does not signal confidence in their own operations. Has anyone else further info on this?

* Two really good articles that indicates a suitable macro environment for SIAF and that will help the company create a competetive advantage for its RAS technology:
http://www.time.com/time/printout/0,8816,2081796,00.html
http://www.nytimes.com/2007/12/15/world/asia/15fish.html?pagewanted=1&_r=2

However in a long term perspective it is possible for competitors to copy this technology and thus SIAFs competitive advantage will disappear. Thus creating retail brands that the company will achieve with their franchising operations is crucial in order to create a long term sustainable competetive advantage.


Thats why i am dead long in the stock. I had a look at the balance sheet, and if you would include only assets such as land property etc, the per share book value of the company is still 40 cents. And this is a very pessimistic worst case scenario in the case of a bankrupcy and all assets need to be liquidated.