Sino Agro Food Inc (fka SIAF)

[viking86]

well, the share price of any stock at any moment is affected by many factors, not just (and to a much lesser extent) by its own "fundamentals", the more important ones being macro events and sentiment (macro sentiment in stocks in general, micro sentiment in China stocks and certain sectors etc...). So just looking at share price and saying "why SIAF price is down x% in past 12 months while its earnings was up y%" as a proof that it's trading not on fundamentals is a superficial approach. Just like you can pull up the chart of AAPL, LVS, and lots of other major stocks and show that they have all tanked 20-40% over the past 2 months or so, and draw your own conclusion.

On YMB somebody said the main reason why SIAF stock has tanked is simply b/c it has diluted like crazy over the past 2 years. Somebody then shows a chart with 4 other chinese smallcaps with strong growth, balance sheet and cash but these have not diluted at all (or very minimally) over the same time frame and it looks like this:

http://finance.yahoo.com/q/bc?t=2y&s=SIAF.OB&l=on&z=l&q=l&c=gure%2Cyong%2Cllen%2Cyhgg&ql=1

What the chart shows is even with over 40% dilution over the past 2 years, SIAF still fares much better than the other 4 although these have not diluted at all. Why? B/c dilution is probably not the main reason since SIAF has grown its diluted eps by 400% in past 12 months. Rather, it's b/c SIAF's fundamentals are probably perceived as better than the other 4 (or many other China smallcaps) despite the 40%+ dilution.

We sure donot know what price and P/E SIAF will trade at in a year. But if the market decides that this stock deserves a forward P/E of 1, then the price will trade in tandem with the earnings. If the earnings double, so will the price. The market may also decide (due to other prevailing reasons like the sentiment toward Chinese stocks may change, other macro events..) it deserves a higher or lower forward P/E, then the price will obviously change accordingly. Who knows? But if P/E stays the same as at today's level, the price will change in tandem with earnings. Earnings do matter, diluted eps growth matters much more than dilution. That's all I am saying.