Regarding Reverse Split
I really don't understand some of you guys would like the company see doing a reverse split to quickly jump to AMEX.
My personal experiences with reverse splits (RS) were always bad. I don't know of a single OTC/BB company really benefitting from a RS in the long run... You could uplist, but then what? The price could always collapse, and then what... This is also what Solomon said in the Sweden presentation. There is NO guarantee the price would stay at the level reached after the RS.
I do believe SIAF could earn 0.68 (if not more!) this year. If this can be achieved, doubling the profits next year would not be daydreaming (EPS of about 1.4$).
With this in mind, even if we trade at only a PE of 1,5 (most likely an underestimation), this would bring the PPS next year to around 2$. So no problem with achieving an Amex listing then...
So why even consider doing a RS now? You really think PPS will skyrocket the moment we uplist to Amex?
Of course not! At this moment it's just too soon. This is what the market tells us...
When the market watches SIAF making substantiable gains and progression each quarter, PPS will rise for sure. But this takes time. I can wait another year, I am not in a hurry.
Let's compare 2 situations, 1 with, and 1 without RS:
assume the following:
- shareholder having 10.000 shares.
- PPS of 0.75$
A) Reverse Split 1 for 2 --> your share amount decreases to 5.000
+ PPS doubles to 1.5$ We know management said Amex would be flexible with the 2$ minimum PPS (so a PPS of 1.5$ probably would be sufficient to achieve).
Imagine after that the company dual lists in Sweden (with a PE of about 10). With EPS of about 1.4$ in 2013 and 2.5 in 2014, this could bring the PPS to 25$.
--> 5.000 pieces at 25$ would make 125.000$
B) No RS and wait till the minimum PPS reaches 1.5 (which it WILL reach when business matures, and really we won't have to wait years for this...) --> share amount stays at 10.000
We assume all other factors remain the same as in situation A)
--> 10.000 pieces at 25$ would make 250.000$
Now what would you prefer?
A) making 125K with RS
or
B) making 250K without RS (of course, with a little more patience)
I am NOT here to make a quick buck. There are other shares to achieve this.
I prefer the more profitabe option B). And I am prepared to wait a little longer.
I could only live with a temporary RS (I mean that in the future a forward split would be executed so the pre-RS amount of shares would stay intact).
Those who are PRO reverse split, please explain this to me with reasonable arguments, because I really don't get it...
AI
