Sino Agro Food Inc (fka SIAF)

[viking86]

Treit: While I agree with most what you say, I am afraid your view on the 2013 share issuance is a little off base. It's not like Solomon can decide when and when not to issue shares. It's the cash flow and business cycle that controls it. The truth is most financing shares are issued 6 months before they are released and hit the market.

IOW, if projects x and y need to be finished by Q1'13, he has to get them started say in Q3 or Q4'12 (sometimes even earlier depending on the complexity of the project) and provide the funds for it one way or another. While some of it will be paid in cash if cash is available, many service providers and goods suppliers will still be paid in shares at the time the contracts are being negotiated. As i have indicated (although I have no evidence for this, only pure common sense), most shares are issued based on as-is price at the time of negotiation, not at the time the shares will be released which is 6 months later when they are immediately tradable. Most likely the shares are paid based on the VWAP of say preceeding 3 months b/c nobody knows what the shares will be valuated 6 months later. Also, since very few Chinese can buy or sell shares on the US market, it's very likely IMO that SIAF has offered to sell the shares for them to induce them to accept shares as a payment . Otherwise I can't see how a chinese contractor would agree to be paid in shares traded in the US at an unknown future price.

For example, acc. to 10Q-Q2'12:
During the six months ended June 30, 2012, the Company issued 10,735,631 shares of common stock for $6,946,250 at values ranging from $0.49 to $0.64 per share to settle debts due to third parties.
I think the 10.7M+ shares will hit the market 6-7 months later. Same with
shares that may need to be issued in early 2013. Although we know the shares will probably have a higher average price next year (say b/c eps will be at 0.80 at the end of Q1'13 etc...), fact is many shares will have been issued in the early months of 2013 based on VWAP of preceeding 3 months which may partially include the PPS we will be seeing in the next few months, not the one prevalent after Q1'13. I also suspect that 75% of the 2013 shares will be issued in the first half of the year where cash flow is low but business cycle (constructionwise) is in full swing.

I may be wrong but that's how I would evaluate the share issuance problem.