Replies to post #62733 on Sino Agro Food Inc (fka SIAF)

[snow]

melehuna

I see Your point. The wholesale center may contribute to getting a better price for the products because it ensures the quality of the Products.

[kavdiv98]

Mele / Snow,

Adding to the note, the importance of Wholesalers is also tied to the margins, liquidity and dilution of Sino Agro. Sino Agro products are almost exclusively sold through wholesalers, which means we are leaving a healthy margin on the table. More importantly, our AR is also mostly consolidated with these wholesalers. The most obvious question that comes to mind is - Why does Sino Agro not give away a 30% margin on 50% of the AR to the Wholesalers for early payment or factor this AR (.5 x 80 mil x .7) = $28 mil available to pay for our investments in 2013.? Too attractive for the Wholesalers not to take that offer. I am not sure of the answer, but Solly kinda answered this on an earlier cc that the wholesalers are really smaller distributors who are represented as a group. Obviously, this is not happening for a good reason. The bottom line is that the increasing AR is exponentially diluting the equity. Solly wants to buy a Wholesaler to preserve the margins and possibly have more control over the receivables too, by getting closer to the consumer. As Mele mentioned, the quality is also a big part of that equation,


10k
Four major customers for the Marketing and Trading unit accounted for 51.49% of consolidated revenues during the fiscal year ended December 31, 2013. Two of those customers accounted for 33.97% of consolidated revenues, approximately evenly split. If one of our major customers were to go bankrupt, our associated accounts receivable would become difficult to collect or a loss.
Our largest customer represents a group of thirty separate live seafood wholesalers at the Guangzhou wholesale markets. Our second largest customer is WSC1, which is owned and operated by APNW. Capital Award was the consulting engineer responsible for the construction of WSC1 and development of its business operation via a Consulting and Service Contract granted by APNW. APNW is now one of our main wholesalers to whom we bill our sales of seafood.
APNW then distributes the seafood to other wholesalers in various cities in China.

kavdiv