Replies to post #103584 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

Zero,

I don't think there is a need for management to respond to any of your comments.

The fishery division has been self-sufficient for a very long time. The company owns 75% of Fish Farm 1 and evidently they don't have any problem getting the cash flow from that CJV. Other than that, Capital Award generates cash from resale and commission, which is owned 100%.

They don't issue stock so they can buy into the (fish)farms. It's all cash. What they issued stock for in the past, was to vendors etc. and to be used for SJAP and HSA mainly. For SJAP, SIAF is the financing partner which is the opposite for the fish farms, where the Chinese partners are financing it and SIAF injects the IP and know-how. But ECAB put a stop to those share issuances when they invested $25M in late 2014 because all those shares ended up being dumped into the market after 6 months, killing the stock.

SIAF has a master license within China for APM technology. It's not even called RAS technology as you suggest. RAS simply describes the system (Recirculating Aquaculture System) and any company can use it. So if SIAF resells licenses within China then they have to pay the patent owner a fee, which they did up until 2008 because it wasn't very efficient or making a lot of money.
But they have improved the system drastically ever since and now they call it APRAS technology instead of APM. Whatever. It's an operational story here based on expertise etc. Any IP related to RAS in general is useless because most companies won't make any money. Or, as the CSO used to say, it's an art.

So, SIAF can buy into the farms they build for clients up to a 75% stake. For book value. They need money for that because they have been growing too fast. Too much money is also "stuck" in Account Receivables, but the cash flow situation here is not exactly optimal, we all know that. Even then, fishery sales is not the main problem. It's once again, SJAP, HU-plantation mostly.

So, obviously they want to buy into those fish farms. Because it's a very cost-efficient system, which they designed themselves. Case of putting your money where your mouth is. I don't think you will find many engineering firms willing to do that.