Replies to post #140686 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

Didn't they claim that the trading division where different than the trading thingie that TRW will be doing?

Why would it be different. Which outlets would they use? Existing ones in Guangzhou and Shanghai, or new ones?

SIAF admits here they don't have the capital to ramp up.

We believe this division has excellent growth potential due mainly to the needs of import foods in China, but the sales of this division is limited mainly by “insufficient working capital” that helps drive sales’ turnover. For instance, the company’s average gross profit on import trade is at 10.5% (derived from a 12.5% mark-up) from selling imported goods to its sales agencies to distribute in China. Total working capital (WC) need for the 1st month’s import and the subsequent 2nd month’s import is calculated to about 4 months’ worth of “goods-sold” when considering that it will require 2 months to complete one cycle of a monthly import’s volume to allow sufficient time for “ordering, shipping, custom clearance, goods inspection, discharging & local transportation, storing and selling time etc. and another 2 months for the subsequent month’s imports, a total of 4 months / WC cycle. As such, if the Company wants to generate $120 million in sales in one year it will require WC of about $40 million (or 33.3%) to be locked up month after month continuously during the year. Since the Company did not have $40 million in WC in the past or currently for this purpose, it was only able to build up sales in this division gradually depending on the availability of working capital, from time to time.

I find it suspicious that they mention the potential loss of this business.

Like, it's possible to transfer it to TRW, if they have the money to ramp up. Because SIAF doesn't. And then SIAF would get $12M deposits back plus the collateral shares.

SIAF is not even allowed to own the trade center in China, it seems.