Replies to post #141244 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

This has nothing to do with AF4.

CA has developed 150 mu of ODRAS(3G) in Yangjiang a year ago and another 150 mu recently in Shenwan. This is land owned by AF3 (TRW). For which CA is getting paid.

This is about another 600 mu in Shenwan and 400 mu in Yangjiang. These are farmer cooperatives. Land not owned by TRW. CA is not the turnkey solution provider here. Presumably, TRW has been financing it.

My guess is, the contracts have not been signed yet. And are dependent on the success rate. TRW will certainly get a percentage of profits. Perhaps royalty payments for CA. They could be waiting for loan money here as well. Either way, these are very significant developments. Could be bigger than prospects for CA abroad IMO. Certainly for ODRAS. Because China is the right place to do this.

[RealDutch]

How much income do you thing CA will get from these 1000mu/67ha?

We can always speculate. For some reason, I think they are already developing the 600 mu in Yangjiang and 400 mu in Shenwan in 2018. Solomon will not sit still.

CA wants to get paid $1.1M/ha for it. But nobody has that kind of money of course. And you can't make the farmers pay back over a 3-year period because it will take too long.

So, they must be developing it at cost. Which should be closer to $20M for 67 hectares. And then TRW is financing it.

Then we could have a situation where instead of getting paid full price, CA and TRW will get paid a percentage of ALL future profits. How much? Let's make it 15% for CA and 35% for TRW.

For CA this means annual income of 15% x 120,000kg x 67ha x 30% margin x $13/kg = $4.7M

For TRW it's $11.0M. Which gives them a payback time of less than 2 years on the $20M investment.

Something like that?

You still need loans or pre-IPO money if you want to go from 1,000 mu to 6,000 mu quickly. But that shouldn't be a surprise.