Replies to post #147953 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

Or is the gain on disposal the 30MUSD lisence + difference between appraisal value and cost of AF1?

You've got it. Probably more correct, the $30M license + net assets of TRW before the carve-out (which is mostly 75% ownership of AF1).

Here is where they disclosed it for the first time, 2 weeks before the 10-K. Not sure if anyone understands this.

https://www.sec.gov/Archives/edgar/data/1488419/000114420417012143/v460897_ex99-1.htm

The (historic) cost of AF2 and AF4 was a lot higher than AF1. So we shouldn't expect much of a (future) gain there. But I think AF3 could be worth more based on their profitability.

People have to keep in mind that the cost method of accounting is a conservative approach and assures that assets aren't overstated. That's why we can use the $340M and feel comfortable about it. Well, it does reflect a P/E of 10.6 currently, as we said before.

You can book the $1.26 on nov 15 (if nov 15 is the ex-date). And $1.52 next year when you get the 2nd part. But keep in mind it is worth more already.

If TRW grows 20% annually (which Solomon will probably laugh at) then TRW is worth a lot more even if you use a very conservative version of Benjamin Graham's formula of intrinsic value. But you can't book the value of your TRW shares that way now. Because it's a subjective measurement. And the $340M SIAF is using, is formal. I hope that ends the debate :-)

[RealDutch]

If you look at the profitability of the different fish farms at the moment, it could look like this.

AF1 $5M
AF2 $5M
AF3 $15M
AF4 $7M

Based on its historic cost, AF3 could be undervalued by $100M. This is "compensated" by the fact that TRW booked close to $100M in license rights for AF5 (including the master license of $30M). Which is why we still have a "normal" P/E of 10.6.

It's possible that SIAF will sell CA to TRW. Settle the remaining debt. And then SIAF will own roughly 50% of TRW after the distribution. Have AF2 and AF3 appraised, and get rid of the license fees they booked for AF5. This should lower the cost for AF5 and lower the cost substantially for any ODRAS developments they have planned. Possible, but how likely? We may find out in the next few weeks.