It is less surprising to me that holders of shares issued to extinguish debt may be selling than enough others aren't buying. After all, they lent money and are being repaid. They probably want to lend the money out again.
There are lots of reasons that they aren't selling into waves of buyers right now. SIAF is a small pink sheet company with little institutional interest. Trading volumes are relatively small. There's no analyst coverage, to my knowledge. So, there just isn't enough investor awareness to cover the shares of a large seller. Perhaps many bulls, like myself, have full positions.
And, of course, there is a general mistrust in the whole sector, where values are all low by any normal financial metric.
Into this environment, SIAF has targeted $57.7M in 2011 revenue, almost 6 times the 2010 figure from continuing operations. So far, they've delivered $3.5M.
The marketplace may well continue skepticism, until they see actual performance. Frankly, this won't be until Q3 results are released. Clearly Q2 will not deliver 1/4 of 2011 targets; more like 1/8th. Hopefully, critically, the company will do a good job explaining why they are on track, what contracts and work are being conducted to underpin that conclusion, along with the natural seasonality of the businesses. Quarterly guidance would help.
If results show dramatic sequential growth -- though they won't approach an arithmetic path to $57.7M -- and the conference call reveals the milestones having been met, and being met to achieve $57.7M, I think we'll have the best buying opportunity for SIAF ever.
Nine months from Q2 release, using Viking's estimate, there's an 80% to 90% chance that we'll have a company that made $50M+ in 2011 sales well into a year they've guided $150M+. And the company now sells for 1/3 of the net asset value then, and at a p/e of under 1 for that then current year.
We will also be one year away from another targeted doubling of both revenues and income. Equally importantly, they've announced intention to unlock value (read, double or triple or quadruple the multiple) by spinning out subsidiaries to an Asian exchange.
If they execute, money will follow, lots of it for the company and its shareholders. We are very early in this story.
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