I'm not suggesting that 2.8B is a bogus number; I just can't figure out what it means to revenues. Therefore, it doesn't really mean much of anything to me, until explained. And there probably is an explanation.
They will not get $186M from that farm. If they could, no one in the world would invest $21M in anything else. They call the profit center "consulting and servicing," but it includes building the whole farm system.
Also, this will be SIAF's fourth farm. So far, the first one has booked $2M in revenues from fish sales.
I think that the easiest gauge to estimate revenues from fish sales is comparing their targeted revenue for consult/service to actual revenues and contracts for same, and apply that ratio -- or an adjusted ratio -- to the targeted revenues from fish sales.
The language and numbers are clear in this regard -- although I still will feel much better with verification: SIAF will exceed 2011 target revenue for fish consulting and services by 75%, and likely will for 2012 as well!! We had no way to suspect such phenomenal performance before this latest contract.
That's why this contract may well be the seminal event in Sino's growth curve. It's now reasonable to assume that this is the type and magnitude of contract they are now seeking. It's also reasonable to assume that this type and magnitude of contract is itself reasonable to ink, based now on the proof of success -- rather than the proof of concept -- of the demo farm. Only stands to reason that after a year and a half, the just signed contract was not with the only group of businessmen Sino has been showing, maybe negotiating with.
So far, fish sales seem to lag by a longer time than anticipated and grow out periods may be longer -- that would be the adjustment I'd apply. But we will get a better idea over time.
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