Replies to post #11431 on Sino Agro Food Inc (fka SIAF)

[Handlamera]

Well Traderfan, I think you do not understand what Solomon is trying to build up here. Calling other peoples opinions "funny" tells more about you than anything else!

if we add 20% to assets and 100% to earnings by issuing 15% new shares and the market absorbe the new shares, as we see now, how can you complain about that?

You want the company to take up bankloans instead?

Show your calculations for that, if that is what you prefer.

[snow]

Traderfan

In almost all cases sellling stock at a p/e ratio of one reduces earnings per share and is therefore frowned on by shareholders. Logically this does not have to be the case. I do not know if earnings per share are reduced by the selling of stock done by SIAF.

Generally, if there are more shares for sale than demand for shares the pps falls. But this is really too simplistic an approach. What matters too is what buyers think a stock is worth. Even if there is heavy selling of shares the pps may move up if the market think the stock is a bargain. The number of buyers is strongly affected by the market's perception as to the pricing of the stock. Is it cheap og expensive all relevant factors taken into consideration?

High liquidity is a positive factor in that it becomes more interesting for the big players to buy stock. But selling stock to increase liquidity also has the negative effect of creating an imbalance between the numbers of shares for sale and the number of shares bid for at a given price. When SIAF sells stock that enters the market this creates a downward pressure on the pps.

I think there is a somewhat simplistic approach to dilution that is voiced on this board. The level of dilution in this stock is fairly moderate. What should be focused on is how the dilution affects earnings per share. If earnings per share can be expected to increase as fast with some dilution as without dilution the dilution does not matter from a rational point of view.