Replies to post #11862 on Sino Agro Food Inc (fka SIAF)

[slyestjester]

Viking--What I wondered at the time of your original post was what would the profit margin be on SIAF's repurchases--surely they will get less ultimately than they usually do with beef--and could they be flooding the market (at least locally), generating lower prices at retail? That said, I KNOW Solomon would not be cutting his own throat.

[jcanuck]

organic pork and lamb could be raised using the same siaf beef model but maybe there is more competition for these markets?

or maybe it is just a question of timing - the beef and fish being more profitable initial starting points?

[slyestjester]

Viking--I think you saw in the provincial gov. getting involved in cattle production what no one else saw. It's not a matter of margins as much as an extension of the franchising concept. Although Solomon has almost never spoken about it, this is what the co. is all about: franchising. It's the fastest and least capital intensive way to expand and the way to earn huge ROE and ROA. That's why he talks about building "demonstration farms", and it perhaps suggests that the company can grow even faster than we have anticipated, paying less than we thought for their participation. Ancient Chinese agriculture meets scientific agricultural techniques meets American marketing! What we have to be able to trust is that the various governments will be willing to respect SIAF's property rights and watch it grow rich w/out interference. Yes, some shares have to be doled out, but if they can establish a franchising base, it's well worth it.