Replies to post #19268 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

Treit, you don't have a clue.

The 2.8B figure you are using was their estimate for year 1. Capacity was actually 5B+ before they changed the contract and tripled the number to 15B.

Also, the flies they are selling are 7 days old. They haven't even used the huge grow-out tanks yet. Or the 10x2mu open dams.... or whatever they are planning for Phase 2 Stage 2.

My $250M may be overdone. But I don't know how many fingerlings they can grow out in the ponds. Whatever it is, it's going to be very efficient. And survival rates are impressive as well.

[viking86]

Treit: at the beginning of the year Mgmt was confident of generating $10M+ in prawn flies sales (corresponding to their stated production target of 2.8B flies in Year 1).

From 10K report:

Sales of Prawns and prawn flies (or fingerlings)

There is huge demand in the China local markets for both prawns (live and frozen) (tens of millions MT/year) and prawns flies (hundreds of billion pieces/year), and their wholesale price is very seasonal (i.e. small sized prawns counting from 80 to 100 pieces per kg vary from US$2/kg during heavy supply season (July to October) to US$7/kg during short-supply season (November to June). Large sized prawns counting from 10 to 15 pieces/Kg vary from US$8/kg to US$24/kg during said respective seasons....

Management is targeting to generate upwards of US $10M in prawn flies sales revenue supplied by this farm in 2012.

But when you asked me what my estimations for PF2 sales was for 2012, I was hesitant at even quoting $1M due to the small sales amounts they reported for Q1 and Q2. I realized however once they reach full production target for Phase 1 of 5 Bill prawn flies (say a mix of lower and higher priced species), the sales could easily reach $20M/yr. But that was Phase 1 with only 5 Bill flies. Now in Phase 2 they have added another hatch station with an additional capacity of 10B prawn flies (although the addendum in Q2-10Q quoted only 1B, probably a typo IMO). So alone the prawn flies would eventually generate 15 x 4M = 60M per year at full capacity.

Phase 2 of the development is being carried out on an adjacent block of land measuring to 200 Mu (or 132,000 square meters). Construction began in May of 2012 on the following:
· 8 in house APM prawn grow-out tanks (situated on 20 Mu);
· On 50 Mu,10 open dams (2 Mu/dam) connected with RAS filtration systems using the APM technology and systems;
· An additional in house (2,000 square meter) APM system hatchery that will have the capacity to produce up to 10 billion flies per year;

There is also prospective sales of grown-out prawn, from small to large size prawn, averaging about $15/kg. We just donot know the production capacity of these but I think they can certainly generate at least an equal amount of sales as the prawn flies ($60M) if raised in large quantities, either in the 8 huge grow-out tanks or in the 10 open ponds. As RD pointed out, if they invest more time and money into quadrupling the size of the initial PF2 project, the intention is certainly to achieve a much higher revenue although we donot have sufficient info at this point. So I wouldn't eliminate the possibility of higher annual PF2 revenue than say $100M.

I intend to send Chad another email to find out what the intentions are with the different facilities at the new PF2 before revising my rev estimates for PF2. Or maybe you know what will be grown in the grow-out tanks and the open ponds, flies or prawns?