Replies to post #37666 on Sino Agro Food Inc (fka SIAF)

[viking86]

RD: I agree with Orreborren that net margin is 29%. While gross profit(ability) only reflects Cost of Goods and doesnt change with who owns what % of the business (controlling interests), net profit or net margin does IMO b/c it reflects all the other costs of doing business including that of paying some of the profit to the controlling interests. As a shareholder, I Donot really care about the absolute profitability at the "gross margin" level. I only care about what me as the s/h gets "paid". In other words, even if the gross margin is huge (say 90%) but the business is 99% owned by non-shareholders, we as s/h get quasi zero net profit. That's how I have calculated the net margin all the time (Net of controlling interests).

The reason why NM is so low this quarter ( and from now on IMO) is ( besides the lower price of sleepy cod) b/c many projects that are co- owned by JV partners start now to show a profit including the wholesale centers and the fertilizer segment. In the past, most of the profits came from the service rev (100% for us) and from FF1 of which we currently own 75%.

[Orreborren]

Two things:

Firstly, it seems we interpret "non-controlling interest" differently. I believed this cash stream is what SIAF has to pay their JV partners from the result of product sales, in accordance with their percentage stake in the JV. Earlier when revenues were largely licence fees and other non product sales revenues, there were virtually no costs for "non-controlling interest". With an increasing share of product sales, this negative cash stream will increase.

In other words, I do not think that "non-controlling interest" is the cost of increasing SIAF's stake in the JV's. But please prove me wrong...

Secondly, I continuously talk about net margin, and you keep coming back talking about gross margin. And I get confused when you refer to page 15, cause it does not talk about gross numbers (like you do) and it clearly shows that the net margin is 29,7%

Revenue: 55.107.751
Net income: 16.378.772
Net margin= net income/revenue = 29,7%

Or do I get it wrong?