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2014

Sino Agro Food, Inc. Announces Updates on Key Developments and Reports Progress on its 5-Year Plan

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GUANGZHOU, China, March 5, 2013 /PRNewswire/ -- Sino Agro Food, Inc. (SIAF), an emerging integrated, diversified agriculture technology and organic food company (the "Company") with principal operations located throughout the People's Republic of China ("PRC") is pleased to report progress on company operations and developments.

Change in Financing Structure

In the past, SIAF has funded its many capital development projects with income from operations, grants from the Chinese government, and equity financing. As addressed later in this letter, in recent years, the company has achieved outstanding growth resulting in triple digit revenue growth and broadly advancing earnings per share.

For FY2012, management anticipates meeting or exceeding its annual guidance of US$.68 per basic share, which the Company attributes to its operational and financing growth strategies. The Company looks forward to reporting audited results in the coming weeks including Management's Discussion and Analysis along with detailed operational results for each segment of its business.

It has been the company's target to limit incremental financing as a percent of total capital expenditures to 10% - 15%.  However, the company recognizes that in 2012 this funding required the issuance of more shares than it had anticipated, due to a low share price.

Management believes that further significant growth prospects remain ahead for the Company, and that the prospective listing in Sweden will open alternative means for financing beyond those used to date. The Company has begun investigation into these possibilities. These include raising credit lines at the subsidiary level, debt financing or hybrid debt/equity financing at the parent level, and private placement or registration of shares at a price calculated within fair values of our current Net Tangible Assets.

While equity financing remains a viable engine to fund growth over and above capital developments financed by income from operations, Management will pursue any and all financing alternatives on an opportunistic basis, striving to employ methods most accretive to its fiscal health and bottom-line.

Update on First North Listing

The Company is in the process of cross listing to the NASDAQ-OMX First North Stockholm (FN) exchange in Sweden subject to final legal due diligence, multiple third party participation and review, and application approval.

The process is moving along well, with every indication of a successful listing; however, it is not plausible to project a number of days until cross listing. What the Company can and will do is inform shareholders whenever concrete information toward cross listing is available, and a time certain once all parameters have been met and the green light is received to move forward, and/or a date certain is established.

Since the last update, some professional third parties involved in the process have commented about ensuring adequate time to complete their trusted responsibilities. FN typically requires eight (8) trading days to review the Company Description, and approval may or may not be subject to further comments or questions requiring additional time.

For those interested in on-going updates to this process and other company communication, please register for investor alerts:

http://sinoagrofood.investorroom.com/alerts

Progress on 5-Year Plan
January 1, 2010 through September 30, 2012

Operations

In 2010, SIAF embarked upon a five-year plan to bring modern and proprietary agricultural technologies to a burgeoning market in China for organic food product.

SIAF is a consulting, engineering and technology based company in agriculture and aquaculture with a vertically integrated niche business model.  SIAF develops, produces and distributes high quality, high margin organic agriculture and aquaculture produce and products through well-established operating subsidiaries with a positive track record in China.

Management believes SIAF can substantially increase revenues, net income and gross margins having implemented a growth strategy that focuses on:

  1. Vertically integrated developments in its fishery and beef sectors to bring primary produce and products directly from farms to the end consumers; and
  2. Marketing its brands of high quality, healthy, natural and organic produce and products to the right markets, at the right price, and at the right time.  

Key to the plan is the ongoing integration of down stream, middle stream, and upstream activities into full modules across all fishery and beef operations. 

Downstream sample activities


  • Establishing Research and Development and Facilities for breeding and nurturing particular species of fish (i.e. Sleepy Cods) and prawns (i.e. Green Prawns) that can be readily grown in our Recirculation Aquaculture System (RAS) on a commercial scale with high economic efficiencies under controlled, chemical free conditions and with management systems that avoid seasonal fluctuations and unfriendly environmental impact.  
  • Securing the sources of supplies of young cattle (averaging from 6 to 12 months old) suitable to be grown (I) in our indoor farms developed by SJYL at Huangyuan, Xining operation and by HSYLA at Hunan, Linli operation and (II) in our free-range cattle farms developed by HMCF and MEIJI at Enping, Guangdong. 
  • Developing and educating manufacturers and suppliers to supply a range of equipment, parts and components: (I) to assemble our designed biological filtration, solid wastes filtration, disinfection and disease illumination chambers and heat exchange units in our RAS farms; and (II) to be installed in our indoor cattle farms with suitable feed-lots and drinking water chains and heating units etc.
  • Developing a team of personnel to liaise with Government officials and to promote our projects to the Government agencies; likewise, to promote our businesses to the local farmers, logistic operators, building contractors and investors such that we can develop our farming cooperatives, social responsibility initiatives and our farms and associated facilities synergistically, and to the benefit of all constituents.
  • Establishing Research and Development to continually improve our RAS technology with yield efficiencies for better economies of scale.

Middle stream sample activities


  • Construct and develop the business operations of RAS fish and prawn grow-out farms and related hatchery and nursery farms for economies of scale
  • The Cattle and Beef sector involves the following:


i. Construct and develop business operations to manufacture organic fertilizer



ii. Construct and develop business operations to manufacture mixed fertilizer



iii. Cultivate and plant crops and pasture to supply raw materials for the manufacture of live-stock bulk feed



iv. Develop facilities and business operations to manufacture live-stock bulk feed



v. Construct and develop business operations for indoor cattle farms



vi. Develop farming cooperatives



vii. Cultivate crops and pastures; construct and develop business operations of the free range cattle farms



viii. Establish research and development facilities to produce Enzymes that SJYL invented or bought for application to bulk and concentrated live-stock feeds for cattle, sheep and potentially fish, prawns, ducks and geese



ix. Construct and develop business operations and facilities to manufacture Enzymes


  • Construct and develop associated facilities to achieve environmental friendly conditions in all operations
  • Train and develop human resources suitable for our vertically integrated group of businesses

Upstream sample activities


  • The marketing and distribution network involves the following:


(i) Construct and develop business operations for wholesale distribution centers



(ii) Construct facilities and develop business operations for the storing and distribution of live, freshly chilled and frozen seafood



(iii) Construct facilities and develop business operations for the storing and distribution of freshly chilled and frozen beef and beef products.



(iv) Develop brands, labels and business operations for a franchising network



(v) Develop business operations for import and export trading to high yielding markets



(vi) Develop logistics and transporting networks for the delivery of our goods.



(vii) Construct facilities and develop business operations for the retailing operations covering:



(vii a) Chains of health food retailing markets and stores in China



(vii b) Chain of dinner style restaurants providing gourmet style cuisine



(vii c) Food store outlets



(vii d) Central kitchens



(vii e) Central storage facilities



  • Value added processing networks involve the following:


(i) Partner with local value added processors to supplement our fish and prawn product line, and to accelerate sales growth



(ii) On the beef and cattle sector, at SJYL:



(ii a) Construct and develop business operations for a slaughterhouse



(ii b) Construct and develop business operations for a deboning facility



(ii c) Construct and develop business operations for a value added factory for beef products



  • Environmental issues and the treatment of and recycling of cattle wastes entail the following:


(i) Develop mash gas stations at SJYL and HSYLA to generate electricity from the fermentation process of cattle waste with the residue to be used as raw material to manufacture our organic fertilizer



(ii) Develop septic systems to recycle the fermented cattle waste back to the pasture growing fields



(iii) Manufacture liquid fertilizer using the fishery wastes

Downstream and midstream activities have been developed over the past years and are combining to generate healthy income. The table below shows the schedule for major company developments and related operational revenues being generated from 2010 to 2012:

#

Income generating activity

Construction period

Revenue commencing

1

Manufacturing of organic Fertilizer (at SJYL)

 

May 2009 to October 2010

March 2010

2

Bulk Live-stock feed manufacturing (at SJYL)

 

May 2010 to October 2011

July 2011

3

Indoor Cattle fattening houses (10 lots) at (SJYL)

Works in progress for another 19 lots

 

January 2010 to present with continuing developments.

 

Cattle sales commenced March 2011

4

Local farm cooperative (at SJYL).Local farmers grow cattle for SJYL using our proprietary livestock feed. The local Government has planned and started construction on more cattle-fattening houses using our farm building technology for said farmers.

 

January 2010 to present with continuing developments

As of 31.12.2012 over 80 farmers have joined the cooperative with projections to grow over 3,500 head of cattle/year

5

Cultivation, cropping and pasturing of land (at SJYL).  As of 31.12.2012, the local Government has committed rental-free land for up to 5,000 acres for the local farmers to grow crops & pasture for SJYL

January 2010 to present with continuing developments

As of 31.12.2012, the pasture growers & farmers of the cooperative have increased their incomes an average of RMB4, 000 / acre / year. 

6

Manufacturing of concentrated live-stock feed (at SJYL)

 

June 2012 to January 2013

Production started end of January 2013.

 

7

Organic and mixed fertilizer manufacturing (at HSYLA)

 

August 2011 to present with continuing developments and 1st production plant completed in January 2013.

 

Trading of fertilizer started June 2012 and production of fertilizer from Production plant (1) commenced from end January 2013.

8

Fish Farm (1) (at JAFP)

September 2010 to August 2011

Production started May 2011

 

9

Prawn Farm (2) (at ZSAPP, with the related SJVC has not been formalized as of 31.01.2013)

 

 January 2012 to present with Phase 2 work continuing.

Production started May 2012 from Phase (1)'s developments.

10

Prawn Farm (1) (at EAPPC, with the related SJVC has not been formalized as of 31.01.2013)

 

June 2011 to January 2013

Expecting production to start in March 2013

11

Cattle Farm (1) (at HMCF)

 

March 2011 to Present with continuing developments.

 

Sales of cattle started in March 2012 and expecting full capacity to be reached by end of 2013.

 

12

Open Dam Fish Farm (at Gao Aquaculture)

March 2011 to present with continuing developments

Sales of fish started March 2012

In addition, during 2012 the Company commenced upstream activities for the distribution of its fish and beef products and import-export of its own and auxiliary products. SIAF also began involvement in the development and operations of two restaurant chains ("Leonie's" and "Bull"), including a central kitchen and other associated activities. As well, 2012 saw development and operation commence for both seafood and beef wholesale markets. The Company intends to inform shareholders of respective work in progress through newsletters, website updates, or SEC filings consistently throughout 2013.

As these activities are further developed into fully integrated modules, the synergies between pre-wholesale, wholesale, distribution, and retail business operations accrue incremental benefits.

This is the essence of our capital development growth strategies generating accretive financial results.

Financial Results

SIAF continues to track to plan both its capital development progress and financial performance. Through September 30, 2012, SIAF has achieved the growth rates shown below:

Financial Summary Highlights

(Performance derived from the 5 year Growth Plan)



Full year

2010

 

 

Audited

Full year

2011

 

 

Audited

Growth rate

Full Year

2010 to

2011

9 months to

Sept. 2011

 

 

Audited

9 months to

 Sept. 2012

 

 

Reviewed

Growth rate

(9 months)

Sept. 2012

vs.

(9 months)

Sept. 2011

Growth rate

(9 months)

Sept. 2012

vs.

(full year)

2011









$

$


$

$



Revenue









Continued

10,918,766

51,879,903

375%

30,527,367

89,678,991

194%

73%


Discontinued

10,195,864

-


-

-




Total

21,114,630

51,879,903

146%

30,527,367

89,678,991

194%

73%

Net Income









Continued

8,500,822

25,894,983

205%

20,399,815

38,686,788

90%

49%


Discontinued

10,203,951

-


-

-




Total

18,704,773

25,894,983

38%

20,399,815

38,686,788

90%

49%

Basic EPS









Continued

-0.05

0.43

960%

0.34

0.51

50%

19%


Discontinued

0.21

-


-

-




Total

0.16

0.43

169%

0.34

0.51

50%

19%

Diluted EPS









Continued

-0.05

0.39

880%

0.31

0.47

52%

21%


Discontinued

0.19

-


-

-




Total

0.14

0.39

179%

0.31

0.47

52%

21%

NTA

101,051,881

135,395,373

34%

121,662,272

191,997,551

58%

42%

NTA/S (Diluted)

1.65

2.02

22%

1.83

2.10

14.9%

4%

WAOS (Dil)

61,223,823

67,158,210

10%

66,542,620

75,676,204

14%

13%

Equity + Min Interest

101,051,881

135,395,373

34%

121,662,272

191,997,551

58%

42%

Equity/Share

1.65

2.02

22%

1.83

2.10

14.9%

4%

Since SIAF started its growth plan from January 2010, the yearly growth rates on equity per share have been 21%, 22% and 23% in 2010, 2011 and 2012, respectively. In absolute dollars, the increases in both revenue and net earnings year over year in 2012 exceeded that for 2010 and 2011, combined.

Management is confident that the overall financial performance of the Company achieved in 2012 has sufficiently compensated for the increase of issued and outstanding shares.

To date, the Directors have retired 18.4M of personal common shares to maintain healthy growth in NTA and EPS per share. If these metrics had not performed as well in 2012 (e.g. EPS growth of 69%), the Directors were prepared to retire an additional 6M shares. SIAF's Directors remain willing to retire up to 6M of personal holdings if future circumstances dictate.

The table below compares the achieved growth rates with those an analysis shows would have been achieved had the Company not implemented its financing and growth strategies. The analysis assumes that after the Company had sold the dairy business, normal developments in our HU Plantation and Fishery business maintained a growth rate of 25% per year.

Accretion to the shareholders
(comparison of financial performance with and without 5-year growth plan)



Full year

Full year

1st 9 months



2010

2011

2012



Audited

Audited

Reviewed



$

$

$

Performances with the Growth Plan





EPS

0.14

0.39

0.47


NTA / share

1.65

2.02

2.10


Return of Investment on Equity

18.51%

19.13%

20.15%






Performances without the Growth Plan





EPS

0.07

0.08

0.083


NTA / share

1.60

1.47

1.486


Return of Investment on Equity

4.43%

5.25%

6.03%






Accretion to the shareholders





EPS

0.07

0.31

0.387


NTA / share

0.05

0.55

0.925


Return of Investment on Equity

14.08%

13.88%

14.12%

Actual performances of accretion to our shareholders evidence clearly the merit of our growth plan that has set SIAF's long term goals and prospects with strong fundamentals. Management is optimistic that the synergies between down, middle, and upstream processes will continue to advance as the remainder of the five-year plan is carried out.

The immediate horizon presents exciting new options and alternatives for cross-listing, continued growth, and financing capital development. Management looks forward to taking advantage of these opportunities in the best interest of the Company and its shareholders.

Over the coming year Management intends to provide new mid-quarterly updates of this nature either as press releases or in conjunction with enhancements and more frequent updates to its website and Facebook page.

I anticipate accelerated progress, and marked developments occurring throughout 2013.  Both the 10-K and its accompanying Investor Presentation will provide greater detail on what the Company anticipates in numbers (i.e. guidance) for this year.

The Company is ramping up in accordance with its five-year plan, and in some areas, exceeding original expectations.  As a fellow shareholder I am quite pleased with its development.  With ongoing improvements I remain confident that the Company has a solid and improving foundation to enhance its overall performance beneficial to all shareholders.

Solomon Lee

CEO, Sino Agro Food, Inc.

ABOUT SINO AGRO FOOD, INC.

Sino Agro Food, Inc. ("SIAF") (http://www.sinoagrofood.com) is an integrated, diversified agricultural technology and organic food company focused on developing, producing and distributing agricultural products in the Peoples Republic of China. The Company intends to focus on meeting the increasing demand of China's rising middle class for gourmet and high-quality food items. Current lines of business include the manufacture and distribution of beef and lamb products, fish products, bio-organic fertilizer, stock feed and cash crops.

Not a Broker/Dealer or Financial Advisor

Sino Agro Food, Inc. is not a Registered Broker/Dealer or a Financial Advisor, nor does it hold itself out to be a Registered Broker/Dealer or Financial Advisor. All material presented in this press release, on the Company's website or other media is not to be regarded as investment advice and is only for informative purposes. Readers should verify all claims and conduct their own due diligence before investing in Sino Agro Food, Inc.

Investing in small-cap, micro cap and penny stock securities is speculative and carries a high degree of risk.

No Offer of Securities

None of the information featured in this press release constitutes an offer or solicitation to purchase or to sell any securities of Sino Agro Food, Inc.

FORWARD LOOKING STATEMENTS

This release contains certain "forward-looking statements" relating to the business of SIAF and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "estimates," "believes," "anticipates," "intends," expects" and similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on SIAF's current expectations and beliefs concerning future developments and their potential effects on SIAF. There can be no assurance that future developments affecting SIAF will be those anticipated by SIAF. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. SIAF undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

SOURCE Sino Agro Food, Inc.



RELATED LINKS
http://www.sinoagrofood.com

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