News and Press Releases

Recent Developments

Mar 8, 2020

Sino Agro Food, Inc. (“SIAF”) has undertaken a review of its businesses and corporate initiatives for 2020. The Company wishes to communicate actions, conclusions, and aims for each business and some other external factors in this web post and others to follow shortly.

In general, the Company has restructured its businesses and business plans to concentrate on prospects with the most promise while de-risking other areas. The Company has disengaged business operations in several subsidiaries, as follows:

1.    After having discontinued the abattoir division (QZH value added products) and strictly scaling back cattle rearing, SIAF has now contracted out remaining operations to SJAP’s management. This guarantees a contracting fee of USD 2.75M annually.

2.     HSA’s income is now derived by leasing its properties and by subcontracting its fertilizer activities to a third party, generating expected annual net income of USD 1.2M.

3.   As part of a strategy to exit the cattle business, SIAF has contracted its Cattle Farm 1 business (MEIJI) to local management in exchange for 36% of gross profits, representing a minimum return of USD 1.3M annually.

4.     Income from the HU Plantation (JHST) currently comes from leasing land which generates an annual profit of approximately USD .5M.

These initiatives generate improved cash immediately. The leasing and contracting revenues total approximately USD 6.5 M and generate income of approximately USD 3 M after deducting value added taxes (income no longer qualifies as agricultural) and administrative and property management and security expenses. This represents a turnaround improvement from a net operational loss of USDC 2.8 M derived from SJAP, HSA and JHST in 2019. 

Meanwhile SIAF will concentrate its efforts on its remaining businesses. 

•  Corporate Division – import export: This business generated revenue of USD 65.9M and net income of USD 13.2 M in 2019. This reflected an excellent return as limited overall supply of some imported seafood sold at premium prices, producing higher margins than the 12.5% the Company targets.

The Company expects moderate natural growth for this business in 2020, which could be augmented, perhaps to a large extent, pending the potential successful raising of dedicated debt or undedicated equity funding.

•  Capital Award – Capital Award (“CW”) is a wholly owned subsidiary whose Fishery Division provides engineering and consulting contracting services to develop indoor and outdoor aquaculture systems using SIAF’s proprietary recirculating technology (APRAS). Building new aquafarms internally has been tabled in favor of restricting capital development to smaller retrofitting projects since Tri-way Industries, Ltd. (“TW”) took over existing aquafarms. On-going poor performance at aquafarms 4 and 5 contributed to this decision after having depleted net working capital and net cash flow.

However, the Company plans to expand CA’s project development globally starting in 2020. CA is still in negotiation with two global companies to develop aquaculture projects, one in Malaysia and the other in India. The Company will announce details, if and when either project’s contract is executed.

Tentatively, SIAF forecasts that Tri-way’s primary fishery operation will require facility renovation generating approximately USD 8M in revenue and USD 2.5M net income for CA in 2020.

SIAF will communicate plans for Tri-way’s businesses – primary seafood production and trading — in a separate web post to follow shortly.

Coronavirus Disease

The Johns Hopkins Center for Systems Science and Engineering created and regularly updates an online dashboard for tracking the worldwide spread of the coronavirus outbreak. Johns Hopkins reports that quite recently the number of new cases of COVID-19 coronavirus in China has dropped to 100–200 per day, while the number of completely recovered patients has increased to 2,000 +/- per day. Sino Agro Food’s headquarters is in Guangdong province, whose population is 113 million. Guangdong has had 1,351 confirmed cases of corona virus, with 163 currently existing. 1181 have recovered and 9 have died.

The good news is that none of our workers has been infected by the virus; however, most of our direct and contracted workers have been on an extended break since late January. At that time China extended the weeklong Lunar New Year into mid-February and limited travel within China and internationally. As of 25 February 2020, only about a quarter of the farm workers were back to work. As of 4 March 2020, more than 3/4 of farm employees have returned to work. The Company expects all farm workers will be back within the next two to three weeks when all transportation will be available. All office workers are expected by next week.

The closing of many restaurants, shops, transportation and catering facilities have impacted Tri-way’s primary production and sales activities seriously. The Company anticipates that all production cycles and sequences may be disrupted for the next three months to six months depending on how quickly the overall consumer markets return to normal. It is too early to predict the exact damages, as the business and markets are dependent on government policies during this crisis.

With respect to trial shipments of the newly expanded import trades, we have been able to delay most of the shipments and related inspection work. However, there are five sea containers of chicken products from Brazil currently caught up at the Shenzhen Port waiting for custom clearance. In time, custom departments and seaports will clear out congested back ordered cargoes and air transportations will return to normal frequency. The Company estimates that its development progress on import trading may be delayed between eight to ten weeks in total. This means we expect throughput to be reestablished by the end of March and to regain normal flow by the middle of May, subject to remaining but declining uncertainties.

In real terms, we don’t expect to suffer any financial losses from the rental and contracting income derived from our other segments (i.e. SJAP, HSA, JHST and MEIJI). However, it is expected that respective contractors will suffer financial losses.

Lawsuit Dismissed

The Company has defended a shareholder derivative litigation: Case#1:19-CV-026080-JMF filed at the Southern District Court of New York. On December 23, 2019, the Plaintiffs (Arne Fredly, Heng Ren Silk Road Investments LLC, and Heng Ren Investments LP) and their counsel have voluntary dismissed the case. On March 4, 2020, the court ordered the parties to submit a joint plan contemplating the issuance of the notice of the proposed voluntary dismissal of the Action to SIAF shareholders. The Company intends to comply with the order and issue the proper notice to shareholders in due course.