News and Press Releases

Sino Agro Food, Inc. Reports Q3 2017 Results

Revenue of USD 48.4M; EPS of USD .15

Nov 14, 2017

November 14, 2017

GUANGZHOU, China-- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), also referred to as “SIAF” or the “Company,” an agricultural technology company focused on protein food including seafood and cattle, announces results for the quarter ending September 30, 2017.


Results reflect the carve-out of aquaculture operations announced March 2, 2017. Income from Sino Agro’s interest in the carved-out company, Tri-Way Industries Ltd. is reported as “income on investment.”  Revenue from the sale of goods from the former aquaculture business segment is no longer reported.

Excluding discontinued aquaculture revenue from Q3 2016, revenue from the sale of goods decreased USD 42.8M, or 48.5%, to USD 45.4M for the quarter ended September 30, 2017 year over year (“YoY”). Contrasted to Q2 2017, revenue from the sale of goods decreased USD 2.5M or 5%.

Compared to Q2 2017, total revenue increased USD 0.7M or 1.5% to USD 48.4M, including project development revenue of USD 3.0M versus no revenue in the prior quarter.


The underlying conditions impacting performance in the second quarter continued in the third quarter, namely:

  • Sale of goods in the aquaculture sector is discontinued, having been replaced by a single income line item below the net income from continuing operations.
  • Tri-way has restricted capital expenditure for purposes of expanding production capacity and sales until it has successfully sourced third party funding.
  • Depressed pricing for the local cattle and beef industry brought on by relaxed import restrictions first from Australia and then the U.S. and Brazil has had a deleterious effect not only on SIAF subsidiaries’ live cattle sales and gross margins, but also on upstream and downstream revenue sources: livestock feed, fertilizer, and deboning of imported beef.


As a result, gross profits declined on a year over year basis from USD 30.2M to USD 6.5M. The Company has adapted to these segment specific conditions by restricting its capital expenditures, reducing general and administrative expenses, and tailoring product mix to products with reasonable, albeit lowered, gross margins.

Other Key Points

  • Q3 2017 income from investment was USD 1.4M. This figure is based on its current 23.89% equity interest in Tri-way, prior to the effective one-year anniversary date (October 5, 2017) when SIAF is permitted to exercise its option to convert Tri-way's USD 41M in outstanding debt into equity interest of 12.71%; equivalent to 12.7M common shares of Tri-way, currently registered in HK and available for transfer upon SIAF's instruction to exercise its option.
  • As of September 30 2017, the Company had net working capital of USD 315.4M, a quarterly increase of USD 1.5M.
  • Stockholders’ equity increased in the quarter by USD 6.4M to USD 636.3M.


Sequential Comparison

The Company achieved the following results, comparing the third quarter of 2017 to the second quarter of 2017:


(USD M, except per share and margin data)

Q3 ‘17

Q2 ‘17






Gross Profit




Gross Profit Margin




Earnings Per Diluted Share (FD) (USD) – from continuing and discontinued operations





The following table breaks out revenue by business segment, comparing the third quarter of 2017 to the second quarter of 2017:


Revenue (USD M)

Q3 '17

Q2 '17


Integrated Cattle Farm (SJAP)




Organic Fertilizer (HSA)




Cattle Farms (MEIJI)




Plantation (JHST)




Seafood & Meat Trading




Sale of Goods Total








Project Development Total




Group total






Integrated Cattle (SJAP)

Gross profit for the Integrated Cattle segment totaled USD 2.0M, a 54% decline from Q3 2016, and a 14% decline from Q2 2017. Fertilizer, and bulk and concentrated livestock feed contributed USD 1.9M or almost 95% of gross profit.

The cattle market has endured depressed pricing for well over 12 months. The Company had already dramatically reduced the sale of live domestic cattle due to unprofitable conditions. Continuing increased competition in the third quarter had a materially negative impact on gross margins, filtering through to deboning and packaging, as competitive pricing for the final products became increasingly challenged. During the quarter, gross margin for the deboning of imported beef deteriorated to the unsustainable level of 2.8%. In addition, the Central Government has instituted new environmental regulations that would require significant additional capital expenditure at SJAP. For these reasons, SJAP management has suspended QZH’s abattoir operations until an effective solution can be found, likely deriving from either a marked turnaround in market forces or government policies to stimulate domestic beef production and local value-added processing.

The local government realizes the serious situation the cattle industry faces in the region, and is looking at various options to assist, while waiting and working with the Central Government to produce a concrete revitalized plan to rebuild the industry.

As reported last quarter, SJAP’s plan in the interim is to:

  • Restrict capital spending and to reserve its cash as much as possible to buy enough time while working through the interim planning process until the Central and Local Government’s revitalization plan is adopted and implemented.
  • Continue limiting operations of the adversely affected aspects of its business.
  • Continue discussions with other operators in wholesaling, logistics, value-added processing, general trading, etc. to negotiate an overall plan/solution in line with the government’s strategic plan.


As previously noted, decisions are to be governed by stricter discipline on return on capital employed (“ROCE”) in support of SJAP’s advised carve-out and spinoff plans.

SJAP is fortunate to enjoy excellent working relationships with various government agencies. These private company/state agency relationships are perhaps more important in China than in western countries. For instance, SJAP has successfully created a local cooperative farmer network that has mutually benefited both parties for many years.  Indeed, it is still viable; despite the influx of highly competitive imported beef due to relaxed import restrictions.

Government agencies recognize the mutual benefit of public/private cooperation. Support for the beef industry awaits a full assessment of forces to determine market equilibrium, before likely indicating a proper and effective stimulation to be supplied to local markets in the interest of all parties.

The Company continues to work through these challenges yet cannot provide a timeframe on when or if these endeavors will provide a successful return or outcome.

Organic Fertilizer (HSA)

Production and sales of organic fertilizer increased 69% to 6,082 MT; however, unit prices dropped from USD 245/MT to USD 153/MT YoY. Sales of organic mixed fertilizer declined 82% to 1,796 MT, due in part to the production plant being retrofitted during the quarter. Unit prices declined 5% to USD 412/MT. These factors led to an 80% YoY decline in gross profit to USD 440K. Nonetheless, while abiding the policy not to incur additional capital expenditures until self-generated cash flows allow, gross profit of USD 440K represented a sequential increase of greater than 100% over Q2.

With the organic mixed production plant available for full utilization, the Company expects a return to productive operation levels.

Cattle Farms (MEIJI)

Improved cost efficiency led to a 78% increase in YoY gross profit to nearly USD 1M. Improved performance continued from the previous quarter’s similar gross profit due to the competitiveness and market acceptance of locally bred “Yellow Cattle.”

Plantation  (JHST)

Revenue and gross profit suffered from a poor quality of flowers due to root diseases caused by years of excessive rain. While gross profit of USD 238K declined YoY by 94%, it was almost a 100% improvement over Q2, indicating the start of remediation results.

JHST is experimenting with a variety of crops that may prove less susceptible to the vagaries of weather in Guangdong province, as well as new processes designed to mitigate the same issues. During the quarter an experimental crop of Passion Fruit had a good reception with reasonable and stable prices. The Company plans to improve the yield per acre while targeting 100 acres for commercial production in the spring of 2018. In addition, Immortal Fruit has attracted the interest of a health plant and operator. The Company plans to repackage this product, aiming to launch sales programs to meet next season’s commercial harvests beginning in the spring of 2018.

The Company anticipates that these changes will accelerate the sales results toward 2016 results, with less dependence on fair weather.

Seafood and Meat Trading  (Corporate)

Gross profit declined 35% YoY (14% QoQ) to USD 1.7M, on a 33% decrease in revenue, stemming from the Company’s decision to trade selective products with reliable profit margins.

The Company is increasing import sales on quality Wagyu beef from Australia with support from reliable producers and suppliers that have granted the Company exclusive distribution rights. Imported Wagyu beef carries a higher profit margin, and has seen increasing market acceptance in China.

Engineering Technology, Consulting and Services (Project Development)

Revenue and profit from this segment is not expected to return to precedent levels until cash flow helping to finance capital expenditures are available to carry out Tri-way’s fishery development and Vigor’s wholesale development. Meanwhile, during Q3 Tri-way funded necessary development work from cash flow resources totaling USD 3.0M after having curtailed any development during Q2.

In the interim, Capital Award (“CA”) has continued to explore opportunities in Asia (e.g., India, Vietnam, Indonesia, Malaysia and other countries), having been introduced to interested parties during the quarter. CA aims to expand its segment operations in technology transfer, related consulting services, and plant and equipment development outside of China, while simultaneously developing mutually beneficial partnerships with other aquaculture technology companies, as demonstrated by the recent MOU signed with Utah, USA based CibusDx.

CEO Commentary

Mr. Solomon Lee, CEO of Sino Agro Food, commented, “Our year over year results continued to reflect the impact of increased competition from imported beef on the local beef raising industry, as well as the marked decrease in aquaculture sales that are no longer conducted by the Company, but rather by its investee, Tri-way Industries. However, we are pleased to see a leveling off in the revenue decline, with total sales of USD 48.4 million in Q3 2017, (versus USD 47.7 million in Q2 2017) and gross profit of USD 6.5 million in Q3 2017, consistent with Q2 2017.

“Even though an immediate solution for SJAP is not expected, we are hopeful that one materializes in the near future since SJAP’s business is directly associated with the livelihood of thousands of farmers. It is a major concern and responsibility of the Government to secure an ultimate and practical solution for the farmers, with SJAP available to assist when it can do so profitably.

“Under current circumstances, we believe our most significant growth opportunities will come from:

  • Tri-Way, which is focused on ramping up its seafood production for domestic sales, and on utilizing its marketing network and global connections to increase sales on imported frozen seafood into China. As such, we are confident that the pace of revenue growth will rapidly accelerate once Tri-way secures adequate debt financing. The process to secure this funding has made significant progress, the details of which will be made public once the funding is secured and its closing in place.
  • Import sales of high grade quality meats (i.e., Wagyu beef with higher overall margins) will continue to improve, achieving better performance as we secure additional high quality products from new reputable suppliers and from loyal, consistent customers.


“Adjusting to the current spectrum of external agricultural market conditions, we are pleased to have achieved USD 0.15 earnings per share during the third quarter, a meaningful improvement compared with USD 0.03 in Q2 2017. This result is a testimony to our agility to execute even under unfavorable conditions, establishing a positive baseline for improved results, when external conditions return to more ‘normal’ levels.

“We continue to believe that there is a major opportunity to capitalize on the growth of China’s economy as the disposable income of China’s middle class continues to rise, leading to an increasing demand for premium seafood. We will continue to tailor our strategy to leverage this growth, mindful of the shorter term macro trends affecting agriculture in China, while Tri-way continues its efforts to secure financing to accelerate production expansion.

“During the quarter we also continued several initiatives aimed at improving financial discipline across the business to support a sustainable and cost-efficient business model, such as concentrating on increasing free cash flow at Tri-way by optimizing operations at each aquafarm in terms of product mix and APRAS performance, and retrofitting HSA’s second production plant’s fertilizer processor to allow for better cost savings in raw material.

“I would like to again thank our loyal shareholders as we implement these steps and work through this transition period toward building long-term value at the Company, while at the same time, continuing with positive momentum on our carve-out and spinoff strategies.”

Q3 2017 Interim Report

For detailed segment operational performance and developments, please take the time to read our latest 10-Q filing, or refer to the Q3 2017 Interim Report posted to the Company website at

Earnings Call Information

The Company will host an earnings call on Friday, December 8, 2017 at 10:00 AM EDT/4:00 PM CET to discuss quarterly financial results.

Please submit questions by email to These will be organized and answered on the call.

To listen to the conference call please use the following information:


SIAF Q3 2017 Results Call Information

Date: December 8, 2017

Time: 10:00 AM, EDT/16:00 PM CET

Participant Dialing Instructions:

SE:       +46 8 5059 63 06

UK:      +44 203 139 48 30

NO:      +47 23 50 05 59

CN:      +86 400 681 54 21

US:      + 1 (866) 928-7517




Conference PIN code: 80849742#

The earnings call will also be available over the web.

To access, click the following link: Sino Agro Q3 2017 Earnings Call




About Sino Agro Food, Inc.

SIAF is an agricultural technology company focused on protein food. The Company produces, distributes, markets, and sells sustainable seafood and beef to the rapidly growing middle class in China. Activities also include production of organic fertilizer and produce. SIAF is a global leader in developing land based recirculating aquaculture systems (“RAS”), and with its partners is the world's largest producer of sustainable RAS prawns.

Founded in 2006 and headquartered in Guangzhou, the Company had over 550 employees and revenue of USD 343 million in 2016. Operations are located in Guangdong, Qinghai, and Hunan provinces, and in Shanghai.  Sino Agro Food is a public company listed on OTCQX U.S. Premier in the United States and on the Oslo Børs’ Merkur Market in Norway.

News and updates about Sino Agro Food, Inc., including key information, are published on the Company’s website (, the Company’s Facebook page (, and on twitter @SinoAgroFood.


Forward Looking Statements

This release may contain forward-looking statements relating to the business of SIAF and its subsidiary companies. All statements other than historical facts are forward-looking statements, which can be identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions. These statements involve risks and uncertainties that may cause actual results to differ materially from those anticipated, believed, estimated or expected. These risks and uncertainties are described in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are based on SIAF’s current expectations and beliefs concerning future developments and their potential effects on SIAF. There is no assurance that future developments affecting SIAF will be those anticipated by SIAF. 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 required under applicable securities laws.


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