SIAF: One Medium-Rare Penny Stock that Pays Dividends

Shares in Sino Agro Food Inc. (OTC: SIAF) should see some better than average volume in the upcoming trading session after reporting Q1 earnings late on Friday. SIAF stock, which ran from $0.361 on December 19th to $1.05 on April 3rd, a 190.86% gain, traded within a wide range in the last session from 0.65 to 0.79 before closing at $0.68. The Company, an emerging integrated, diversified agriculture technology and organic food company with its principal operations located throughout China, had exceptional earnings for Q1.

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SIAF Stock Chart:

Market Cap:: 49.48M

52-Week High
(May 31, 2011): 1.22
52-Week Low
(Dec 19, 2011): 0.36

Avg Vol (3 month): 263,329
Avg Vol (10 day): 147,575
Shares Outstanding: 72.72M
Float: 59.82M
% Held by Insiders: 38.55%

10 Day History
Pct Change: -1.45%
Moving Avg: 0.7108
Avg Volume: 129,859

Food price inflation is set to continue worldwide. The demand is rising faster than supplies can keep pace with evidenced by the 2007 and 2008 riots in 60 countries from the rise in the prices of corn, wheat and soybeans. There are numerous drivers behind rising food prices, yet the primary reason among them is the increased demand from China and diversion of agricultural resources to produce biofuels.

Sino Agro Food Inc., based in Guangzhou, the third largest city in China, operates out of three segments:

  • Aquaculture Operations,
  • Cattle Farm, Beef and Fertilizer Operations, and
  • Plantation Operations

SIAF Management stated that, by the end of May, they plan to have completed, furnished and staffed their four-story corporate office building which should assist the Company in streamlining their operations. As of the end of April, the Company constructed and fitted out a total of 12 cattle houses with the capacity to house up to 1,500 head of cattle at any given time.  The target is to construct and fit out more cattle houses to house up to 2,500 head of cattle before the end of 2012.

The Company also entered a 5-year lease for an approximate 650 square meter space at the newly established Wholesale Fish and Seafood Market situated within Guangzhou City that is earmarked to replace the old Guangzhou Fish Market.

Q1 Financial Results Highlights:

Q1 2012 Q1 2011 Change
Revenue $15,980,016 $3,121,531 411.93%
Gross Profit $8,013,592 $1,930,916 315.02%
Net Income $5,632,769 $910,913 518.37%
Basic EPS $0.08 $0.02 300.00%
Diluted EPS $0.07 $0.01 600.00%

Other Financial Highlights:

During Q1, the HuangYuan Govt. awarded a cash grant of RMB500,000 toward the development of an Enzyme factory targeted to be completed by the end of the year at a total cost of roughly $2 Million. Also, MEIJI paid a deposit of $1.25 Million toward its purchase of 25% equity in a cattle farm; the Sino Joint Venture Company is anticipating official approval of its partnership by August 2012.

About SIAF Stock:

Sino Agro Food Inc. 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.

To view the SEC filing for SIAF, click here. To view the Q1 Financial Results in their entirety, click here.

Bottom Line: The range SIAF‘s penny stock traded in the last session has a wide window for day trading. SIAF stock is not as volatile as most other OTC stocks which makes it less risky than those of the most actively traded. SIAF actually paid a dividend of $0.01 to all shareholders of record back on October 31, 2011.


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