May 12, 2016
Sino Agro Food, Inc. has provided its preliminary summary information for the first quarter of 2016, which shows "evident" year-on-year declines in both revenues and gross profit.
The ratio of decline in these metrics have become marginally less when compared to the fourth quarter of 2015's figures, with revenue decreasing by 27% to approximately US$ 72 million, and gross profit by 11.7% to approximately US$19 million.
The gross profit from Project Development declined by 53% to US$3.6 million. In addition to the annual Chinese New Year holiday, inclement weather and other factors resulted in a period of only three weeks to perform contracted services throughout the first quarter, contributing to the marked decline.
Without this sector shortfall, sequential quarterly total gross profits would have increased by approximately US$1.6 million or 7.5%.
Aquaculture (CA and Tri-Way)
Although continual growth in sales volume to of approximately 1,900 tonnes of prawns and seafood in Q1 2016 compared favorably to both Q1 2015 (1,380 tonnes) and the previous quarter (1,325 tonnes), an increased share of fish with lower average sales price ("ASP") explains the revenue decline.
Integrated Cattle (SJAP)
Due to the relaxation of trade restrictions on beef imports to China from 11 exporting countries, the price for live weight domestic cattle has fallen from RMB32/Kg (US$4.92) in mid-year 2015 to an average price of RMB25/Kg (US$3.85) in the fourth quarter of 2015, and had bottomed at RMB15/Kg (US$2.31) during the first quarter of 2016. As a result, the company curtailed its sales of live cattle to 851 head in the first quarter of 2016 (versus 5,032 in Q1 2015), and anticipates selling larger numbers of cattle in the upcoming quarters, as prices rebound.
Reduced head of live cattle also impacted the sale of fertiliser and livestock feed.
The company continued to grow value added production to 2,177 tonnes in the first quarter of 2016 (versus 1,227 tonnes in Q1 2015); however, this growth, which is intended to eclipse live cattle sales in the future, was not sufficient to overcome the marked reduction in live cattle sales this quarter.
Cattle Farm (MEIJI)
The average unit sale price per head of cattle decreased to US$1,589 in the first quarter of 2016 (versus US$2,935 in Q1 2015). This was primarily due to more sales of locally bred "Yellow Cattle" sold at higher price points with an average weight of 350kg/head helping to offset the sale of other beef cattle averaging over 600kg/head, but sold at lower market prices.
Seafood and Meat Trading
The decrease in revenue within the Corporate Trading sector was due to lower imports of seafood from Madagascar after its government introduced policies restricting its export of seafood in the second half of 2015.
Total import volume grew to 1,050 tonnes in the first quarter of 2016 (versus 790 tonnes in Q1 2015). Record high beef import volume was insufficient to outweigh the seafood shortfall because of lower beef average selling price (ASP).