Sino AG — Earnings Release 2017

Aug 14, 2017

Sino Agro Food, Inc. Reports Q2 2017 Results

Sino Agro Food, Inc. Reports Q2 2017 Results

Positive USD .03 EPS Despite Transition and Headwinds

Advances Strategic Relationships; Adjusts Cap Ex Strategy

GUANGZHOU, China-- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), a

specialized investment company focused on protein food including seafood and

cattle, announces results for the quarter ending June 30, 2017.

Revenue

Results reflect the carve-out of aquaculture operations announced March 2, 2017.

Income from Sino Agro's 36.6% interest in the carved-out company, Tri-Way

Industries Ltd. is reported as "share of income from unconsolidated equity

investee."  Revenue from the sale of goods from the former aquaculture business

segment is no longer reported.

Stripping out discontinued aquaculture revenue from Q2 2016, revenue from the

sale of goods decreased USD 18.7M, or 28%, to USD 47.7M for the quarter ended

June 30, 2017 year over year. Contrasted to Q1 2017, revenue decreased 17%.

Business Segment Overview

Negative Comparisons (vs. Q2 2016)

Integrated Cattle  (SJAP): The combined results of SJAP (including QZH) in Q2

2017 decreased in sales revenue by $18 million, and gross profit by $7.4 million

Organic Fertilizer (HSA): Q2 2017 revenues decreased by $4.2M; gross profit

decreased by $1.84M

Plantation Division (JHST): Q2 2017's revenues decreased by $4.7M; gross profit

decreased by $2.7M

Import and Export  -- beef only (Corporate Division): Q2 2017's revenues

decreased by $3.7M; gross profit decreased by $0.42M

Project Development: Q2 2017's revenues decreased by $19.3M; gross profit by

$5.8M

Positive Comparisons (vs. Q2 2016)

Cattle Farm (MEIJI): Q2 2017's revenues increased by $0.3 M; gross profits

increased by 0$0.72M

Import and Export  -- seafood only (Corporate Division): Q2 2017's revenues

increased by $2.3M; gross profits increased by $0.18M

SIAF's On-going Strategy

Integrated Cattle (SJAP)

As reported last quarter, the Xining government engaged SJAP in discussions

aimed to help the cattle and beef industry and promote economic development in

the district, which boasts annual production of over four million head of

cattle. SJAP was selected as the lead company to coordinate and carry out

sweeping long-term regional plans.

This also reflects the local government's realization of 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.

The Company'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 such time

as 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, and,

· supplant Australian beef imports with those from the USA that offer

comparatively better value in price, quality, and selection

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 mutually beneficial

for many years. Indeed, it is still viable; albeit, severely more challenging

with 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.

Organic Fertilizer (HSA)

Plans to adapt to changing market conditions at HSA have been formulated with

the restriction of incurring any further capital expenditure until available

through self-generated cash flow. Sales are anticipated to pick up from Q3 2017

after completion of the retrofit of its production plant. Profits are intended

to increase from this quarter onward, eventually exceeding past performance once

raw material is in adequate supply, targeting sometime during Q4 2017.

Plantation  (JHST)

There is no easy solution when disease sets in, except to replant the whole

plantation with a new breed of disease-resistant HU plants that are currently

available in China. However, the Company plans to restrict capital expenditure

for the time being until such time as SIAF's cash position becomes strong enough

to consider future capital expenditure plans and direction.

In the meantime, JHST will plan on growing seasonal cash crops that exhibit

stable markets and steady prices to maintain its plantation operation for the

remainder of this year until its able to consider various available options. The

Company is confident in finding the appropriate solution.

Import and Export  (Corporate)

The company projects that by sometime in Q4 2017 imported beef from the U.S.

should find its footing in the China market, providing a better guideline to

importers overall and helping to determine an appropriate direction.

In the interim, China is short in seafood supply with demand increasing each

year. It is projected that China will become a negative importing country with a

shortfall of over tens of millions of metric tons ("MMT")/year within the next

decade based on its current consumption of over 50 MMT/year. The current

shortfall is running at some 6-7 MMT/year. In this respect, the locally grown

seafood and imported seafood trade has strong potential to increase the

Company's sales revenue and profits, such that the plan is to increase import

seafood trading starting in Q3 (to include frozen seafood), helping to offset

some of the overall revenue decline Q2.

Project Development

Revenue and profit from this segment is expected to resume, returning to normal

levels and above, once Tri-way secures its intended debt financing.

In the interim, CA has been exploring opportunities in Southeast Asia (i.e.

India, Vietnam, Indonesia, Malaysia and other countries) with the aim to turn

into a global operator outside of China. Since this is at an early stage, the

Company is not in a position to provide a timeframe or potential chance of

success. However, the Company can report that it has made progress in this area,

and intends to provide updates as they occur throughout the remainder of this

year.

Triway's COSO Exercises

Progress updates in this arena will continue over the coming weeks.

Sequential Comparison, Continuing Operations, Sale of Goods:

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

to the first quarter of 2017:

+-----------------------------------------+------+------+-----+

|(USD M, except per share and margin data)|Q2 '17|Q1 '17|% |

+-----------------------------------------+------+------+-----+

|Revenue |47.7 |57.4 |(17) |

+-----------------------------------------+------+------+-----+

|Gross Profit |6.5 |10.0 |(35) |

+-----------------------------------------+------+------+-----+

|Gross Profit Margin |13.6% |17.4% |(3.8)|

+-----------------------------------------+------+------+-----+

|Earnings Per Diluted Share (FD) (USD) - |.03 |.36 |(94) |

|from continuing and discontinued | | | |

|operations | | | |

+-----------------------------------------+------+------+-----+

Other Key Points

· Q2 2017 income from unconsolidated equity investment was USD 1.3M. This

figure was based on a 23.8% equity interest in Tri-way, prior to registration

and finalization of SIAF's effective 36.6% interest, along with corresponding

adjustments within the coming Q3 quarter,wherein someand there will bedebt re

-paymentsby Tri-way to SIAFwill assist intoimprovingeSIAF's cash flow starting

from Q3quarter of2017.

· As of June 30 2017, the Company had net working capital of USD 313.9M, a

quarterly increase of USD 16.4M.

· Stockholders' equity increased in the quarter by USD 15.5M to USD 629.9M or

USD 24.99 per share, based on the weighted average number of fully diluted

outstanding shares in the quarter.

CEO Commentary

Sino Agro Food's Chairman and CEO Solomon Lee addressed the second quarter

results and 2017 outlook:

"The Company is confident that we will see a rebound in the remainder of 2017.

On a more strategic front, in consultation with our partners and advisors, the

aim is to prudently address the spectrum of external agricultural market

conditions to facilitate our carve-out and spinoff exercises, some of which are

well underway."

"The growth in demand for seafood in China is set to rise to 39kg per capita in

2020. Whereas the Chinese seafood industry is heavily challenged by sea

pollution and overfishing of wild fish, Tri-way's sustainable production

environment produces healthy, safe and sustainable seafood all year round.

Moreover, it produces premium quality seafood that can yield higher margins than

competitors. We are encouraged by our business plan and the macro-trends that

support our belief in this strategy. To further this strategy while minimizing

risks and ensuring the long-term sustainability of its business model, Tri-way

has decided to focus its near-term goals on securing financing to support the

execution of this business plan before proceeding.

"Tri-way continues to make meaningful progress toward securing this financing to

develop its infrastructure and grow the business. Recent achievements include

the granting of a credit facility of RMB 100 million with the Agricultural Bank

of China ("ABC"), the world's third largest bank based on reported assets, and

being assigned the strongest credit rating, 5A-1, from Dun & Bradstreet, a

reputable business services company headquartered in the U.S.A. These milestones

confirm Tri-way's credit worthiness, clean balance sheet, and its risk averse

approach, all of which support our confidence in Tri-way's ability to secure

additional financing to complete the build out of Aquafarm 4 and to commence the

construction of Aquafarm 5.

"Moving onto our beef sales, we experienced a decline in sales this quarter due

to a shift in market demand toward newer sources of imported beef. We adapted to

the influx of Australian beef by importing it to the Shanghai Distribution

Center, and in Xining for value added processing. Now, new imports offer a

further competition, offering us the same opportunities to embrace, after a

transitional period.

"Having previously identified the trend of imported beef, we have been

transitioning toward premium domestic beef, while maintaining the farmer's

cooperative model, which promotes several missions. While we expect short-term

headwinds related to increased competition from international beef farmers to

impact sales, we are confident in our long-term strategy. We are fortunate to

enjoy excellent working relationships with various government agencies, with

which we are currently discussing new means to accomplish our mission, without

SJAP having to continue businesses made unprofitable by the relaxation of import

restrictions. These private company/state agency relationships hold greater

significance in China than in western countries, and we are proud to have

established a positive working relationship with the Xining Government in an

effort to support our growth strategy.

"During the quarter we also implemented 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 adapt to poultry.

"I would like to thank our loyal shareholders as we implement these steps and

work through this transition period toward building long-term value at the

Company."

Q2 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 Q2 2017 Interim

Report (http://sinoagrofood.investorroom.com/download/Sino-Agro-Food_Q2-2016

-Interim-Report.pdf) posted to the Company website at

http://sinoagrofood.investorroom.com/download/Sino-Agro-Food_Q2-2017-Interim

-Report.pdf (http://sinoagrofood.investorroom.com/download/Sino-Agro-Food_FQ1

-2017-Interim-Report.pdf)

Earnings Call Information

The Company will host an earnings call on Thursday, August 31, 2017 at 10:00 AM

EDT/4:00 PM CET to discuss quarterly financial results.

Please submit questions by email to info@sinoagrofood.com. These will be

organized and answered on the call.

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

+-----------------------+--------------------------------+

|SIAF Q2 2017 Results |

|Call Information |

+-----------------------+--------------------------------+

|Date: August 31, 2017 |Time: 10:00 AM, EDT/16:00 PM CET|

+-----------------------+--------------------------------+

|Participant Dialing |

|Instructions: |

+-----------------------+--------------------------------+

|SE:       +46 8 5059 63|UK:      +44 203 139 48 30 |

|06 | |

+-----------------------+--------------------------------+

|NO:      +47 23 50 05 |CN:      +86 400 681 54 21 |

|59 | |

+-----------------------+--------------------------------+

|US:      + 1 (866) 928 | |

|-7517 | |

+-----------------------+--------------------------------+

|Conference |

|Pincode 75442190#   |

| The earnings call will |

|also be available over |

|the web.To access, |

|click the following |

|link:   Sino Agro Q2 |

|2017 Earnings Call  |

| (https://wonderland.vid |

|eosync.fi/sino-agro |

|-food-Q1-report-2017)  |

+-----------------------+--------------------------------+

Peter Grossman

Investor Relations

1 (775) 901-0344

info@sinoagrofood.com

Todd Fromer / Elizabeth Barker

1 (212) 896-1215 / 212-896-1203

SIAF@kcsa.com

Nordic Countries

+46 (0)8 120 558 30

info-se@sinoagrofood.com (erik.ahl@sinoagrofood.com)

About Sino Agro Food, Inc.

SIAF is a specialized investment 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 (http://www.sinoagrofood.com), the Company's

Facebook page (https://www.facebook.com/SinoAgroFoodInc), and on twitter

@SinoAgroFood (https://twitter.com/SinoAgroFood).