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# Yongye International, AŞ Message Board

• erikarju erikarju Oct 20, 2010 12:33 AM Flag

## For your consideration re SeaSaw

I skip Seasaw's arguments about fulvic acid and branded stores as unresolvable matters of opinion. But his implied inventory and production capacity calculations deserve more detailed presentation. All data presented here is available on Edgar, embedded in YONG's 2 latest 10-Q statements. Before going to those numbers let me explain the production capacity I am using. I accept as given YONG's stated nominal 15000 metric tons per year. Also, as described in company's SEC filings the animal feed product is the last phase of production, hence conversion to plant product is really simple: just stop using liquid fulvic acid for animal feed. I assume further that 50% capacity increase came inline early Q2. That gives nominal production capacity of 3750 metric tons per quarter which I will be using here. Okay, the sales and inventory numbers.

Q2 sales of plant product: 89.41 million USD.
Equivalent sales in metric tons of plant product: 8342

from above an estimate for the value of a ton of product: ~ 10700 USD

Value of finished goods as of 03-31-2010: 39.1 million USD
Value of finished goods as of 06-30-2010: 35.8 million USD

Let's convert dollars to equivalent metric tons of product using that 10700 USD/per ton.

all in tons of product
A. Plant product sales during Q2 2010: 8342
B. Finished Goods end of Q1 2010: 3648
C. Finished Goods end of Q2 2010: 3340

Assuming no third parties were contributing to finished product during Q2 2010 we get the following production number in tons for the said quarter:

production in tons =
sales - inventory shrinkage =
A - (B-C) =
8342 - 3648 + 3340 =
8034 tons

Compare that to nominal capacity of 3750 tons per quarter. I have some thoughts about the above, but before continuing I would like to hear some other voices here.

Thank you.

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• "I have some thoughts about the above, but before continuing I would like to hear some other voices here."

Anyone? I'm interested in hearing your thoughts now that you laid all of that out.

• Sorry, I am not sure exactly what you are saying. Is your conclusion that they needed to produce about 8000 tons in the 2nd quarter to have the amount of product they claimed to sell? If that is true, that seems about right. I see you are assuming 3750 production capactiy in the 2nd quarter. There is no evidence that the claimed production capacity for the quarter is much more than 2500 tons but I understand you are just making a favorable assumption for YONG. I also see you are assuming they converted the animal production to the plant production. YONG didn't say they are did that, they claim additional production capacity came from streamling processes and upgrading machinery.

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