SL Agritech eyes P1 B from commercial papers

MANILA, Philippines - SL Agritech Corp., a leading producer of hybrid rice seeds and premium rice in the country, plans to issue up to P1 billion in commercial papers.

The company obtained an issuer rating of PRS Aa  from the Philippine Rating Services Corp.

A company rated PRS Aa differs from the highest-rated corporates only to a small degree, and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates. 

An issuer rating is an opinion on the general and overall creditworthiness of an issuer, evaluating its ability to meet all its financial obligations within a time horizon of one year.  

The focus is on financial strength and stability under normal and stressed conditions to be able to meet existing and prospective financial obligations.

In assigning the rating, PhilRatings considered SL Agritech’s  good market position, strong core revenue generation, and the positive prospects for the hybrid rice industry.

Incorporated in September 2000, SL Agritech began the commercial production and distribution of SL-8H, its flagship rice seed product, in 2003.

The seeds are available to farmers through the Department of Agriculture Regional Office, the Municipal Agricultural Office, local distributors and dealers, financiers/big land owners, and cooperatives/irrigators’ associations.

SL Agritech’s  premium rice products are offered under two brands: Doña Maria and Cherry Blossom. Each brand targets a specific market segment.

The company’s rice products are available through retail stores, wholesalers and dealers nationwide.

The company also supplies premium rice products to hotels, restaurants and cafes.

PhilRatings, however, noted  SL Agritech’s relatively short track record in terms of operations. 

The local credit watcher said the firm has yet to be subjected to severe economic downturns.

For the past five years, SL Agritech registered a compounded annual growth rate of 8.2 percent in net sales.

Profit margins have likewise been on an upward trend since 2011 as costs were kept at manageable levels.

Gross profit and net profit margins were recorded at a high 47.7 percent and 14.4 percent, respectively, last year.

For its fiscal year ended May 31 this year, SL Agritech posted a record profit of P254.4 million as revenues grew 48.5 percent to P2.1 billion.

PhilRatings expects SL Agritech’s revenues to remain robust as rice consumption has been increasing at a faster pace than rice supply.

“This exerts pressure on the Philippines to be able to increase national rice production and attain rice self-sufficiency for its expanding population,” PhilRatings said.