SL Agritech to issue P2 B CPs

MANILA, Philippines — SL Agritech Corp., a leading producer of hybrid rice seeds and premium rice in the Philippines, is issuing up to P2 billion in commercial papers (CPs) to pay down debt.

Proceeds will be used to pay short-term obligations and purchase rice and seed inventories from the company’s contract growers.

The bond issue was assigned an issuer credit rating of PRS Aa (corp.), with a stable outlook by Philippine Rating Services Corp. (PhilRatings).  

A company rated PRS Aa (corp.) 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. 

A stable outlook, on the other hand,  is defined as: “The rating is likely to be maintained or to remain unchanged in the next 12 months.” 

In arriving at the rating, PhilRatings took into account the SL Agritech’s competitive market position locally, potential growth given the company’sinternational business expansion and the  opportunities for growth for the local hybrid rice industry given the enactment of the Rice Tariffication Law. 

PhilRatings also considered the company’s sustained profitability, albeit declining coverage ratios. 

SL Agritech is involved in the production of hybrid rice seeds and premium rice. It has established itself as one of the leading rice companies in the Philippines and exports high quality rice seeds and premium packaged rice.

Its hybrid seeds are exported to Vietnam, Myanmar, Indonesia and India while its rice products are sent to Saudi Arabia, Bahrain, Jordan, Kuwait, Singapore, Australia, United Arab Emirates (UAE) and the US.

The company has taken steps to expand the production of its hybrid rice seeds in neighboring countries such as Bangladesh, Myanmar, India and Indonesia, which  are reportedly four of the world’s largest rice producers. 

?For the past 10 fiscal years, SL Agritech’s  revenues registered a compound annual growth rate (CAGR) of 17.3 percdnt while net income had a CAGR of 16.8 percent.

For the period covering the first three months of fiscal year 2020 (June to August 2019), SL Agritech’s total revenues grew by 10.2 percent to 813 million, largely driven by sales of hybrid seeds and rice products in the domestic market.   Net income, however, was flat at P82.6 million as cost of sales  and operating expenses increased.