LOCAL hybrid-rice producer SL Agritech Corp. (SLAC) is keen on going public by next year on the back of a healthy bottom-line for their fiscal year 2016-2017, its chairman said.
“We are looking forward to a very healthy bottom-line. If we could double again our bottom-line by end of our fiscal year, we will put a market cap and then go into initial public offering [IPO],” SLAC Chairman Henry Lim Bon Liong told reporters on the sidelines of SLAC’s listing at the Philippine Dealing and Exchange Corp last Wednesday.
“We are trying to do preferred shares. If we can do preferred shares first before IPO, we would raise P2 billion in preferred shares first,” Lim added.
SLAC’s current fiscal year ends on May 31.
Lim said they may go public around the first half of 2017.
The SLAC chief said should they successfully go public, the money that will be raised will be used in expanding the company’s operations locally and abroad.
“We are going to India right now,” Lim said. “Rice is a P350-billion to P400-billion industry in the Philippines, only second to power and even higher than other industries combined. With that P400-billion industry, if I can get 5 percent of that, that’s P20 billion already. Then I’ll put a lot of rice mills, fund contract-growing farmers also, and other expansions,” he said.
SLAC is targeting to expand the area planted with its rice varieties to 450,000 hectares in crop year 2016-2017, Bon Liong said.
“So far, we have already planted 300,000 hectares in this season. Maybe we can hit the target next season, given that our fiscal year ends on May 30 next year,” he said.
Earlier, Lim said SLAC is looking at selling as much as 25 percent of the company, raising around P7 billion to P8 billion.
SLAC bared its plans to go public as early as 2010, but shelved them amid unstable market conditions. The rapid expansion of SLAC operations in the country in the last two years prompted Lim to revive its IPO plans. The SLAC chairman said he wants to intensify the company’s operations and presence in the Chinese market, following latest trade developments between the Philippines and China after President Duterte made a state visit to Beijing.
“Right now, we are one of the biggest rice exporters to China. In fact, I think during the last trip of President Duterte to China, we signed $168-million rice-production processing facilities in China,” Lim said.
“Because in the Philippines, no matter how much I increase my production facilities, the contiguous rice areas for me to produce rice is very limited. But in China and Korea, they have experience in producing rice seeds and they have available large plants to do that,” Lim said.
Lim said SLAC has already signed an agreement with Jiangsu Hongqi Seed Co. Ltd. for the $168-million hybrid rice-seed production.
“This will be a five-year plan, but we already started our production there,” he said. Bon Liong said SLAC plans to boost its rice-seed production to as many as 3,000 metric tons (MT) by expanding its seed-processing facilities in the country using the P1.5 billion raised by the company in commercial paper sale.
Of the P1.5 billion, P200 million will be used in finishing the construction of a new seed-production processing plant in Davao del Sur early next year, Bon Liong said.
SLAC currently has two seed-processing plants in the country: one in Laguna and another in Davao Oriental, Bon Liong said.
At present, SLAC’s seed-production capacity can cover 100,00 hectares, or a production volume of 1,500 MT. Bon Liong said the Davao del Sur-based seed-processing plant could cover 50,000 hectares to 100,000 hectares of land, resulting in an incremental production of 750 MT to 1,5000 MT of seeds.