SL Agritech raising B from CP issue

SL Agritech Corporation (SL Agritech), a leading producer of hybrid rice seeds and premium rice in the Philippines, is planning to raise R2 billion from the issuance of commercial papers (CP).

In a statement, Philippine Rating Services Corporation (PhilRatings) said it has assigned SL Agritech an issuer rating of PRS Aa (corp.), with a Positive Outlook in relation to the proposed commercial paper issue.

An issuer rating is an opinion on the general and overall creditworthiness of the 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.

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

A Positive Outlook means there is potential for the present credit rating to be upgraded in the next 12 months.

In arriving at the rating, PhilRatings took into account SL Agritech’s market position as the frontrunner in hybrid rice technology in the Philippines as well as its sustained high-growth trajectory, with profitability margins expected to improve going forward.

It also considered the firm’s the strong shareholder support and the potential upside given a favorable regulatory environment, complemented by its international business expansion.

However, PhilRatings said there is a need for careful monitoring of related risks in relation to its entry into other markets outside of the Philippines.

Over the projected period, SL Agritech expects net income to remain robust. Earnings growth will continue to be supported by strong revenue generation, coupled with controlled cost management.

SL Agritech sustained its high-growth trajectory. For fiscal year ending May 31, 2017, net income grew by 10.9 percent to R509.2 million, driven by robust sales both of hybrid seeds and hybrid rice.