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SunRice reaps big benefits from exchange change
Date : 09 April 2019
Author/s : Bridget Carter, Mergers and Acquisitions Editor, The Australian
Type : Publication


SunRice, the consumer brand and trading name of Ricegrowers, made an impressive debut on the Australian Securities Exchange yesterday.


The company has staged a massive uplift in value since almost a year ago, when it announced a transition to the Australian Securities Exchange.


Now the business is worth about $487 million, more than double its value a year ago.

The company’s Class B shares yesterday closed at $8.30 each, which is up from their last day of trade on the National Stock Exchange of Australia on Friday of $6.50 each.


Working on the move to the ASX for SunRice have been King & Wood Mallesons, Addisons and Macquarie Capital.

The company is now trading at 15 times its net profit compared to about five times while listed on the Newcastle bourse.


The uplift in the business comes as the ASX offers the opportunity to secure additional access to capital and expectations are now mounting for the business to grow at a time that it shrugs off the challenges of a long drought in eastern Australia.


SunRice Group chairman Laurie Arthur and chief executive Rob Gordon opted to move the company’s home to the ASX to boost the level of liquidity.


SunRice comprises Class A shares, which are owned by the growers and cannot be traded, and Class B shares, which are listed.


As part of the changes, investors now will be allowed to own up to 10 per cent of the stock, rather than 5 per cent previously.


The company also owns other feed and food-related businesses and, with a deeper access to capital, it could potentially embark on acquisitions.


SunRice has been hit by drought in southern NSW, but is expected to report a profit of between $30m and $35m for the 2019 financial year.


The group is Australia’s monopoly rice exporter and had earlier embarked on a capital raising to strengthen its position.


For some time, SunRice has been promoting itself as a growth stock due to the benefits it will reap from rising global demand for food and its growth strategy has been aimed at capitalising on Asia’s growing demand for premium products.


Currently, two of the company’s largest shareholders are farmers Colin Bell and Julian Menegazzo.

SunRice comprises 11 businesses and more 30 brands and employs more than 2200 staff in Australia, the Pacific, Papua New Guinea, the US, the Middle East and Asia.


Its rice production is based in southern NSW. The business expanded to north Queensland in 2014, with the purchase of a rice mill in Brandon.


Among the 700 products it manufactures are table rice and rice flour, snacks, rice meals for companion animal and livestock products.


About 80 per cent of the Australian crop is exported.


IBISWorld says industry revenue is expected to rise over the next five years.


View the full article here:

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