Bernas to benefit from higher rice prices

KUALA LUMPUR: Padiberas Nasional Bhd (Bernas) made it to the top 10 gainers list yesterday, raising as much as 8.5% intra-day before ending 6.5% or 19 sen higher at RM3.12, spurred by expectations it may benefit from higher international rice prices, having already locked-in its import requirements until March 2012.

The company, which on Sept 30 reportedly received more time to negotiate terms to its rice import monopoly with the government, imports about 30% of Malaysia’s rice needs from Thailand, Vietnam and India. The remaining 70% is sourced from local farmers.

Concerns of a shortage in the commodity cropped up after floods in Thailand, Vietnam, Laos and Cambodia were reported to have ravished 1.5 million hectares of padi fields. Also driving prices higher was the Thai government’s promise last month to pay farmers as much as 15,000 baht (RM1,512) per tonne of padi and 20,000 baht per tonne of jasmine rice — some 5,000 baht more than before.

Thailand Grade B White Rice was fetching US$615 (RM1,925) per tonne on Oct 5, Bloomberg data showed, down from a recent high of US$629 per tonne early September, but still up some 27% from a recent low of US$494 per tonne as at end-May.

In a note dated Sept 15, Maybank Investment Bank Research said Bernas had secured its rice import requirement up to March next year, at a fixed price of US$490 per tonne. At the time, Maybank-IB noted that Bernas could raise price by RM100 to RM200 per tonne without government resistance. “As such, it would be enjoying sustainable profit growth with net margins of 5% to 7%,” it wrote in the note.

For 1HFY2011 ended June 30, Bernas’ net profit rose 44.4% to RM118.83 million from RM82.26 million a year earlier. Revenue also increased 9.2% to RM1.66 billion from RM1.52 billion.

At its RM3.12 close yesterday, Bernas is up 15.13% year-to-date, but is down from a recent high of RM3.59 on Sept 8.