Ricegrowers Limited (ASX:SGLLV) trades as SunRice, the company’s main brand. SunRice is a global fast-moving consumer goods (FMCG) business and one of Australia’s largest branded food exporters with more than 30 brands across 50 countries. We see favourable conditions for at least the next two years as the group manages a ‘sweet spot’ for Australian rice harvests in a world of dwindling supply, with organic growth, acquisition growth/synergies and cost recovery. The company has established a strong base in key divisions from which to expand with progressively larger acquisitions, not dissimilar to the likes of Bega Cheese (ASX:BGA). Despite significant freight and labour cost pressures, SunRice delivered H1 FY23 underlying EBITDA growth of 13% (to $41m), a testament to brand strength and diversification. We expect an acceleration in growth over the seasonally stronger H2 FY23, and into FY24 on the back of cost recovery. Using a Sum of The Parts (SoTP), that is applying selected peer multiples to RaaS FY23 adjusted divisional EBITDA forecasts, we derive a valuation of $8.74/share, 30% above the current share price.
