Ricegrowers Limited, trading as SunRice (ASX:SGLLV) has reported its H1 FY26 result, delivering RaaS adjusted NPAT of $34.8m, 11.5% above the previous corresponding period (pcp) and a touch above RaaS estimates, albeit aided by a lower tax rate (23% vs. 28% forecast and the pcp). Net debt closed the half at $169m, the lowest since October 2021 despite ~$125m in subsequent acquisitions. Operating cash flow was 115% of adjusted EBITDA and the interim dividend was in-line at 20cps. Lower Pacific Island revenue (competition and GST changes) was almost offset by strength in US and Middle East consumer packaged goods, Toscano (bakery) and bulk animal feed to see revenue decline 3.1%, while adjusted EBITDA increased despite significant investment in people and marketing. As we work our way through a new divisional reporting structure, we take a cautionary view on a likely materially lower Riverina rice crop flagged for CY26 (for sale in FY27) and assume an under recovery of overheads in the order of $10m. Given this is assumed as a one-off, and with the benefits of a lower tax rate and lower debt in FY26, our DCF valuation remains unchanged at $19.10/share.
