Last year's potentially risky listing of farmer-owned SunRice on Australia's main stock market board just as droughty conditions were turning dustier by the week could easily have been a recipe for massive investor disappointment.
Instead, 18 months after ringing the bell to start trading on the Australian Securities Exchange, chairman Laurie Arthur says interest in SunRice's 60 million B-class shares has rarely been more active - even if their value isn't as strong as back then.
Despite the big southern NSW-based agribusiness being forced to scale back most of its Australian milling operations as it took in its second smallest crop ever - just 45,000 tonnes this year - shareholders collected another fully franked 33 cent dividend at the end of 2019-20.
Group profits were down by a third on the previous year to $22.7 million, but the national rice business' diverse overseas trading and milling efforts helped sustain the company to defy critics - and the weather.
"This marked our fifth year of paying a 33c dividend," Mr Arthur said.
"At a time when drought was really expected to make us struggle, we've proven we're a strong grower-run business that I think has a pretty good story to tell.
"In fact, we're finding a lot of mum and dad investors like our story, too, and our consistent dividend record."
Indeed, over the past eight years SunRice's share performance has grown 106 per cent, or almost double that of the ASX 200 index for consumer staple companies.
Total shareholder return has also increased 210pc - again almost double the performance of the consumer staples index.
Company debt during the period shrank from 40pc to 15pc, while at the same time SunRice's tangible asset base has grown in value by more than 50pc.
Until last year's ASX listing SunRice shares only traded between growers or industry-related parties on the National Stock Exchange.
The company's capital structure banned outside investors and effectively restricted share market liquidity.
At times NSX SunRice share trades were almost non-existent for days at a time, but investor activity on the ASX is now frequently around 10,000 trades a day, hitting highs above 30,000 late last year and early this month, and peaking at 56,000 in July.
In fact, a board decision last December to start a strategic share buyback, largely to help underpin the share price, was recently abandoned because the steady investor activity and an uptick in the B-class share price made it "unnecessary to participate in the market".
Although its share price, currently around the $5.50 mark, is well down on the $8.30 reached when SunRice listed on the ASX in April 2019, grower shareholders generally appeared to be in no rush to sell down their holdings.
Growers own more than half of SunRice's B-class shares, with some big producer names including the Menegazzo and Lawson families being among the company's top few shareholders when it listed last year.
Over time, other investors will understand the diverse international nature of our business and what makes us profitable, which will be reflected in our share price
Mr Arthur said despite recent tight farm income years experienced by many ricegrowers, and consistent buyer offers, it appeared most shareholders believed the current price did not fully reflect their company's true value, and therefore were not too tempted to sell.
"I also expect, over time, other investors will understand the diverse international nature of our business, our strong balance sheet, and what makes us profitable, which will be reflected in our share price," Mr Arthur said.
SunRice's bespoke dual share class structure gives growers, through their single A-class shares, an overarching controlling ownership of SunRice.
This arrangement, which cannot be changed without a 75pc majority vote by rice producers, does not sit comfortably with a lot of ASX investors, but Mr Arthur said both growers and B-class shareholders, and prospective investors, "had our eyes wide open" when the company's capital structure and ASX listing was locked down.
SunRice could still "deliver good shareholder value" without forfeiting grower control, he said.
Meanwhile, to streamline the company's 11-director board, next year the number of Rice Marketing Board director seats shrinks from three to two.
By 2023 another director position will also be scrubbed leaving nine seats, five of which will be occupied by grower directors.
"Nine directors is still a big board, but we have a very diverse business and a relatively unique structure which requires skills in many different areas," he said.
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