Matco Foods’ new plant tocome online by May next year

KARACHI: Matco Foods Limited (MFL), one of the top rice exporters of Pakistan, has procured most of the equipment for its rice glucose syrup and protein plant, which is expected to come online by May 2019.

This new expansion would increase the total production capacity of the company to 30,000 tons rice glucose and 3,000 tons rice protein per annum, respectively.

The last shipment of the equipment for the new plant would arrive by the end of December 2018, according to the MFL management. The company planned to sell off their MATCO-I site, and receipts from it would be utilised to minimise the company’s short-term borrowing.

Analyst Syed Mustafa Zamin of Taurus Securities said the company has set a target to reduce their short-term borrowing by Rs250 million in calendar year 2019, and Rs400 million by 2020.

MFL constitutes one of the top 30 rice-exporters of Pakistan, and was the only publicly listed company. It holds 10 percent share in the total rice exports from Pakistan.

“The management of MFL is looking forward to growth in volume; with future plans to vertically integrate themselves in other product markets ie rice, maltose, and in FMCG line,” Zamin added.

The company had recently notified the Pakistan Stock Exchange that it has applied to the Competition Commission of Pakistan for a joint venture in Pakistan with Barentz International to diversify its product range. The joint venture would import raw material and sell in line with MFL’s existing rice glucose and rice protein business, commented Matco Company Secretary Muhammad Latif Qureshi in the notification. The management of MFL expects stable rice prices in the global market, under $1,000/ton.

MFL, that markets its products under the brand names, Falak, Amber and Bahar, manufactures and processes parboiled basmati rice, steam basmati rice, brown long grain rice, white long grain rice, broken rice, and other organic rice.

The company’s rice-export composition consists of over 60 countries, including the European Union (30 percent), Middle East (20 percent), Australia (20 percent), and United States (five percent).

MFL’s rice-export composition consists of EU (30 percent), Middle East (20 percent), Australia (20 percent), and USA (5 percent).

In 2018, MFL increased its cash reserves by 618.88 percent, or Rs711.97 million. Cash flow from financing totalled Rs750.66 million or 10.91 percent of revenues. In addition the company generated 131.88 million in cash from operations, while cash used for investing totalled Rs176.67 million.

MFL’s 66 percent of rice syrup was being consumed in the domestic market, whereas the remaining 33 percent was exported.

The company also manufactures rice bran powder, rice glucose, rice bran oil, rice protein, jasmine rice, pink salt, iodized salt, vermicelli and other snack foods, such as biscuits, wafers and baked chips.

Year on year MFL revenues have grown 11.71 percent from Rs6.16 billion to Rs6.88 billion, while net income improved 11.15 percent from Rs277.15 million to Rs308.07 million during 2018. Also, the company’s year on year growth in earnings per share excluding extraordinary items increased 31.62 percent.

On Thursday, MFL shares closed at Rs28.61, 18.64 percent above the 52 week low of 24.11 set on October 15, 2018.