Twenty years ago, Henry Lim Bon Liong didn’t know anything about rice, its price per kilo, how it was produced, its annual production, and how many hectares and farmers were involved in what probably is the oldest profession in the Philippines.
Today, Henry, 65, speaks like a rice scientist. And like an economist, which he also is, he monitors daily rice prices and recites from memory statistics on rice—production, per capita consumption, geographic origin, and prices.
Henry, who trained as a mechanical engineer from the University of the Philippines, can beat any rice scientist on the science of rice—the seed, how to cultivate it, cross-breed it, grow it commercially, and sell it to farmers here and abroad.
Eventually, the boyish-looking, nattily-dressed tycoon with a rich crop of hair, took up business economics from the University of Asia and the Pacific in 1992 and an executive program at Harvard in 2003-2005.
It took Henry four years to successfully cross-breed varieties to produce what he now calls the SL-8H. Success was not easy. The first 75 hybrids all failed. He credits his late mother, Maria Co Chiao Ti Lim, for the serendipitous discovery of SL-8H. Two months after she died in 2000, she was supposed to have guided Henry’s rice scientist to Plant No. 8 in the family’s 40-hectare experimental rice field in Laguna.
The SL stands for his father’s initials, the 8 for the plant where that particular seed was extracted successfully for the first time, and H for, of course, hybrid.
The problem with hybrids is that the second generation almost always fails and yields much less than the first. Henry overcame that difficulty, thanks to hard and painstaking work, help from China, serendipity, and help from the supernatural.
SL-8H has become a major moneymaker of Henry Lim’s SL Agritech Corp., the family-owned company that promises to be the biggest company in the emerging diversified conglomerate called Sterling Paper Group of Companies.
Today, the Sterling Group is estimated to generate P10 billion in annual revenues and more than P400 million in profits.
Sterling has a dozen companies under its wing, including SL Agritech. It celebrates its 70th year this year. Other companies under the group include Sterling Paper Products Enterprises, Central Book Store Inc., Expressions Stationery Shop Inc., S.P. Properties Inc., and Straight Lines International Inc.
Sterling Paper’s narrative is a rags-to riches saga of hard work, persistence, entrepreneurial vision, and luck and serendipity. The business began as a nondescript bookstore in Manila 70 years ago. It ventured into pad and paper, pencil, pens and ballpens, and stationery of all kinds. In recent years, it grew further to build community malls and to diversify into property and call center business.
It is hybrid seeds and rice production that offer enormous potential for growth and profits. In the course of nearly 20 years, Henry invested more than P500 million of hard-earned money from the family corporations and borrowings to fund his now-booming hybrid seeds and rice business.
SL Agritech Corp. reported revenues of P2.06 billion for the fiscal year 2015 which ended on May 31, 2015 and handsome profits of P254 million. That’s a return on sales of 12.3 percent and based on its stockholders’ equity of P1.236 billion in FY 2014, a return on equity of 20.6 percent, much more than what large banks return in a good year.
The FY 2015 revenues of P2.06 billion was an increase of 48.4 percent from P1.392 billion in 2014 which itself showed a gain of 10 percent from P1.262 billion in 2013. That indicates a hefty 29-percent average rise in annual revenues in the past two years. Last year’s P254-million profit was a jump of 26.3 percent over the 2014 net income of P201 million which showed a gain of 11 percent from 2013’s P181-million profits. This indicates an average annual rise in profits of 18.65 percent.
Henry Lim himself expects annual profits of P500-million on revenues of between P7.5 billion and P10 billion. At yearly profits of P500 million, he will be recovering his P500-million investments every year for the next five years, if not longer. All he has to do is keep investing in his R and D to keep competitors at bay. SL Agritech currently has 85 percent of the hybrid seeds market.
By 2017 alone, SL Agritech is looking at revenues of P3.5 billion and profits of P800 million.
No wonder when SL Agritech conducted an IPO for P1 billion worth of commercial papers (with 4 percent yield), it was easily oversubscribed. Bids reached P2 billion. The P1-billion loan proceeds will be used to expand SL Agritech’s business, here and abroad.
Though hybrids is a science and anchored on solid technology, it is still subject to hits and misses, just like any science, and the vagaries of the market place. Thus, it is not easy to value the worth of SL Agritech’s seeds and rice business.
Still, the father of the hybrid rice, Dr. Yuan Long Ping, is estimated to be worth about $45 billion because of his vast knowledge of the grains science and the one who perfected the science of hybrid rice.
Sources say a foreign investor has attempted to buy the rights for SL Agritech’s SL-8H for commercial production in the investor’s country.
Not only is Henry’s hybrid seeds and rice becoming popular in the Philippines. He has also exporting SL-8H to Indonesia, Bangladesh, and Vietnam. It is poised to export to other countries like Cambodia and India.
SL Agritech has developed additional rice varieties such as SL-7H and SL-9H. They taste better but produce lower yield. The new varieties enabled the company to expand its rice business producing premium rice under the brand Doña Maria, Henry’s late mother.
Dr. Yuan is said to be responsible for saving hundreds of millions of Chinese from dying from hunger since 1974. During the Mao Tse Tung era, as many as 30 million Chinese are estimated to have died from hunger because they had nothing to eat. It was Dr. Yuan who inspired and helped Henry develop hybrid rice in the Philippines.
In China, the hybrid rice is suitable only for temperate countries. It was Henry’s SL Agritech which developed the hybrid rice suitable for tropical countries.