SANW: A stand-out quarter and a reported profit!
Ian Gilson, CFA
First Quarter profits.
On November 14, 2011 S&W Seed (SANW) reported the 2012 first fiscal quarter results and held a conference call to discuss them. The company re-entered the Saudi Arabian market with $5.1 million in revenue, 84% of total revenue for the quarter, up from essentially nothing a year ago. This was a combination of both volume and price. S&W Seed estimates that it has about 20% of the Saudi market and is working to increase that. The price differential between generic seed and the S&W varieties has narrowed significantly and the higher yield of the proprietary seeds now offsets the price differential. Other alfalfa growers in Africa are also interested in upgrading their seeds. Margins improved year over year. Domestic revenue increased 18% Y/Y.
S&W Seed sold 1.6 million pounds of seed in the quarter, up from 0.85 million pounds last year. Current internet prices for seed vary from $3.40 to $4.50 a pound in 500 pound lots depending on the type of seed.
Alfalfa is still going up in price. Mid-central California price for premium alfalfa (Source: The Hoyt Report, Inc. in Dollars per ton at the same location) were:
| May 2010 | Nov. 2010 | May 2011 | Nov. 2011 | |
| Premium Alfalfa | $160 | $185 | $275 | $295 |
As long as these prices hold the demand for alfalfa seed should increase from the fourth quarter 2011 level.
On Sept. 30, 2011 accounts receivable were $6.1 million. Of this $4.5 million has been collected.
Stevia:
The revenue from the stevia sold in the first quarter of fiscal 2012 will be recorded in the second quarter. On Nov. 10, 2011 S&W announced that the stevia leave provided to PureCircle passed all of the required specifications for Reb. A content, moisture content and low levels of contaminants such as seeds, stems and branches.
Although the stevia plant can be stripped of leaves up to three times a year the optimum Reb A concentrations would probably occur with an annual harvesting. Selective breeding for the maximum Reb A content will continue.
The Official Journal of the European Union has published regulations permitting the use of stevia sweeteners in European Union. This will allow the sale of products made with stevia as soon as December 2nd, 2011. PureCircle stated that this permission could increase the overall potential market by 50%.
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