SML - Synlait Milk Ltd

[trader_jackson]

I did say they were heading for a LOSS even though they didn't want to mention that terrible word ..only saying "overall FY21 NPAT result will be approximately half that of the FY20 NPAT result, will now not be attainable." and then a few weeks later "breakeven"

But $30m LOSS is pretty significant

Couple of months to year end so more room for bad news

As long as the story is strong, there is no point crying over spilt milk they say... but then again this is quite a bit of spilt milk and the story is looking more like a glass half empty than a glass half full.

[winner69]

No worries though - John is fixing things up

Synlait CEO John Penno commented: “I am disappointed to share this news with our investor base. As a team we are focused on closing out this year as well as we can, then resetting, and delivering a much improved financial performance in FY22.

[bull....]

imagine more bad news will come for them from a2 in time

[mike2020]

As a long time ex supplier of Fonterra this is starting to sound familiar. When I was younger many a fellow farmer was weary of the business round tables desire to clip the dairy ticket...HA! Got ya :t_up:

[Beagle]

Synlait now expects to make a net profit after tax loss of between $20 million to $30 million in FY21.

An interesting way to describe a loss, (surely the second most widely anticipated and most predictable downgrade this year after ATM's ongoing fiasco).

What I am reading here suggests to me (assuming its $30m) is that this loss is after tax which means the real loss is ($30m / 0.72) = $41.67m and they will be claiming a tax credit (utilizable in future years one would hope) against this.

Worse...there's still a fair bit of water to flow under the bridge until balance date on 31 July 2021 so one should be cognisant of the possibility of another downgrade.

Some people have been calling this mutt exactly that for quite some time now...I hope some people listened to the barking.

[winner69]

An interesting way to describe a loss, (surely the second most widely anticipated and most predictable downgrade this year after ATM's ongoing fiasco).

What I am reading here suggests to me (assuming its $30m) is that this loss is after tax which means the real loss is ($30m / 0.72) = $41.67m and they will be claiming a tax credit (utilizable in future years one would hope) against this.

Worse...there's still a fair bit of water to flow under the bridge until balance date on 31 July 2021 so one should be cognisant of the possibility of another downgrade.

Some people have been calling this mutt exactly that for quite some time now...I hope some people listened to the barking.

It's been a mutt even before I convinced you to end your love affair with them and you sold out at 11 bucks plus

Cash flows have told the real story

[winner69]

At least John had some good news - they don't intend to have another capital raise

Bit of an embarrassment if they did - after $5.10 not that long ago

[Beagle]

Fair comment about how long they've been a mutt. I doubt they could raise more capital at this point...they need to get a lot of uncertainty out of the way, banks have no choice but to accommodate them and clear the decks as they say, and then spin another "story" about their growth prospects next year. Some people will be silly enough to throw good money after bad.

[BlackPeter]

Fair comment about how long they've been a mutt. I doubt they could raise more capital at this point...they need to get a lot of uncertainty out of the way, banks have no choice but to accommodate them and clear the decks as they say, and then spin another "story" about their growth prospects next year. Some people will be silly enough to throw good money after bad.

Though not sure whether they might rise like Phoenix from the ashes ... at some stage they well might be a sensible buy again. Just give the SP time to settle, wait until they established a half way capable board, found a new CEO (and hope like hell that it will be next time a better choice than Mr. Pink Fonts).

They invested into a lot of stainless steel, they do have quite modern packaging and canning facilities and - overall - I think they do have a capable workforce, which used to be well motivated (not sure how it is these days, though, haven't met my SML contacts for some time).

This all must be worth something, but hard to predict where the bottom will be ...

Their biggest problem is in my view to refresh the board. Too many of their directors do not understand the local circumstances (some even struggling with the local language). Even some of the local directors are more likely to just add color to the board photo rather than relevant skills to the board. Ex-politicians on boards are always a reason for concern ... their skill sets are normally more biased towards finding some minimum level populist consensus instead of analyzing an organization and making the hard decisions. As well - they don't understand how to run a business and they anyway tend to rest on their political laurels and see the board job as retirement entitlement instead of a reason to roll up the sleeves and do some real work. Warm and comfy seats for the girlz (and boyz).

Anybody able to list Ruth's recent board contributions?

Anyway - they clearly need to learn about how to recognize and recruit capable CEO's, they need to learn how to manage CEO performance and they need to learn about how to recognize and manage risks. Leon is good evidence for them lacking the first and second skill I mentioned - and them ignoring the risk of A2 IF dependency for ways too long clearly shows their lacking in the latter part of above skills.

[winner69]

Share prices refuses to stay below 3 bucks

As they say “the power of story drives corporate value”

Synlait has one really powerful story

[bull....]

debt going to blow out this year , lucky the banks are being kind with the waivers

[Beagle]

Good post BP and in theory what you suggest has merit...at some point they may be a buy BUT someone on here a while back, (might have been you) suggested all the milk companies have a poor track record of governance including fonterror, (deliberately misspelt) so i wouldn't be holding my breath looking for a compelling entry point if I were you.
I don't presently subscribe but the headline says it all NBR - Synlait CEO "We took our eye off the ball"
https://www.nbr.co.nz/story/synlait-ceo-we-took-our-eye-ball No kidding :rolleyes::rolleyes:

[BlackPeter]

Good post BP and in theory what you suggest has merit...at some point they may be a buy BUT someone on here a while back, (might have been you) suggested all the milk companies have a poor track record of governance including fonterror, (deliberately misspelt) so i wouldn't be holding my breath looking for a compelling entry point if I were you.

You are probably right ... and I won't hold my breath. It's just - I do have a weak spot for local industry, and their factory in Dunsandel is quite something.

But hey - I certainly won't leave money growing roots in the cheque account, just to wait for a potential reentry ... i.e. no damage done anyway. Pondering however whether I should buy in November something like 1000 shares at 50 cents each to get an entry ticket into the AGM :) .. I expect some fireworks - and this despite the warehouse not selling them anymore.

We will see closer to the time :)

[Beagle]

You never know mate, you might get your 50 cents. Certainly I wouldn't touch them at anything like their current price despite John Penno's mea cupla today which is far too little and far too late.
Its one thing to acknowledge fault and error and quite another thing to clean up the mess and with no real assurance of a culture change one must assume people and the planet are still on the same level as shareholders. I don't think they've really got it that the company exists as its primary purpose to make shareholders money. Wait for the guy fawkes bonfire. Hint (Banks have only given them accommodation for FY21)...things could get pretty interesting in FY22 if they keep losing money :eek2:

[BlackPeter]

You never know mate, you might get your 50 cents. Certainly I wouldn't touch them at anything like their current price despite John Penno's mea cupla today which is far too little and far too late.
Its one thing to acknowledge fault and error and quite another thing to clean up the mess and with no real assurance of a culture change one must assume people and the planet are still on the same level as shareholders. I don't think they've really got it that the company exists as its primary purpose to make shareholders money. Wait for the guy fawkes bonfire. Hint (Banks have only given them accommodation for FY21)...things could get pretty interesting in FY22 if they keep losing money :eek2:

Agree. Just listened to the Q/A session (like good old steam radio :) https://www.synlait.com/wp-content/uploads/2021/05/Synlait-Conference-Call-10014135-240521.mp3) - and it sounded a bit like: "Ah well, very sorry we took the eyes off the ball and missed some details, but the strategy is fine and wait for 2022 everything will be good again."

Not convinced it will be that easy ... I heard nobody asking based on which assumptions they modelled their 2022 recovery (i.e. do they assume ATM to return to their old growth trajectory or did they make some more cautious assumptions)? Nobody asked either what the position of the company will be if ATM sales do not recover next year.

You just can't leave these shareholders alone, but given that I don't hold I thought it not appropriate to join the meeting ...

[Beagle]

Thanks for the steam train version of the conference call. I'll listen in later in the week.
Why do people "rubber neck" at the scene of a car crash ? Answer that and you'll know why I can't help myself keeping an eye on the "dynamic duo" of ATM and SML. They're the car crash that just keeps on giving and giving and... I think these sort of corporate fiasco's play themselves out in such a way there's a lot you can learn from them....about what not to do in business.

They haven't painted the exterior of the new Pokeno plant pink yet...so you never know mate, there could be even more scope to go down their pink path :eek2: :eek2:

How will this mess ultimately play itself out ?...who knows but its going to be fascinating to see. Maybe ATM takes over SML and reneges (maybe under some force majeure clause we don't know about) on their MVM purchase ?

[Siyamalan]

Fidelity International Ltd has been throwing money at Synlait for quite sometime. I wonder what their end game is..

[gbogo]

Jarden note today: "Target Price down 19% to NZ$2.90; retain Underweight on valuation downside, high debt loading and low confidence over near-term outlook improvement drivers."

[winner69]

Obviously market sees value in SML

Dreadful guidance but up 20% since mid of last week

That’s pretty good

[Sideshow Bob]

Obviously market sees value in SML

Dreadful guidance but up 20% since mid of last week

That’s pretty good

Obviously better to give dreadful guidance than no guidance.......FPH down about 15% after an 82% increase in profit, but no forward guidance.

On another front, Synlait matching Fonterra's price: Synlait matches Fonterra’s milk prices | Farmers Weekly (https://farmersweekly.co.nz/section/dairy/view/synlait-matches-fonterras-milk-prices)

[winner69]

Seems Synlait sacked the guy who didn’t fit in with culture …or as the guy says he was ‘cancelled’

https://www.nzherald.co.nz/nz/david-seymour-confronted-by-lee-williams-who-was-sacked-from-synlait-over-his-youtube-channel/VHUU6CIOSMSMDFCBNOSZNPA2AI/

[Sideshow Bob]

No doubt a pound of flesh extracted....

Synlait agrees new funding arrangements - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/376439)

Synlait agrees new funding arrangements

30/7/2021, 8:30 am

GENERAL Synlait Milk Limited (Synlait) has agreed terms to refinance its maturing syndicated banking facilities, with final documentation to be completed in coming weeks.

As advised in May, Synlait has been in discussions with its banking syndicate regarding ongoing funding arrangements after a waiver was granted for the relevant FY21 covenants. Discussions have concluded, and the changes to the funding arrangements are:

1. Working capital facility of $250 million, extended for 12 months, maturing 1 October 2022. Additional funding is required to bridge the seasonal HY22 working capital requirement. Therefore, a temporary $80 million increase in this facility has been agreed. This will step down over a period of seven months from $330 million in August 2021 to the current of level of $250 million in February 2022.

2. Revolving credit facility (Facility A) of $100 million. This maturing facility will be required for the majority of FY22. It will be amortised down to $66.7 million at the end of July 2022 and then to $33.3 million at the end of July 2023. The syndicate has agreed that Facility A will rollover for two years, at which point the other revolver facilities will mature, providing an opportune time for Synlait to consider all medium to long term funding requirements and sources.

3. Revolving credit facility (Facilities B and C) – facility limit of $100 million maturing on 1 October 2023 (maturity date previously 1 August 2023).
In addition to the syndicated bank facilities above, Synlait listed $180 million of five-year unsecured subordinated fixed rate bonds on the NZX Debt Market in December 2019.

Synlait has key financial covenants in place with its banking syndicate for FY22. These are:

1. A total debt leverage ratio set at 4.5x.
2. A senior debt leverage ratio set at 3.0x.
3. Minimum shareholder funds of no less than $600 million.
4. An interest coverage ratio of 3.0x.
5. A working capital ratio of 1.5x.

Synlait CFO Robert Stowell commented: “Synlait has been proactively engaging with its banking syndicate for some time. The syndicate is supportive of Synlait’s story and strategy, and we are pleased to have completed this refinancing exercise so we can provide increased certainty for our shareholders, customers, suppliers and staff.”

[Getty]

SML ann. that they are discussing with staff, ways to cut numbers 15%.

In what must be the quote of the week, John Penno said;

"...remove any unhelpful hierarchy from the organisation"

[winner69]

Leon’s good work being unwound

Synlait CEO John Penno commented: “Synlait has been through a lot of change over the last 12 months. This means some areas are now over resourced, and some areas are under resourced. We need to review and reset the structure of our business to match our current goals to be successful.”

The proposed changes are designed to align leadership and resourcing around key business units (Nutritionals, Ingredients, and Liquids) and remove any unhelpful hierarchy from the organisation to ensure staff have the information, resources, and freedom to act as they need to, to do their jobs every day.

John commented: “As part of this, we are also on a journey to transform our culture. We need to build teams that are working together with clear roles and responsibilities, and the systems needed to chase the growth we are looking to achieve.This is not just a cost out exercise, it is a complete reset of how we operate as a business.”

The proposed structure would see Synlait’s overall headcount reduced by approximately 15% and generate potential annual savings of approximately $10 to $12 million.


I like the ‘unhelpful hierarchy’ and the ‘complete reset’ bits

Looks like 100 plus people looking for a new job by Christmas

[winner69]

Resene busy coming with a new corporate colour as well

[winner69]

Remember this from three years ago …..probably all being unwound now ….Penno must have been shaking his head all those three year as the unlucky one in Leon took the company from a round of applause at the ASM to red ink on the financials,

What was reported 2018 ASM:

REFRESHED PURPOSE STATEMENT AND BRAND IDENTITY

Synlait also launched its new purpose and brand identity at the Annual Shareholder Meeting, which was met with a positive response from shareholders.

Mr Clement explained that “the statement which best fits with where we’ve come from, who we are and where we want to go in the future is Doing milk differently for a healthier world.”

"Doing milk differently is in our DNA. We have always brought an innovative and disruptive attitude to our industry and we’ll continue to do that into the future. For a healthier world is about looking after the planet, looking after our people and our communities, and continuing to serve life-enhancing milk nutrition,” he said.

“We have some clear goals around our strength in being a catalyst for change. And we want to create more value for New Zealand. We take our responsibility seriously and we will lead change in our industry.”

Synlait has also updated its logo and brand colour.

“The more we looked at our changing goals and purpose, the more we realised we needed to change the look of Synlait as well,” says Mr Clement.

“Pink is the colour of disruption and difference. Our new wordmark is friendly and more appropriate for a company working with flowing milk. We think together they work really well to tell the world who we are.”

[Beagle]

I am not surprised they're having a culture reset. I'm on record many times as saying Leon was absolutely obsessed with all things diversity and inclusion to such an extent this was ostensibly put as the number 1 goal of the company. Penno appointed him and is now forced to clean up some of the mess.
Canny investors will notice that their NZX notice is still headlined in pink and will know that the board have strong leanings this way which is why they appointed Leon in the first place and gave him so much rope. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/378737/354225.pdf

If they ever stop using pink as the representation of their corporate culture this might be investable again, until then, I'm avoiding this like the plague.

[winner69]

Maybe Penno will make Synlait great again.

Lot of pakeke mahi to be done (prefer hard yakka as it sounds better but will use pakeke mahi as after all I’m in NZ) but rewards for shareholders could be high

Might even see a $12 share price again

[Getty]

Is the conclusion to be drawn, that the LGBTQ market is not large, or they just dont use milk?

[Getty]

Maybe Penno will make Synlait great again.

Lot of pakeke mahi to be done (prefer hard yakka as it sounds better but will use pakeke mahi as after all I’m in NZ) but rewards for shareholders could be high

Might even see a $12 share price again

Tumeke there ehoa!

[whatsup]

AS part of SML way forward/restructuring they today have ann a layoff of 150 workers.

[ralph]

Yes just keep the leftist of center pinky ones ,out with all the right of center not politically correct Ones .

[Getty]

Like when the Engineers Union bought into Fisher & Paykel, when they still made washing machines here.

Instead of providing labour, they just ensured a supply of agitators...

[Teatree]

Then they made a top loader that had no agitator. It was a flop

[Gerald]

Guess FIL have given up? Would have thought we would have seen another sph notice by now. They were pretty consistant.

[winner69]

Synlait loss $28,5m .... suppose one ould say top end of guidance of $20m to $30m

Return to 'robust profitability' in F22 whatever that means

And another man from Fonterra to become CEO

Pink in reports not gone yet

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/379820/355590.pdf

[BlackPeter]

Synlait loss $28,5m .... suppose one ould say top end of guidance of $20m to $30m

Return to 'robust profitability' in F22 whatever that means

And another man from Fonterra to become CEO

Pink in reports not gone yet

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/379820/355590.pdf

One picture says more than thousand words:

12996

I guess they always had been coy to admit that they are an one trick pony only trained to jump for ATM ...

While the picture above still avoids to give numbers it nevertheless talks "volumes".

Bull-whip-effect. LOL.

Anyway - Bright Dairy (i.e. city of Shanghai) still holding board control despite owning less than 40% of the shares. Some of the directors will keep struggling with the English language (always wondered how they perform board business) and Ruth will continue to bring some colourful clothes into AGM's. Hey, she must be good for something.

[winner69]

One picture says more than thousand words:

12996

I guess they always had been coy to admit that they are an one trick pony only trained to jump for ATM ...

While the picture above still avoids to give numbers it nevertheless talks "volumes".

Bull-whip-effect. LOL.

Anyway - Bright Dairy (i.e. city of Shanghai) still holding board control despite owning less than 40% of the shares. Some of the directors will keep struggling with the English language (always wondered how they perform board business) and Ruth will continue to bring some colourful clothes into AGM's. Hey, she must be good for something.

Bit of a worry production heading down in F22 already ..... prob need to quit all the surplus stock first eh

[Beagle]

No worries...people and the planet are exactly of the same importance as profit so as the old meat loaf song goes, two out of three ain't bad. ;)

[BlackPeter]

Oops - export licence for their IF to China up for renewal early next year (page 23 on their presentation - all in pink .... not sure, whether this is a good sign?).

While I assume that their quality is up to scratch - Chinese regulations change often, are hard to read, harder to understand and there are rumours of political interference sometimes nudging the outcome of Chinese government audits as well as judicial actions into undesirable directions ... well, for the person or company under review (or in front of court), this is.

Remember the poor Canadians they just released ... lets hope our government knows how to behave?

Definitely easier to work in countries with a rule of law.

Let's cross fingers everything goes well for Synlait, otherwise the bull whip might end up in a waterfall ...

[RTM]

Oops - export licence for their IF to China up for renewal early next year (page 23 on their presentation - all in pink .... not sure, whether this is a good sign?).

While I assume that their quality is up to scratch - Chinese regulations change often, are hard to read, harder to understand and there are rumours of political interference sometimes nudging the outcome of Chinese government audits as well as judicial actions into undesirable directions ... well, for the person or company under review (or in front of court), this is.

Remember the poor Canadians they just released ... lets hope our government knows how to behave?

Definitely easier to work in countries with a rule of law.

Let's cross fingers everything goes well for Synlait, otherwise the bull whip might end up in a waterfall ...

They have a large Chinese shareholder - right ? Does that help with maneuvering through the Chinese regulations BP ?
Disc: Not holding

[Baa_Baa]

They have a large Chinese shareholder - right ? Does that help with maneuvering through the Chinese regulations BP ?
Disc: Not holding

Bright Dairy Group, a China State Owned Enterprise (SOE), through Bright Dairy Holding Limited own 39% of Synlait, by far the largest shareholder. Follow the breadcrumbs to learn how Bright Dairy is connected to the China government.

Incidentally Bright Dairy Group, through one of their subsidiaries Shanghai Maling (Hong Kong) Limited own 50% of Silver Fern Farms Limited.

[BlackPeter]

They have a large Chinese shareholder - right ? Does that help with maneuvering through the Chinese regulations BP ?
Disc: Not holding

That's a good question. I suppose the answer would be - it depends.

Sure - on one hand are the financial interests of the city of Shanghai, which would be impacted if Synlait underperforms long term (or crashes) if they would (worse case) lose the Chinese market.

On the other hand would be the lever the CCP currently has to motivate e.g. NZ government to do the "right thing" (whatever this might be in their view - I guess the current tensions between US, Australia and China would provide a rich playing field for games like that).

I would not see 37% of Chinese ownership in this context as "stay out of all political trouble" card, but it probably does not hurt ... though - all sorts of games might be imaginable ....

Actually - I think this is really an interesting game to watch, but I am not sure I want to be involved as a holder just in case the dragon decides it wants to teach the Kiwi to fly ... :scared: :

[RTM]

That's a good question. I suppose the answer would be - it depends.

Sure - on one hand are the financial interests of the city of Shanghai, which would be impacted if Synlait underperforms long term (or crashes) if they would (worse case) lose the Chinese market.

On the other hand would be the lever the CCP currently has to motivate e.g. NZ government to do the "right thing" (whatever this might be in their view - I guess the current tensions between US, Australia and China would provide a rich playing field for games like that).

I would not see 37% of Chinese ownership in this context as "stay out of all political trouble" card, but it probably does not hurt ... though - all sorts of games might be imaginable ....

Actually - I think this is really an interesting game to watch, but I am not sure I want to be involved as a holder just in case the dragon decides it wants to teach the Kiwi to fly ... :scared: :

Thanks BP...I would at least hope it would help with this bit...."Chinese regulations change often, are hard to read, harder to understand", not so sure wrt the political interference.

[BlackPeter]

Thanks BP...I would at least hope it would help with this bit...."Chinese regulations change often, are hard to read, harder to understand", not so sure wrt the political interference.

I think that it is often as well for Chinese people easy to misunderstand the rules ... and I don't think that this would be due to language issues :):

Anyway - hasn't Silverfern as well significant Chinese ownership? I remember that they had over the recent years plenty of issues with exporting their product into China.

I think this clearly shows the priorities of the CCP.

And just to be clear - I don't say that SML will have problems with the re-newal process ... I hope it will all be fine.

I am just saying it is a risk investors need to consider, it is a risk which would be very painful and might be fatal if it does occur, and neither the company nor the investors are able to manage or control it.

[Sideshow Bob]

I think that it is often as well for Chinese people easy to misunderstand the rules ... and I don't think that this would be due to language issues :):

Anyway - hasn't Silverfern as well significant Chinese ownership? I remember that they had over the recent years plenty of issues with exporting their product into China.

I think this clearly shows the priorities of the CCP.

And just to be clear - I don't say that SML will have problems with the re-newal process ... I hope it will all be fine.

I am just saying it is a risk investors need to consider, it is a risk which would be very painful and might be fatal if it does occur, and neither the company nor the investors are able to manage or control it.

One aspect facing NZ meat plants, is that if they have a case of Covid at the plant, then they get deslisted from China, with no apparent roadmap back. For lamb plants especially, when 40-50% of your production goes to China, then its a massive issue. Makes sense to incentivise vaccinations.

Not sure if the same issues for dairy and dairy plants.

Think SFF have found that Chinese ownership has had little/no real advantage when it comes to Chinese listings. Pretty much in the same boat as everyone else.

Would expect that renewal of SML's lisiting should be reasonably straight forward compared to a new listing, and wouldn't expect any issues. Chinese officials can't visit to audit. Although in the fish industry they did some virtual audits and understand delsited some facilities based on these, when they saw people (in level 1) not wearing masks.

[Marilyn Munroe]

The commercial turmoil currently being observed in China can be driven by faction fighting in the Chinese Communist Party. Official harassment is often a tool used to gain advantage in the party over rivals who are the companies principals.

It would be useful to know if the principals of Bright Dairy are members of the Pooh Bear or Toad factions.

Boop boop de do
Marilyn

[winner69]

Market liked the soothing words and started to fall in love with Synlait again

Share price up 8% today

Milk back in favour

[kiora]

Good promotion
"Synlait to sell reusable stainless steel milk bottles through New World in South Island"

https://www.stuff.co.nz/business/farming/agribusiness/126508219/synlait-to-sell-reusable-stainless-steel-milk-bottles-through-new-world-in-south-island

[bottomfeeder]

Good promotion
"Synlait to sell reusable stainless steel milk bottles through New World in South Island"

https://www.stuff.co.nz/business/farming/agribusiness/126508219/synlait-to-sell-reusable-stainless-steel-milk-bottles-through-new-world-in-south-island

Stainless steel bottles looks cool, but when they start being scratched, and beaten up a bit, it will be to the detriment of the brand.

[ralph]

Stainless steel bottles looks cool, but when they start being scratched, and beaten up a bit, it will be to the detriment of the brand.
Then they will get melted down and recycled ,Green as :eek2:

[winner69]

Goodness gracious me ….UBS have a price target of $5.35

That’s 46% gain from here …..on top of the ~20% this week

That new global customer must be huge

[Valuegrowth]

https://simplywall.st/stocks/nz/food-beverage-tobacco/nzx-sml/synlait-milk-shares/news/synlait-milk-limited-nzsesml-insiders-made-a-handsome-profit

[dreamcatcher]

Goodness gracious me ….UBS have a price target of $5.35

That’s 46% gain from here …..on top of the ~20% this week

That new global customer must be huge


UBS has been buy rated on both Synlait & ATM for a while

[couta1]

UBS has been buy rated on both Synlait & ATM for a while UBS are serious gameplayers and manipulators and their ratings should be treated accordingly.

[dreamcatcher]

UBS are serious gameplayers and manipulators and their ratings should be treated accordingly.

I don't disagree but they out on a limb here for a long time with this rating so believe maybe they know something I don't.

[mcdongle]

Goodness gracious me ….UBS have a price target of $5.35

That’s 46% gain from here …..on top of the ~20% this week

That new global customer must be huge

Have they not released the name of this customer yet?

[winner69]

I don't disagree but they out on a limb here for a long time with this rating so believe maybe they know something I don't.

UBS very close to A2 and other milk guys …but then we have Chinese walls don’t we

[Valuegrowth]

One threat to milk industry in the short run is rising feed cost and inflation. Am I right?

[Gerald]

One threat to milk industry in the short run is rising feed cost and inflation. Am I right?


Not really, goes to the farmer, unless it gets bad enough to cause production to drop and Synlait to pay more for milk.

[Nor]

Stainless steel bottles looks cool, but when they start being scratched, and beaten up a bit, it will be to the detriment of the brand.

Just drop them off at the metal polisher for a touch up when they start to look tired. Panel beater too?

[Sideshow Bob]

Write up from Farmers Weekly:

Farmers Weekly October 4 2021 by Farmers Weekly NZ - issuu (https://issuu.com/farmersweeklynz/docs/fw_04-11_issuu_b1e77e9fc65f14?utm_source=sfmc&utm_term=Virtual%2BPaper&utm_content=12800&utm_id=fbdf4582-55fd-4615-809b-85c6426cd09f&sfmc_activityid=fa4f7a75-9b65-40d7-8fc9-700b5faa826e&utm_medium=email) Page 7

[Marilyn Munroe]

Chaos in Chinese bond markets --> spillover into Chinese banking disrupting trade? --> bad news for Synlait?

Boop boop de do
Marilyn

[dreamcatcher]

Chaos in Chinese bond markets --> spillover into Chinese banking disrupting trade? --> bad news for Synlait?

Boop boop de do
Marilyn


Why Synlait ?

[Beagle]

Stainless steel bottles looks cool, but when they start being scratched, and beaten up a bit, it will be to the detriment of the brand.

From many years of owning boats I have learned that "stainless" is a euphemistic adjective. A very deep and exhaustive polish of one's stainless steel bow and all hand rails and cleats is a must at least once a year, (twice a year if you want to show off and have the shiniest stainless steel in the marina).
Its rusts and oxidizes like any other metal just at a slower rate than most. Who's going to want to buy 1.5 liters of milk in oxidized looking metal containers ? Only those absolutely obsessed with recycling and nobody else, in my opinion.

[dreamcatcher]

From many years of owning boats I have learned that "stainless" is a euphemistic adjective. Its rusts and oxidizes like any other metal just at a slower rate than most. Who's going to want to buy 1.5 liters of milk oxidized looking bottles ? Only those absolutely obsessed with recycling and nobody else, in my opinion.

These returnable cans are the stupidest idea I have heard and highly unlikely I would be interested in carrying empty smelly bottles around.
Still waiting to hear about New client..........?

[Beagle]

These returnable cans are the stupidest idea I have heard and highly unlikely I would be interested in carrying empty smelly bottles around.
Still waiting to hear about New client..........?

"Stupidest idea" I'm not absolutly sure its their stupidest ESG idea...its a tough call sifting through and picking the absolute most stupid idea as there have been so many of them to chose from lol

[Marilyn Munroe]

Why Synlait ?

Yes there are others who could be considered vulnerable because of trading with China, however SYN has other vulnerabilities. We don't know if the principals of Bright Dairy are aligned with the favored faction of the Chinese Communist Party and they are going through a period of fragility at the moment.

Boop boop de do
Marilyn

[Sideshow Bob]

From Business Desk (free) version:

Synlait confident on guidance but not expecting much from A2 Milk | BusinessDesk (https://businessdesk.co.nz/article/primary-sector/synlait-confident-on-guidance-but-not-expecting-much-from-a2-milk)

Synlait confident on guidance but not expecting much from A2 Milk (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=96a00407a0&e=3b6f9185d3)Synlait Milk is confident it can generate "robust" profit over the coming years but anticipates A2 Milk's orders for infant formula will only edge up at best.
“We do expect to see some recovery in our key customer, the A2 business, but their purchase of Mataura Valley Milk and with the market changing significantly in recent years, we’re not expecting large increases in their production,” said chief executive John Penno at the company’s annual general meeting.

Read on » (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=d50237701e&e=3b6f9185d3)

[dreamcatcher]

Expecting new client reveal shortly ..................probably Danone

[winner69]

Expecting new client reveal shortly ..................probably Danone

Need something to replace what A2 has transferred to MVM to keep them busy

[mcdongle]

is this the client from last year they cant name?

[dreamcatcher]

Need something to replace what A2 has transferred to MVM to keep them busy

My understanding is a2 recently applied for SAMR but MVM may be used for producing smaller runs of new products and still trying to get milk supply.

Currently SML holds SAMR approval

[dreamcatcher]

is this the client from last year they cant name?

yes correct

[ralph]

yes correct6+
Yes we are all awaiting that a pity we have no time lines as to when this will occur ,apart from early this year

[JimmyTrade]

6+
Yes we are all awaiting that a pity we have no time lines as to when this will occur ,apart from early this year

Maybe late April …

[mcdongle]

yes correct

its not dannone

[dreamcatcher]

its not dannone

My assumption was based on this soil health partnership with Danone from Dec 2021 ............

"Agriculture Minister Damien O’Connor today announced a unique partnership between food producers Synlait Milk and Danone, science provider AgResearch, and the Ministry for Primary Industries’ (MPI) Sustainable Food and Fibre Futures fund. The project will study soil health on 10 farms in Waikato, Canterbury, and Otago over five years, to determine the impacts of changes in soil health on production, farm resilience and the environment, including climate change."

[mcdongle]

i live in rolleston i am surrounded by employees of Synlait , Who cant keep quiet

[ralph]

i live in rolleston i am surrounded by employees of Synlait , Who cant keep quiet

Give us a clue Mcdongle is it a positive & when will it be public

[tzbang]

i live in rolleston i am surrounded by employees of Synlait , Who cant keep quiet

Ha ha if the employees can't keep quiet — why would you? :p

[mcdongle]

Give us a clue Mcdongle is it a positive & when will it be public

Sorry cant

[Gerald]

https://www.livewiremarkets.com/wires/have-you-got-enough-food-in-your-bunker

[nztx]

SP doesn't appear to be hearing any noise.. :)

Well at least the steep 2 year descent seems to have been stemmed .. for now :)

[BlackPeter]

https://www.livewiremarkets.com/wires/have-you-got-enough-food-in-your-bunker

Interesting article ... thanks for sharing.

And yes, the part related to SML might be a good reminder to review whether it is worthwhile to reinvest into this stock. Obviously - huge question marks still hanging around .. who is this big new customer? What agreements do they have? How will the China trade proceed if China decides to support the Russian warlord and child killer more actively?

[Sideshow Bob]

Sounds like the DD at Synlait is a bit useless......did they even visit the factory??

Synlait takes out $8.8m suit over cheese acquisition | BusinessDesk (https://businessdesk.co.nz/article/listed-companies/synlait-takes-out-88m-suit-over-cheese-acquisition) (paywalled)

Not good on the part of KPMG either!!

[BlackPeter]

Anybody remembers the good old days when both ATM as well as SML both have been growth companies and priced for perfection - well above $10 per share and rising? Punters here had sweepstakes which of these amazing companies will rise faster.

Management couldn't make a wrong move and the market was always right? Yeah, right.

These were the days. ATM demonstrated the risks of being a one trick pony ... and SML demonstrated the risks of putting all eggs into one basket to be carried by a one trick pony - but hey - didn't they build amazing stainless steel factories on the way ... and wasn't Dr. John Penno one of the most enthusiastic CEO's one could think of?

I must admit - even I was impressed by John and as well by his former CFO (Nigel Greenwood). Luckily not impressed enough to not exit when the downturn started in earnest. This former Fonterra CEO just had a funny colour around his aura.

Just looking at the development of the share price ... looks a bit like a mole hill (or if races are your thing - like the height profile of the coast to coast):

13658

SML seems to have found a bottom somewhat below their IPO in (I think) 2013 ... and never paid one cent of dividend on the way ... but hey, for anybody who loves stainless steel - they trade currently below NTA (whatever this might be worth).

Both TA and FA still say ... stay away ... but can that much stainless steel really be a bad thing? Just wondering what they did with all these business analysts they hired in the good days supposed to grow their business - their factory was highly automated and their processes and even their office space was "agile" ... i.e. a huge hall with lots of easily movable desks.

From time to time when I feel sentimental I am still trying to catch up with them ... and somewhat bemused they plan to publish their HY results on April 1st. Is this a good or a bad sign? Maybe a bit cheesy, if one hears the issues around the cheese factory they bought in order to - well, what exactly? It clearly was not to make money.

Anybody expecting a good April fools day story? - and if yes, is it likely to be true?

[winner69]

They've got a lot to live up to haven't they BP. Hope they on track.

FY22 guidance statement:

Synlait expects its Net Profit After Tax result to return to robust profitability in FY22 based on:

• a return to normal trading conditions and tighter management of its Ingredient business;
• improved infant base powder volumes;
• a growing contribution from its Liquids and Consumer Foods business units; and
• targeted and significant cost savings from Synlait, Dairyworks and Talbot Forest Cheese.

FY22 will also include a one-off gain on sale of approximately $17 million from the sale and leaseback of the land and building at Synlait Auckland.

Synlait’s performance will build into FY23 as its new multinational customer at Synlait Pokeno ramps up, and its Liquids and Consumer Foods businesses continue to grow.

Planned reductions in inventory at Synlait and Dairyworks will generate operating cashflows in excess of earnings. These strong cashflows will enable Synlait to complete its capital expenditure programme and reduce debt to comfortable levels over the next two years.

By the end of FY23, the recovery plan will have seen Synlait return to similar levels of profitability, operating cash flows, and debt ratios as the years leading into FY21.

[carrom74]

Tomorrow hopefully the “mystery “ customer will be revealed. Last hour optimism today albeit on a small volume. Let the pink PPT”s show some “muscle “😀

[Sideshow Bob]

Planned reductions in inventory at Synlait and Dairyworks will generate operating cashflows in excess of earnings. These strong cashflows will enable Synlait to complete its capital expenditure programme and reduce debt to comfortable levels over the next two years.


Hopefully the can take advantage of strong dairy markets and reduce their inventory at good levels and realise a bit of profit......maybe......

[winner69]

So NPAT is $27.9m - up 338% - is headlines

Don't say much about the $11.9m gain sale and leaseback but do note Adjusted NPAT is $14.5m in the small print

No worries - all looking good for rest of year and beyond

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/389878/367898.pdf

[winner69]

Still just a 'new multinational customer'

Full year guidance really vague but should be OK

[Gerald]

So about 1 cps lost over LTM, but 80m less shareholders equity :confused: Probably something to do with hedging and all that.

Almost 400m payables seems pretty high. Hope the farmers getting paid on time.

ERP implimentation 20m over budget hidden away in presentation, wouldn't be material would it.

[BlackPeter]

hmm - not sure that announcement fills me with confidence:


Synlait Chair Dr John Penno commented: “This is a strong result that reinforces the focus and hard work undertaken to get Synlait back on track after a challenging 18 months.” “Having been part of Synlait from the outset, I saw it as extremely important to help lead the company through its recent challenges and set it up for future success. While the job is not yet done, we have made some big steps in the right direction as we reset our leadership and rebuild our profitability and balance sheet.”
Synlait CEO Grant Watson commented: “Today comes as I reach two and a half months at Synlait. The result validates that momentum is building, but to return Synlait to strong, sustainable growth we need a greater level of focus and accountability right across the organisation. Improving our systems, tools and processes will improve our ability to execute with excellence. This is a significant opportunity and will be our focus for the second half.”

So - what did they do in the first decade that they needed to "reset" the leadership and still need to start to increase focus and accountablility? I thought that it is the job of the board to closely monitor company performance and select and guide the right leaders.

John, what really went wrong? Is the board inept in appointing leaders and monitoring the performance of its management? If the board used to be unable to monitor and control the business, than why should shareholders rely on them now?

Sounds like the board did slumber the last decade and enjoyed the initial sunshine thanks to one lucky customer who turned out to be a one trick pony ... how do we know that they really did wake up now, and how do we know they are capable to do what it takes?

The board probably just sleepily opened one eye, saw a huge increase in HY earnings and so they snoozed off again. All these Chinese directors (minority holder with majority votes) are probably still busy in checking their smart phones as they do (even during past AGM's) and our colourful political bird on board is doing what she always does ... looking colourful ... but not so visible in helping to bring the board on track.

[winner69]

So about 1 cps lost over LTM, but 80m less shareholders equity :confused: Probably something to do with hedging and all that.

Almost 400m payables seems pretty high. Hope the farmers getting paid on time.

ERP implimentation 20m over budget hidden away in presentation, wouldn't be material would it.

Agree - seems lots of no so good things glossed over

Doesn't give you much confidence does it

[ralph]

So NPAT is $27.9m - up 338% - is headlines

Don't say much about the $11.9m gain sale and leaseback but do note Adjusted NPAT is $14.5m in the small print

No worries - all looking good for rest of year and beyond


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/389878/367898.pdf

A very good half year result just awaiting this new customer ,big improvements and looking good for the future

[winner69]

So about 1 cps lost over LTM, but 80m less shareholders equity :confused: Probably something to do with hedging and all that.

Almost 400m payables seems pretty high. Hope the farmers getting paid on time.

ERP implimentation 20m over budget hidden away in presentation, wouldn't be material would it.

Effective portion of changes in fair value of cash flow hedges adverse $65m

Seems a awful lot eh

No wonder Book Value fell to $3.42

So soon to be trading above Book Value .... that's good

[dreamcatcher]

2020 announement.........maybe not long to wait

Synlait signs new multinational customer agreement5/11/2020, 1:39 pm MKTUPDTESynlait Milk Limited (Synlait) has signed a manufacturing supply agreement with an established, global category leader.
Under the agreement, Synlait will manufacture, blend, and package nutrition products which include plant-based products.
Synlait Chair Graeme Milne commented: “Our team has been working on this agreement for some time. It recognises our world class technical and quality capabilities and utilises our integrated manufacturing chain. We are pleased to welcome this important multinational customer to Synlait’s network.”
Synlait CEO Leon Clement commented: “This is the start of a valuable, enduring, strategic partnership that gives us broader market and category exposure in Asia Pacific.”
“Asian markets are experiencing strong sector growth as consumers seek nutritional products that support better health. Synlait is excited to play a role in this journey. This is a significant step forward for us as we genuinely diversify our customer, category and geographic reach.”
What this agreement means for Synlait:
• Recognition of Synlait’s world class technical and quality capabilities
• Expected utilisation of Synlait’s integrated manufacturing chain, delivering fully finished, consumer products to market
• Expected utilisation of Synlait Pokeno and Auckland’s capacity
• Delivering on our strategy with customer, category and market diversification progressing
• Expected to have a positive impact on earnings from FY23
Processing and packaging customisation will be required at Synlait Pokeno and Synlait Auckland, with expected capital expenditure of $70 million spread over two years. Commercial production is currently projected to start mid-2022.
Further details of the agreement and relationship will be not be disclosed due to confidentiality.
For all enquiries please contact:
Hannah Lynch
Corporate Affairs Manager
P: +64 21 252 8990
E: hannah.lynch@synlait.com

[ralph]

Could/should be a game changer Dreamcatcher

[BlackPeter]

SP $3.25. Amazing long term investment - they had the same share price in September 2013 and didn't lose a cent :) ;

Admittedly - they didn't make a cent of share holder value from then to today. Sure, there was an amazing hype mountain on the long way to enjoy for traders, but for long term investors? No dividend, Zilch capital gains - though lots of hot air and ESG correctness on the way to today.

But hey, what is this saying - nothing is useless, you can use anything as a good example to learn from.

Just wondering what one can learn from this story?

... surely - never put all your eggs into one basket.
... pink may or may not be a nice colour, but it does not increase the value of a company?
... stainless steal might be as expensive as gold, but it doesn't increase the value of its firm in the same manner?
... lean is just another useless buzzword in a fat organisation
... even an enthusiastic CEO does not replace the application of common sense?
... at the board table its not the colour of the clothes but the competence of the board members which counts?
... maybe ... it might help if all board members master the same language?


But otherwise?

[winner69]

SP $3.25. Amazing long term investment - they had the same share price in September 2013 and didn't lose a cent :) ;

Admittedly - they didn't make a cent of share holder value from than to today. Sure, there was an amazing hype mountain on the long way to enjoy for traders, but for long term investors? No dividend, Zilch capital gains - though lots of hot air and ESG correctness on the way to today.

But hey, what is this saying - nothing is useless, you can use anything as a good example to learn from.

Just wondering what one can learn from this story?

... surely - never put all your eggs into one basket.
... pink may or may not be a nice colour, but it does not increase the value of a company?
... stainless steal might be as expensive as gold, but it doesn't increase the value of its firm in the same manner?
... lean is just another useless buzzword in a fat organisation
... even an enthusiastic CEO does not replace the application of common sense?
... at the board table its not the colour of the clothes but the competence of the board members which counts?
... maybe ... it might help if all board members master the same language?


But otherwise?

Jeez mate .... what bought that on

You forgot to mention they've burnt cash in most of those 9 years ..... but have some nice shiny things and a dunger of a cheese factory to show for it

[BlackPeter]

Jeez mate .... what bought that on


Good question ... I guess they just came up for review on my long term watch list.

Its a funny thing - for some reason I feel closer to them than many other (now past) investments ... maybe because they are just down the road ( ;) )... and I really used to like and respect John Penno and Nigel Greenwood).

It feels a bit like supporting and trying to foster a promising child over the years and than watching it going down the wrong path.

Otherwise ... I can't complain as investor - just checked - trippled with them my invested capital and managed to get out at the right time. It is just - I like companies doing good stuff and succeeding, and I thought at one stage they might be one of these.

Probably just my bruised ego ... I didn't see them going down this path.




You forgot to mention they've burnt cash in most of those 9 years ..... but have some nice shiny things and a dunger of a cheese factory to show for it

True ... and there are some other "minor" issues. Boards recruitment skills suck as well, but hey, they are not alone in that regard.

[Gerald]

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02541796-3A597184?access_token=83ff96335c2d45a094df02a206a3 9ff4

[xafalcon]

Operating in the third party formula manufacturing business is tough, and very difficult to turn a reliable and regular profit. Having a cornerstone client that is almost entirely dependant on an informal sales channel (daigou) is not a sensible business strategy. Going head to head with fonterra does not offer prospective clients any advantage, unless SML undercuts fonterra pricing, which of course reduces profitability. The failure to develop successful formula brands of their own after 10 years is the final piece that limits their potential to become successful

[JimmyTrade]

Operating in the third party formula manufacturing business is tough, and very difficult to turn a reliable and regular profit. Having a cornerstone client that is almost entirely dependant on an informal sales channel (daigou) is not a sensible business strategy. Going head to head with fonterra does not offer prospective clients any advantage, unless SML undercuts fonterra pricing, which of course reduces profitability. The failure to develop successful formula brands of their own after 10 years is the final piece that limits their potential to become successful

I believe they have learn’t from this and addressing lack of customer diversity. The coming months will be telling with the release of the new customer and the opportunity to possibly enter the US market with the issues with US supply chains that are 3A/ FDA approved.

Additionally there processing facilities are truely world class and have great flexibility with ability to produce many value added products other than IF (flavoured milks, whipping cream, ambient yoghurt etc)

Focusing on moving away from dependence on China will be a key factor on my continuing investment in the company that and managing debit.

They will be looking to employ a lot of operators over the coming months ( advertising is coming through ) but it is a tough jobs market at the moment. They will need this to build competency for production for the new customer as IF production has been limited to date.

[BlackPeter]

I believe they have learn’t from this and addressing lack of customer diversity. The coming months will be telling with the release of the new customer and the opportunity to possibly enter the US market with the issues with US supply chains that are 3A/ FDA approved.

Additionally there processing facilities are truely world class and have great flexibility with ability to produce many value added products other than IF (flavoured milks, whipping cream, ambient yoghurt etc)

Focusing on moving away from dependence on China will be a key factor on my continuing investment in the company that and managing debit.

They will be looking to employ a lot of operators over the coming months ( advertising is coming through ) but it is a tough jobs market at the moment. They will need this to build competency for production for the new customer as IF production has been limited to date.

I agree - diversifying from the Chinese market looks essential, but given that the City of Shanghai has in practical terms the majority on their board am I wondering, what the odds for that move might be?

Bright Dairy (owned by Shanghai Municipal Government) is entitled to appoint up to four directors on Synlaits board - and this is what they do.

[Marilyn Munroe]

I agree - diversifying from the Chinese market looks essential, but given that the City of Shanghai has in practical terms the majority on their board am I wondering, what the odds for that move might be?

Bright Dairy (owned by Shanghai Municipal Government) is entitled to appoint up to four directors on Synlaits board - and this is what they do.

Bright Dairys grip on Synlait may not be as firm as it appears.

The chain of ownership goes back through Bright to the Shanghai Municipality.

A large portion of the cash that used to wash through this local government entity came from property development. Exacerbated by lockdowns, maybe the comrades are feeling the pinch.

I would not be surprised if the bean counting commissar issues instructions for municipal owned enterprises to raise cash quick. The attraction of selling an asset in far off Dunsandel is if the sale turns to poo the displaced workers are unlikely to riot and invade local party headquarters.

Boop boop de do
Marilyn

[BlackPeter]

Bright Dairys grip on Synlait may not be as firm as it appears.

The chain of ownership goes back through Bright to the Shanghai Municipality.

A large portion of the cash that used to wash through this local government entity came from property development. Exacerbated by lockdowns, maybe the comrades are feeling the pinch.

I would not be surprised if the bean counting commissar issues instructions for municipal owned enterprises to raise cash quick. The attraction of selling an asset in far off Dunsandel is if the sale turns to poo the displaced workers are unlikely to riot and invade local party headquarters.

Boop boop de do
Marilyn

Interesting theory. If it turns true, than it might pay to save a bit of cash to buy SML shares sometimes over the next 12 months for $1.50 per share ;) ; At some stage the inherent value of all this stainless steal must make it worthwhile.

Anyway - whatever it is - the comrades clearly did not make money with their investment in Synlait. No capital gains for more than a decade and no dividends either .... and if they really sell they will need to pay a hefty parking fee on top of no gains for their capital invested.

[aperitif]

New multinational customer to be announced very shortly….I wonder if they would like to buy a stake in a2…..

[ralph]

New multinational customer to be announced very shortly….I wonder if they would like to buy a stake in a2…..
About bloody time ,anyone no whom or want to hazard a guess !!

[Mafman]

Well with a new "president- china" announced today, I think we know where the partner is coming from.

[winner69]

you've got to worry when a (NZ) company gives their execs titles like Director of this and President of that

somebody once did a study of Australian and NZ companies who went down that path and concluded they were ego driven and generally under performed

Mainfreight global success - not one Director or President on Exec Team .... just mere Country Managers, Sales Managers, Operations Managers etc etc

[Golfer01]

About bloody time ,anyone no whom or want to hazard a guess !!

My hazardous guess is Dean Foods or Nestle

[aperitif]

I think everyone knows down my way anyway, who it is haha.

[Golfer01]

I think everyone knows down my way anyway, who it is haha.

Can you disclose who it is?

[winner69]

I think everyone knows down my way anyway, who it is haha.

whoever it is wlll it make difference to Synlaits financial performance

Seems to be an never ending story ---announced nearly 2 years ago ....and that was after 'our team had worked on the deal for some time'

Main thrust of the rationale was it will keep them busy but did mention it might have a positive impact on earnings from FY23

[winner69]

Can you disclose who it is?

Not likely ---one of those hush hush well kept secrets that the locals have promised not to spread outside Rolleston

If only you knew what I knew .... wink wink nudge nudge

[Golfer01]

Not likely ---one of those hush hush well kept secrets that the locals have promised not to spread outside Rolleston

If only you knew what I knew .... wink wink nudge nudge

Bugger, so close! I'm in Hornby so missed out...

[winner69]

Not likely ---one of those hush hush well kept secrets that the locals have promised not to spread outside Rolleston

If only you knew what I knew .... wink wink nudge nudge

Take a trip up to the Rolly Inn and talk to the guys who pop in there after their days work down at the factory

But remember it's so hush hush and once you have found out you are one of the special ones

[Golfer01]

Take a trip up to the Rolly Inn and talk to the guys who pop in there after their days work down at the factory

But remember it's so hush hush and once you have found out you are one of the special ones

No need. Think I've sussed it out. It's the cafe just before the Rakaia bridge. Tourism is back! Latte sales are going through the roof. The synergies are obvious. From farm gate direct to cafe. Cuts out all the processing costs as well! :)

[Sideshow Bob]

No need. Think I've sussed it out. It's the cafe just before the Rakaia bridge. Tourism is back! Latte sales are going through the roof. The synergies are obvious. From farm gate direct to cafe. Cuts out all the processing costs as well! :)

That's Harvey's Cafe.

Milkshakes are great......:drool::rolleyes:

[Sideshow Bob]

Executive Leadership Team Update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/397775)

More changes. Director of "Sustainability, Brand, Beverages and Cream"

[BlackPeter]

Executive Leadership Team Update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/397775)

More changes. Director of "Sustainability, Brand, Beverages and Cream"

Is this as in "peaches and cream"?

Anyway ... not quite sure I fully understand the announcement:


Hamish ... leaves Synlait with gratitude and best wishes.

I don't get this gratitude and best wishes bit.

Are they saying that Hamish is leaving full of gratitude that Synlait used to employ him all these years - or are they saying that Synlait is thankful that he allowed them to employ him? Whose gratitude are they talking about?

As well - is Hamish wishing the company all the best or is the company wishing him all the best?

:confused:

[dreamcatcher]

Is this as in "peaches and cream"?

Anyway ... not quite sure I fully understand the announcement:



I don't get this gratitude and best wishes bit.

Are they saying that Hamish is leaving full of gratitude that Synlait used to employ him all these years - or are they saying that Synlait is thankful that he allowed them to employ him? Whose gratitude are they talking about?

As well - is Hamish wishing the company all the best or is the company wishing him all the best?

:confused:


Maybe received a good handout? ..........:confused:

[BlackPeter]

All this talk of doom and gloom ... and then Synlait's SP sneaking through the Golden Cross. Last Thursday was the day. Sure - a quite flat crossing, i.e. the MA 50 just crawling (or slowly diffusing) through the MA 200, but hey - it made it!

14176

TA looks at face value now all good, but for my liking the fundamentals a still ways too foggy.

Sure - if this mysterious new client appears and creates loads of new and profitable business, all good, but - what if he doesn't?

Anybody brave enough to jump on the train?

[Sideshow Bob]

Anybody brave enough to jump on the train?

No, but they report next Tuesday.....

[BlackPeter]

No, but they report next Tuesday.....

Yes, but reporting in its nature is about the past, which is what it is.

Given that the past was interrupted by Covid as well as by ATM logistical issues ... I think it is certain to assume that the future will look different. Only question is - will it look better?

Last decade brought for shareholders neither dividend nor capital gain (though some fun for traders) ... I recon they will need a better story than just "lets continue" to keep their investors motivated (and to find new ones).

[DTC]

All this talk of doom and gloom ... and then Synlait's SP sneaking through the Golden Cross. Last Thursday was the day. Sure - a quite flat crossing, i.e. the MA 50 just crawling (or slowly diffusing) through the MA 200, but hey - it made it!

14176

TA looks at face value now all good, but for my liking the fundamentals a still ways too foggy.

Sure - if this mysterious new client appears and creates loads of new and profitable business, all good, but - what if he doesn't?

Anybody brave enough to jump on the train?

I bravely bought a few at 3.09 in June, figuring, the share price had often threatened, but never actually had fallen below $3.

[Sideshow Bob]

https://www.nzx.com/announcements/399427

Key financial highlights:
• Revenue up 21% to $1.66 billion.
• NPAT up $67.0 million to $38.5 million.
• Adjusted NPAT up $62.4 million to $34.0 million.
• EBITDA up $91.8 million to $129.1 million.
• Adjusted EBITDA up $79.8 million to $117.2 million
• Net debt down 29% to $341.9 million.
• Operating cash flows up $214.5 million to $232.9 million.
• Impairment charge of $12.2 million due to continued idling of Temuka cheese plant.
• Gain on sale and lease back of Auckland land and building of $11.9 million.

Final 2021 / 2022 milk price:

The final average base milk price is $9.30 per kgMS for the 2021 / 2022 season – the highest base milk price Synlait has paid. In addition, an average of $0.29 per kgMS was paid for incentives, taking the total average milk payment to $9.59 per kgMS for the 2021 / 2022 season.
Tight global milk production and solid demand for dairy have resulted in Synlait’s forecast average base milk price remaining at $9.50 per kgMS for the current 2022 / 2023 season.

Key takeaways from today:

• Return to robust profitability on track – EBITDA up $91.8m to $129.1m.
• Balance sheet returned to normal metrics (net debt to EBITDA ratio of 2.6x) enabled by strong operating cashflows and inventory reduction.
• Review of Synlait strategy and Executive Leadership Team structure completed.
• SAP successfully implemented in August.
• Commercial production to start in early 2023 for Synlait Pokeno’s multinational customer.
• Launch of Foodservice cream in China under JOYHANA brand in partnership with SAVENCIA Group.
Full year 2023 guidance statement:
• Disciplined management of the Ingredients business will continue without some of the one-off foreign exchange gains experienced in FY22. Milk will be diverted to produce higher-margin products in the Advanced Nutrition and Foodservice businesses.
• The performance of the Advanced Nutrition business will continue to build.
• Synlait’s new multinational customers will start to lift margins and improve asset utilisation at Pokeno and Dunsandel (Liquids facility).
• The Consumer business will deliver a steady contribution as it maintains growth but navigates high cheese commodity prices and continues to expand into overseas markets.
• Operational cash flows will continue to be robust but softer than FY22 due to the rebalancing of opening and closing finished and raw material inventory levels.
• Costs will increase modestly due to higher sales volumes, SAP stabilisation activities, inflation and supply chain pressures, and key enabler activities within the refreshed strategy.
• A debt to EBITDA ratio of 2.0x to 2.5x is being targeted.
• At the end of FY23, Synlait will have completed its two-year recovery plan. As previously indicated, Synlait intends to exit FY23 and enter FY24 with a similar level of profitability experienced before FY21. However, Synlait is managing several risks, including, but not limited to, the SAMR registration timeline, a tight labour market, high inflation, and supply chain pressures. All of which could materially impact the company’s current FY23 guidance.

[winner69]

AMAZING TURNAROUND - a $29m loss into a $39m profit

Good stuff and well done Synlait

And F23 looking good - npat about $80m by looks of it

And these new customers will see proft over $100m in F24 .... cool

[winner69]

Peter must be happy as today with that announcement

His $3.06 entry looking good ..... an inspired investment

Thought you'd be posting early to rave about it to give the share price a boost.... won't get to 400 today but maybe at end of October

[BlackPeter]

Peter must be happy as today with that announcement

His $3.06 entry looking good ..... an inspired investment

Thought you'd be posting early to rave about it to give the share price a boost.... won't get to 400 today but maybe at end of October

What Peter are you referring to? Can't be me ...

Anyway - the future seems to look pink .... and China seems to play a big role in it. Hey, they even have a president China sitting in a sea of directors ...

Just wondering how the SP will react when Xi follows Putin and plays his Taiwan card :) ;

Apart from that - does anybody understand the future strategy (page 23 of the presentation)? I guess it looks like a pretty cluttered collection of common place items to me. Hope it works for them.

[ralph]

[QUOTE=winner69;976545]AMAZING TURNAROUND - a $29m loss into a $39m profit

Good stuff and well done Synlait

And F23 looking good - npat about $80m by looks of it

Yes an amazing turnaround I was a bit concerned when the sp never jumped up on that announcement this morning ,but considering the bear was out today its understandable .
And well done Peter

[Baa_Baa]

Good stuff and well done Synlait

And F23 looking good - npat about $80m by looks of it

Yes an amazing turnaround I was a bit concerned when the sp never jumped up on that announcement this morning ,but considering the bear was out today its understandable .
And well done Peter

Yes, an excellent result, though the market didn't like it, fickle as it is. Strangely quiet that the doomsayers have nothing to say. Even A2 up a bit on the day. Enjoy the low SP if you're accumulating a few.

[ralph]

Yes, an excellent result, though the market didn't like it, fickle as it is. Strangely quiet that the doomsayers have nothing to say. Even A2 up a bit on the day. Enjoy the low SP if you're accumulating a few.



It would be rude not to after that announcement Baa Baa

[Gerald]

40m spent this year alone for the ERP system, 62m over 2 years not on the income statement so probably didn't make much this year. Don't think they would have agreed to pay anywhere near that at the start

Massive multinational deal just selling UHT cream in China or is that not the big one that was promised? Apparantly another $62m spent off income statement in dedicated capex for this wonderful customer in 'processing modifications' just in fy22 alone.

Only impaired 1/3 of the shoddy cheese factory, and apparantly pouring more money into it?

Inventory and debt down seem good though.

" Intangibles in progress of $61.9m at balance date is comprised primarily of project to date spend on the Group’s
implementation of an on-premise, perpetually licensed ERP system (SAP) which was commissioned on 1 August 2022."

[bull....]

was not that flash

take note

• Costs will increase modestly due to higher sales volumes, SAP stabilisation activities, inflation and supply chain pressures, and key enabler activities within the refreshed strategy
• At the end of FY23, Synlait will have completed its two-year recovery plan. As previously indicated, Synlait intends to exit FY23 and enter FY24 with a similar level of profitability experienced before FY21. However, Synlait is managing several risks, including, but not limited to, the SAMR registration timeline, a tight labour market, high inflation, and supply chain pressures. All of which could materially impact the company’s current FY23 guidance

they have warned you

also a overhanging issue will be a2 one day moving all there production to there own facility

[winner69]

Total Comprehensive Income was a loss of $18.8m

Meant Shareholder Equity (Book Value) was down from a year ago.

Hope those ‘ Items that may be reclassified subsequently to profit and loss’ don’t impact future profits.

[Sideshow Bob]

https://businessdesk.co.nz/article/primary-sector/synlaits-bond-may-be-risky-but-it-could-pay-off?utm_source=7am+Headlines+from+BusinessDesk&utm_campaign=647378be81-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-647378be81-402467359

Synlait bonds - paywalled but you get the idea.....

[winner69]

SML share price has gyrated between 310 and 350 all this year ….chart looks a bit like a heart monitor print lol.

Closed below 310 today

Will it go back to 350 odd again in next week or so …….or finally succumb to the bear and go back into the 200’s

[BlackPeter]

SML share price has gyrated between 310 and 350 all this year ….chart looks a bit like a heart monitor print lol.

Closed below 310 today

Will it go back to 350 odd again in next week or so …….or finally succumb to the bear and go back into the 200’s

NTA is $2.69. Perhaps there will be even an amazing opportunity to buy lots of stainless steel below book value. Anybody has a business idea what to do with all these amazing pipes and tubes?

[Nor]

Something to do with coffee? Seems to be the idea that springs to every budding entrepreneur's mind.

[BlackPeter]

Something to do with coffee? Seems to be the idea that springs to every budding entrepreneur's mind.

Mmmh - maybe too large for your standard expresso machine. Unless they make a lot of it.

[winner69]

So Customer S is a “truly world-class first-tier consumer company” says Penno and in a few years time will be their biggest customer and Pokeno will be going flat out just producing for them.

Maybe Synlait bed to put in more stainless steel (ie capex) somewhere to supply other customers

From an NBR article

[winner69]

Pink ASM preso for ASM hard on the eyes to read but I think I saw ambition to have more than $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%)

So planning 9% pa revenue growth but big jump in profits ... maybe as high as 30% pa

Share price recovered from that recent dip and at $3.18 back in that 310/350 trading range

With Customer S about to start buying and with what the 'new' team intends to do I reckon share price could be lose to $5 by the time of next years ASM

Lot to like about Synlait

[FTG]

Pink ASM preso for ASM hard on the eyes to read but I think I saw ambition to have more than $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%)

So planning 9% pa revenue growth but big jump in profits ... maybe as high as 30% pa

Share price recovered from that recent dip and at $3.18 back in that 310/350 trading range

With Customer S about to start buying and with what the 'new' team intends to do I reckon share price could be lose to $5 by the time of next years ASM

Lot to like about Synlait

Yip, a bit of bling with the pink preso, with some nicely curated schematics in play. Certainly saying all the 'right' things.

But as we know, talk is cheap. Ultimately it will come down to execution by the Board & SMT.
Do they have what it takes to consistently execute on the strategic plan?

Only time will tell huh.

[BlackPeter]

So Customer S is a “truly world-class first-tier consumer company” says Penno and in a few years time will be their biggest customer and Pokeno will be going flat out just producing for them.

Maybe Synlait bed to put in more stainless steel (ie capex) somewhere to supply other customers

From an NBR article

Sounds like they didn't learn from their A2 fiasco. Out of the frying pan into the fire.

[winner69]

Golly gosh ….share price up 7% today to 340

Break through 350 and it will be on way to 5 bucks

Lots to like about Synlait’s future

[silverblizzard888]

Golly gosh ….share price up 7% today to 340

Break through 350 and it will be on way to 5 bucks

Lots to like about Synlait’s future

If they can show more consistent growth in profits then the market will surely be seeing this as a market darling next year.

[winner69]

Golly gosh …..just as things were looking good they come out with a H1 profit downgrade but no worries all will fine in H2 and beyond …I think that’s what says

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/404539/386191.pdf

[Leemsip]

Just had a 5 min check of this companies financials.
- $34m profit against enterprise value of $770m odd. P/E of 22
- net debt of $300m (like 10X NPAT, wtf)
- issues with SAP (which they said they banged in in Sept with no issues).

Looks sh#t.

Anyone explain the bull case here?

[Filthy]

Anyone explain the bull case here?

punters hoping for a t/o offer from ATM one day perhaps?

[winner69]

Just had a 5 min check of this companies financials.
- $34m profit against enterprise value of $770m odd. P/E of 22
- net debt of $300m (like 10X NPAT, wtf)
- issues with SAP (which they said they banged in in Sept with no issues).

Looks sh#t.

Anyone explain the bull case here?


The $34m profit you mention is going to be about $75m this year so PE on your calcs about 10.

Things nearly sorted …the future bull case is ‘…next few years saying 9% pa revenue growth but big jump in profits ... maybe as high as 30% pa’

Thatsvthe bull case

[BlackPeter]

Just had a 5 min check of this companies financials.
- $34m profit against enterprise value of $770m odd. P/E of 22
- net debt of $300m (like 10X NPAT, wtf)
- issues with SAP (which they said they banged in in Sept with no issues).

Looks sh#t.

Anyone explain the bull case here?

I agree.

Think the bull case is as follows:

Market used to pay $13 per share. Today market pays only $3.40 - i.e. share must be really cheap and will no doubt recover in next to no time to its previous "fair" price, given that everybody knows that stocks only can go up.

[ratkin]

Basket case

[Leemsip]

Hey Winner.

Been looking for a FY23 guidance doc. Where do you see the $75m NPAT forecast?
Or is this inferred by the "back to 2019ish sort of thing" comments?

[winner69]

Hey Winner.

Been looking for a FY23 guidance doc. Where do you see the $75m NPAT forecast?
Or is this inferred by the "back to 2019ish sort of thing" comments?

Spot on

And H1 going to be avbit less than $28m

[Leemsip]

ok ta. Will investigate further

[winner69]

WOW - Synlait one of Bell Potters picks for 2023. Bell Potter much respected

Synlait Milk (SM1)

SM1 is NZ's fourth largest milk processor and a B2B supplier of dairy ingredients (SMP, WMP & AMF), infant formula (IMF) products and Lactoferrin. SM1 counts global FMCG companies among its client base, including the a2Milk Co (A2M) for which SM1 is the exclusive supplier of infant formula in China, Australia and NZ.

FY22 was a year of transition for SM1, with FY23e set to benefit from new customers in nutritionals and stabilising demand from A2M. The optimisation of capacity from ingredients towards nutritionals and valued added products results in a favourable margin gain for SM1, while also accelerating deleveraging (pre-payments and utilisation of assigned receivable facilities for IMF).

This combination of operating leverage and balance sheet deleverage is likely to emerge as a key driver of future share price direction. We view the positive outcome on the USFDA process for A2M as an incremental positive for SM1.

Buy, Price Target $3.60

[FTG]

A surprising announcement, considering that the ASM was just last month! Surely they would have known then how things were tracking?

Perhaps the CEO/Board are being a little too focused on 'curating the optics', rather than fully maintaining CD obligations?

[winner69]

OMG what a disaster

The 2 year recovery now a 3 year recovery

Might make $15m this year …jeez last year they made $38m ….big big drop

Never mind, the new customer will save them

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408512/390881.pdf

[Greekwatchdog]

Might make $15m this year …jeez last year they made $38m ….big big drop

Guidance range of $15 million to $25 million.

[winner69]

Mr Watson commented: “The focus of our leadership team remains on stabilising Synlait …..”

Sounds like they are trying to stop the ship sinking

[winner69]

Might make $15m this year …jeez last year they made $38m ….big big drop

Guidance range of $15 million to $25 million.

But when a previous out look was about 2019 levels ($75m) you’d have to say their guesses are pretty bad

Maybe next guess/guidance will be ‘breakeven to $15m’

[Waltzing]

Winner() how do you manage to find the time to be all over so many stocks...

AI 4 is out and might really be useful in a few years time.

[stef]

Guess the pink washing BS isnt working on the bottom line growth anymore

[BlackPeter]

Guess the pink washing BS isnt working on the bottom line growth anymore

It never did ... looks like there was a direct correlation between pink in and earnings down :) ;

[Leemsip]

"Could be back to 2019 profit levels sort of thing...." oh wait going to be $15m now.

Not sure what a good price on this turd is now... might go quite a bit lower from here.

[winner69]

With their profit guesses all over the show you’d have to say management has now lost all credibility

You don’t go from forecasting about $75m npat to maybe $15m in a master on months unless you have no idea what’s going on.

F23 a wipe out ….doubt whether they’ll revisit the F27 ambitions they proudly touted a while ago

[FTG]

A surprising announcement, considering that the ASM was just last month! Surely they would have known then how things were tracking?

Perhaps the CEO/Board are being a little too focused on 'curating the optics', rather than fully maintaining CD obligations?

Posted in December... seems like the SMT/Board are up to the same old tricks?

[BlackPeter]

With their profit guesses all over the show you’d have to say management has now lost all credibility

You don’t go from forecasting about $75m npat to maybe $15m in a master on months unless you have no idea what’s going on.

F23 a wipe out ….doubt whether they’ll revisit the F27 ambitions they proudly touted a while ago

Well, they are a proud daughter of ATM, aren't they? They say that the apple does not fall far from the tree ...

[winner69]

In BusinessDesk -

Octagon's chief investment officer, Paul Robertshawe, said the market had been anticipating that Synlait would take longer to complete its financial recovery, especially as China had been closed.

“But this is a material miss to even those expectations,” he told BusinessDesk.

Robertshawe added that the number of causes for the company’s recovery deferral had also been broader than the market was anticipating. “The number of causes is a bit surprising. Some of those things you might have anticipated.”

The highlighted comment a bit telling

[winner69]

Share price still sinking …maybe will reach 2 bucks soon

Half year result next Monday

They didn’t give guidance for half year but seeing full year could be $20m profit I wouldn’t be surprised that half year was break even or maybe a loss.

Be hard to put a good story around that

[BlackPeter]

Share price still sinking …maybe will reach 2 bucks soon

Half year result next Monday

They didn’t give guidance for half year but seeing full year could be $20m profit I wouldn’t be surprised that half year was break even or maybe a loss.

Be hard to put a good story around that

They always can promise a much better 2nd half. Not new, but many managers do that and some shareholders believe it :) ... and hey, it could be better, couldn't it?

[whatsup]

and to think A2M paid circa $8-00 a few years ago !!

[Ggcc]

and to think A2M paid circa $8-00 a few years ago !!
Maybe A2 might make a complete takeover offer for $6-$8. They would hold enough cash I feel

[winner69]

and to think A2M paid circa $8-00 a few years ago !!

Average cost of the 43 million shares A2 have has been $6.66

Their $289m 'strategic investment' is now worth $115m so $174 under water

Since last December accounts they have had a $38m 'change in value' - just as well these sort of things don't hit the Profit line (shows up in Other Comprehensive Income)

No worries it will all come right one day

[Leemsip]

I worry about the debt load here...
Should be an interesting half year update.

Reckon the share price will get trashed over the next few days... too much doubt for the instos surely. $2 bucka

[Sideshow Bob]

Maybe A2 might make a complete takeover offer for $6-$8. They would hold enough cash I feel

Bright Dairy Holdings (part of Bright Food which also owns 50% of SFF) own 39% of Synlait, so they'd be a key part of any takeover. Our otherwise they might see the opportunity to take a bigger chunk of Synlait cheaply??

However what is the advantage of taking them over? Is running dairy plants part of A2's expertise? They bought into MVM.....do they want to own a shareholding in another dog??

One thing is the A2 have no representation on the board, but 3 from Bright Dairy.

Both major shareholders are reasonably financial - perhaps some sort of capital raise likely? Maybe the opportunity to increase their % stake.

[winner69]

BIG NEW CUSTOMER will save them

[Sideshow Bob]

Looks like even Westland made more.....


Westland Milk Products posted record sales in 2022 and is firmly back in the black.
According to the Chinese-owned company, revenue jumped 27% year-on-year in the 12 months to Dec 31 to $1.04 billion. Profit was $39 million versus a loss of $82.2m in calendar 2021. (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=9390cfeeb0&e=3b6f9185d3)

https://businessdesk.co.nz/article/primary-sector/westland-milk-products-back-in-the-black-after-posting-record-1b-in-revenue?utm_source=7am+Headlines+from+BusinessDesk&utm_campaign=2e9bbd7b29-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-2e9bbd7b29-402467359

[Sideshow Bob]

Operations would be a fairly key role??

https://www.nzx.com/announcements/408801

Director of Operations Nigel Macdonald has resigned from Synlait Milk Limited (Synlait).
Nigel will leave Synlait at the end of May 2023. His focus over the coming months will be on Synlait’s 10-year asset plan. Nigel has built and led Synlait’s operations team through COVID-19, which was a challenging period for the company and its people. Nigel leaves with Synlait’s best wishes and thanks.
Head of Manufacturing Glenn Laing has been appointed Acting Director of Operations.

[bull....]

synliat not doing to good compared to westland maybe they asked why and they left

[winner69]

Profit slightly more than break even is good news ….but heck they sell $770m of stuff

Cash is king so they have burnt through another $156m of it in six months ..never mind all OK

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391412.pdf

[winner69]

Seeing they obviously don’t have much idea how to drive this new ERP thing they’ve got you have to wonder how ‘robust’ this result is

[bull....]

terrible :scared: nearly running at a loss and at the same time time debt is increasing and to further add to the bad news saying there maybe more profit downgrades coming

said on this thread yrs ago manufacturers normally trade on very low p/e's as there price takers

[Sideshow Bob]

Net debt up 32% to $518.6 million.

Hmmm........

[Leemsip]

Holy smoke, break even H1 and burned $150m+ on capital items over and above depreciation (not sure what they are building/buying??). A lot of this could be inventory? Seems like the net debt increase needed explaining in the update.

Destroying value here. Share price back to 2013 levels..

[bull....]

sml debt securities moving higher ..... risk increasing they better hurry up and do a deeply discounted cash issue lower the debt

[hesiod]

Long history of THAT erp being hard to digest and requiring squillions more to sort it. Been there done that.

[Baa_Baa]

Long history of THAT erp being hard to digest and requiring squillions more to sort it. Been there done that.

I think everyone in the IT industry who has experience in implementing SAP would vouch for that, always grossly underestimating how long it takes, how much it costs, and how complicated it is to automate ERP processes. Sad that the legend for IT project overruns continues, but, once it's installed and working, it is extremely efficient with end-to-end view of the source-manufacture-distribution-sales pipeline. Very sticky as well, once the the customers are hooked, they'll never leave, such is the power of SAP.

They'll get there eventually, if they can survive the pain of implementing. Thinking about it, maybe an investment in SAP itself might be a better choice than their customers. ?

[winner69]

Giving punters time to work out how much the NEW CUSTOMER is worth ……and share price rockets over 3 bucks


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410243/392965.pdf

[Sideshow Bob]

Need time to work out how much the NEW CUSTOMER is worth ……and share price goes over 4 bucks


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410243/392965.pdf

Can't be good......

[winner69]

Can't be good......

Wonder if A2 affected as well if bad news

[bull....]

me thinks this company in big financial trouble .... better quickly raise money

[Balance]

Wonder if A2 affected as well if bad news

ATM owns just under 20% of SML so will be impacted one way or the other.

Bad news and adverse developments seem to follow Synlait these days like a bad smell which would not go away.

[Leemsip]

Noticed the other day the SML Dec 24 bonds trade at 9%.... pretty decent yeild... highest on the nzdx...


Agree that this disclosure unlikely to be good...

[Leemsip]

Below $2 soon I guess... $500m debt.... no profit. Put this in the metroglass basket of capital raise needed but the share price is too low.... so wait it out.... and it gets worse...

Hey Winner - whats this new customer thing you speak of? Taking the piss or real?

[winner69]

Below $2 soon I guess... $500m debt.... no profit. Put this in the metroglass basket of capital raise needed but the share price is too low.... so wait it out.... and it gets worse...

Hey Winner - whats this new customer thing you speak of? Taking the piss or real?

That new international customer they’ve been on about for a while …never been able to say much but maybe today is the day

Will make huge difference to financials

[Ggcc]

Maybe A2 should just buy the rest of it off the shareholders and take it off the nzx.

[Mel]

Wonder if A2 affected as well if bad news
You would expect an announcement from A2 also, if that were the case?

[Sideshow Bob]

Maybe A2 should just buy the rest of it off the shareholders and take it off the nzx.

Or their largest shareholder might do the same.

[Ggcc]

Or their largest shareholder might do the same.
Yup maybe 50/50 each. It would be best for A2 to have a strategic partner

[BlackPeter]

Giving punters time to work out how much the NEW CUSTOMER is worth ……and share price rockets over 3 bucks


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410243/392965.pdf

Not sure you appreciate the words of the memorandum ... they said:


SML has requested a trading halt of its ordinary shares and quoted bonds on the NZX Main Board and ASX to provide it with additional time to properly consider new information it has received which may require it to revise its previously issued guidance to the market.

Surely - if its good news they would consider, they would have said


SML has requested a trading halt of its ordinary shares and quoted bonds on the NZX Main Board and ASX to provide it with additional time to properly consider new information it has received which may allow it to revise its previously issued guidance to the market.

Wouldn't you think so?

[Balance]

Not sure you appreciate the words of the memorandum ... they said:



Surely - if its good news they would consider, they would have said



Wouldn't you think so?

Insightful, BP.

Me thinkth you be correct and this is going to be a shocker.

[winner69]

BP ….if new customer was to bring in another $10m in profit they might be required to change guidance

Get you point though ….it seems that some really bad news is on the way

Hope they don’t blame new computer system again

[BlackPeter]

Maybe A2 should just buy the rest of it off the shareholders and take it off the nzx.

A2 is neither the largest shareholder nor the one with the deepest pockets ... City of Shanghai is .. and I am sure they are happy to share their losses with us :) ; If they make a takeover, they will know that the bad times are over ... and hey, given that they control the board in practical terms already, it wouldn't be due to lack of insider information.

[Sideshow Bob]

A2 is neither the largest shareholder nor the one with the deepest pockets ... City of Shanghai is .. and I am sure they are happy to share their losses with us :) ; If they make a takeover, they will know that the bad times are over ... and hey, given that they control the board in practical terms already, it wouldn't be due to lack of insider information.

Interestingly enough, A2 doesn't have a representative on the board, from memory Bright has three.

At least Bright's other major NZ investment is going well. They'll get a few more million off that next week.

Going back a few years I would have thought their other NZ investment would be the dog, and Synlait be the shooting star......, not the other way around!! ;)

[BlackPeter]

Interestingly enough, A2 doesn't have a representative on the board, from memory Bright has three.

At least Bright's other major NZ investment is going well. They'll get a few more million off that next week.

Going back a few years I would have thought their other NZ investment would be the dog, and Synlait be the shooting star......, not the other way around!! ;)

True - so difficult to predict the future - and linear extrapolations (they are doing well now, so they will in future) are only right until they are wrong ..

[Filthy]

BP ….if new customer was to bring in another $10m in profit they might be required to change guidance

my pick is that the new customer is leaving

[alex f]

First half 4.8m profit, full year prediction 15-25m, a bit optimistic wasn't it.
Less than 4 weeks from the announcement a revision is on the way.
Maybe someone will buy the whole company, it getting cheaper by the day.They are supposed to have a NTA of $3

[bull....]

find out next wed morning

[Snoopy]

my pick is that the new customer is leaving

Ah, but can a new customer 'leave', if they never arrived?

SNOOPY

[ralph]

my pick is that the new customer is leaving

Agree new multinational customer ,its just been to long & too secretive .
Although Mcdongle I believe did say they had been producing formula for them for a while & no one is allowed to speak till the big hurrah .
But with today's climate the way it is I am very pessimistic ,still its a long wait till wednesday

[Toddy]

Maybe a major restructure and mass job losses coming as there was also an announcement of a 'Director of People and Culture ' i.e someone new to head HR with no personal relationships with staff.

[JimmyTrade]

Agree new multinational customer ,its just been to long & too secretive .
Although Mcdongle I believe did say they had been producing formula for them for a while & no one is allowed to speak till the big hurrah .
But with today's climate the way it is I am very pessimistic ,still its a long wait till wednesday

Maybe but I don’t think this is the case.

Yet to do commercial production for new international customer. I would expect this around Q3, well that’s the hope!

I think the bigger high value product for SML is whipping cream and flavoured milk SKUs they have the infrastructure just need the customer, maybe they have now ? … appears whipping cream is starting to increase/start production looking at last report but very small volumes..


.

[sb9]

From AFR, courtesy of poster on HC:

While demand for A2 infant formula has rebounded from a pandemic-sparked collapse of the Chinese daigou - or reseller - market in 2020, Synlait had been pinning its hopes on a mysterious “customer S”, widely believed to be US nutrition giant Abbott, which was expected to dominate its New Zealand production. But details about a deal with the yet to be named customer have yet to be released. But chief financial officer Rob Stowell said late last month that raw material inventory was up 62 per cent, in part from “customer S preparation”.

Perhaps the pending announcement could be positive?

[Balance]

From AFR, courtesy of poster on HC:

While demand for A2 infant formula has rebounded from a pandemic-sparked collapse of the Chinese daigou - or reseller - market in 2020, Synlait had been pinning its hopes on a mysterious “customer S”, widely believed to be US nutrition giant Abbott, which was expected to dominate its New Zealand production. But details about a deal with the yet to be named customer have yet to be released. But chief financial officer Rob Stowell said late last month that raw material inventory was up 62 per cent, in part from “customer S preparation”.

Perhaps the pending announcement could be positive?

Better be!

Better not be customer S deciding not to go ahead with a contract.

[sb9]

Better be!

Better not be customer S deciding not to go ahead with a contract.

Highly doubt of that event happening.

[BlackPeter]

From AFR, courtesy of poster on HC:

While demand for A2 infant formula has rebounded from a pandemic-sparked collapse of the Chinese daigou - or reseller - market in 2020, Synlait had been pinning its hopes on a mysterious “customer S”, widely believed to be US nutrition giant Abbott, which was expected to dominate its New Zealand production. But details about a deal with the yet to be named customer have yet to be released. But chief financial officer Rob Stowell said late last month that raw material inventory was up 62 per cent, in part from “customer S preparation”.

Perhaps the pending announcement could be positive?

Just wondering, if your scenario is correct - wouldn't they have put into their first announcement something like:

We are extremely pleased that Customer X confirmed our agreement but significantly increased the forecasted orders. Our finance team is currently working overtime to reformat the spreadsheets in order to present the now much larger forecasts. We will inform the market as soon as they are done.

I recon they would have, but unfortunately what they wrote sounds quite different. Sounds like they don't really want to update their forecast, but they have to. Hmm ...

Always good to be an optimist, but I think in this case it would be unreasonable.

[mcdongle]

so someone leaked the customers name....

[Balance]

so someone leaked the customers name....

Can always trust the AFR to get the good oil.

Someone wants SML’s sp to tank.

[Baa_Baa]

so someone leaked the customers name....

... and? where can we learn more about this, TIA

[mcdongle]

Read sb9's post... The AFR apparently

[Balance]

Maybe nothing more ominous than operating issues affecting all manufacturers in NZ :

https://www.just-food.com/news/synlait-may-have-to-change-guidance-halts-shares/

“The so far predicted guidance is due to factors including a cut in the forecast demand from customers for Synlait’s “advanced nutrition” products, “raw material supply challenges”, a shortage in CO2, general “high inflationary cost pressures” and “an extremely tight labour market”.

[BlackPeter]

Maybe nothing more ominous than operating issues affecting all manufacturers in NZ :

https://www.just-food.com/news/synlait-may-have-to-change-guidance-halts-shares/

“The so far predicted guidance is due to factors including a cut in the forecast demand from customers for Synlait’s “advanced nutrition” products, “raw material supply challenges”, a shortage in CO2, general “high inflationary cost pressures” and “an extremely tight labour market”.

Hmm - if its really just that, how long do you think they would need to adjust these data in their spreadsheets? Are you saying they still work with mechanical abacuses? - the latter are a pain for calculating percentages :) - slide rulers are much better;

[winner69]

Hmm - if its really just that, how long do you think they would need to adjust these data in their spreadsheets? Are you saying they still work with mechanical abacuses? - the latter are a pain for calculating percentages :) - slide rulers are much better;

Don’t forget they have a new fandangled computer they don’t know how to operate

Takes time …..and boss will be saying ‘can’t be correct’ …..go back and do more sums

[Balance]

Hmm - if its really just that, how long do you think they would need to adjust these data in their spreadsheets? Are you saying they still work with mechanical abacuses? - the latter are a pain for calculating percentages :) - slide rulers are much better;

A cut in the forecast demand from customers for Synlait's 'advanced nutrition' products could very well be the reason why there is a requirement to rehash SML's forecasts.The other factors should certainly have been provided for in the company's last profit downgrade.

Looking like the old adage of 'downgrades come in 3s" could be playing out with SML?

Anyway, all will be revealed soon.

[winner69]

Word on the street is that suited up bankers and a guy from Jarden heading out to Synlait HQ

[Balance]

Word on the street is that suited up bankers and a guy from Jarden heading out to Synlait HQ

CR time? No reason for Jarden to be there otherwise.

[Baa_Baa]

CR time? No reason for Jarden to be there otherwise.

Banking covenants, debt look dicey. Might even be technically insolvent?

[winner69]

Banking covenants, debt look dicey. Might even be technically insolvent?

With big IT implementation issues there’s always the possibility that the huge inventory levels $467m don’t actually exist or have been valued wrong ……big writedown to make matters worse.?

[Habits]

There is no guidance for when the TH ends. Thats a bad sign??

[BlackPeter]

There is no guidance for when the TH ends. Thats a bad sign??

That's how it started with CDL Insurance ... :scared: ;

[Simsee]

There is no guidance for when the TH ends. Thats a bad sign??
I’m almost a 100% positive that the announcement shall be everyone of our staff have resigned because the SAP implementation has stopped their will to live

[winner69]

When they said ‘. SAP significantly impacted Synlait’s ability to release and ship products to customers in Q1 FY 23.’ I thought jeez the computer is holding the company to ransom.

Seems the system said CANNOT RELEASE ORDER FOR DELIVERY so no sale made

But what happened to the old fashioned approach in such circumstances …. Like Customer X wants a few tonnes of that stuff in our over fill warehouses so just deliver it now and worry about the paper work later

Bloody circus if you ask me.

[Fortunecookie]

I had a look at bed bath and beyond given that the headlines about bankruptcy and the struggle to stay afloat in recent years.

They went from about $35 early 2021 to a few cents now.

Apart from the obvious fact they have not been able to generate a net profit for a while and they have been restructuring since. The most recent quarterly report show massive debts in the current liabilities.

I had looked a at the most recent statement for SML. They are abit better off, at least they are turning a profit. However it's the same things, massive debt in the current liabilities.

Probably obvious now with hindsight. Debt in current liabilities suggest that they are struggling to restructure it. In a environment where int rates have been increasing, it effectively becomes a debt spiral. A slight positive is perhaps we are near peak int rates. However for now perhaps hard to avoid a CR. Then again I'm not looking at the company just at the cap structure.

[Balance]

When they said ‘. SAP significantly impacted Synlait’s ability to release and ship products to customers in Q1 FY 23.’ I thought jeez the computer is holding the company to ransom.

Seems the system said CANNOT RELEASE ORDER FOR DELIVERY so no sale made

But what happened to the old fashioned approach in such circumstances …. Like Customer X wants a few tonnes of that stuff in our over fill warehouses so just deliver it now and worry about the paper work later

Bloody circus if you ask me.

Unfortunately it’s not that simple with exports of dairy products these days, W69.

Having exported a wide variety of NZ produce to China & Asia ( meat, dairy, seafood, fruits and vegetables), I can tell you that the documentation required these days is very precise.

Miss one piece of information and the shipment can be held up in the entry port (at horrendous charges) for days and weeks!

Automated documentation is required along with automated manufacturing system. Forget about manual documentation like manual manufacturing.

SAP is not the best outfit to use for such system but companies like to use SAP so
management can cover their backside. Just like companies used IBM for their computer systems in the 70s, 80s and 90s.

[Fortunecookie]

Unfortunately it’s not that simple with exports of dairy products these days, W69.

Having exported a wide variety of NZ produce to China & Asia ( meat, dairy, seafood, fruits and vegetables), I can tell you that the documentation required these days is very precise.

Miss one piece of information and the shipment can be held up in the entry port (at horrendous charges) for days and weeks!

Automated documentation is required along with automated manufacturing system. Forget about manual documentation like manual manufacturing.

SAP is not the best outfit to use for such system but companies like to use SAP so
management can cover their backside. Just like companies used IBM for their computer systems in the 70s, 80s and 90s.

I can agree with that comment. I know someone who does the QA for Nutricia. There is alot of work and documentation behinds the scene to ensure what is shipped reflects what is on the nutrition info.

[hesiod]

Completed the onsite part of SAMR late Feb and no update but would expect A2 to also have reacted if there was an issue. SAMR is causing a degree of discomfort for other parties at present. Heard chatter 1 of the driers wasn't performing well might just be that. Can also confirm doc requirements are intense, and any minor non conformances trigger more paperwork. Major ones = stock food.

Ed misplaced word.. & predictive ...

[Sideshow Bob]

When they said ‘. SAP significantly impacted Synlait’s ability to release and ship products to customers in Q1 FY 23.’ I thought jeez the computer is holding the company to ransom.

Seems the system said CANNOT RELEASE ORDER FOR DELIVERY so no sale made

But what happened to the old fashioned approach in such circumstances …. Like Customer X wants a few tonnes of that stuff in our over fill warehouses so just deliver it now and worry about the paper work later

Bloody circus if you ask me.

I know of another major (non-dairy) exporter who recently implemented a SAP system. From the outside, could see huge staff turnover, huge growth in project numbers (team involved and cost) and a huge impact on customers, with their deliveries/exports and their ability to service them. Total cluster.

Understand they've just rolled out their next module further into the business.

Seems like Synlait have had a similar experience to this?

I'm not tremendously au fait with SAP systems, but there must be a great payoff to justify the tremendous cost and huge interruption to the business??

[bull....]

$70m West Coast investment to secure Westland as global dairy leader
https://www.scoop.co.nz/stories/BU2304/S00318/70m-west-coast-investment-to-secure-westland-as-global-dairy-leader.htm

:scared: synliat in trouble

[winner69]

All a bit of a non-event this dramatic trading halt

F23 not a good year but jeez watch out for F24 with double digit growth blah blah …so what’s new

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410391/393130.pdf

[Balance]

Maybe nothing more ominous than operating issues affecting all manufacturers in NZ :

https://www.just-food.com/news/synlait-may-have-to-change-guidance-halts-shares/

“The so far predicted guidance is due to factors including a cut in the forecast demand from customers for Synlait’s “advanced nutrition” products, “raw material supply challenges”, a shortage in CO2, general “high inflationary cost pressures” and “an extremely tight labour market”.

Well foreshadowed by article above.

This is downgrade #2?

So one more at least to go.

[winner69]

Well foreshadowed by article above.

This is downgrade #2?

So one more at least to go.

Pretty amazing they can reduce npat guidance by $20m in less than a month

Doesn’t bode well for next downgrade ….. as they say they continue to manage several material risks which could impact its year-end performance blah blah blah ………and which could impact Synlait’s current guidance.

[Lego_Man]

Debt levels too high...but we don't plan to raise equity?

[bull....]

Debt levels too high...but we don't plan to raise equity?

strange they have ruled that out , must be looking at asset sales?

[Master98]

Pretty amazing they can reduce npat guidance by $20m in less than a month

could be a class action lawsuit frome aussies someday in the future.

[winner69]

Ha ha ….A2 seem ‘surprised’ as to the size of the downgrade

Think they a bit pissed off

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/410403/393144.pdf

[Getty]

When they said ‘. SAP significantly impacted Synlait’s ability to release and ship products to customers in Q1 FY 23.’ I thought jeez the computer is holding the company to ransom.

Seems the system said CANNOT RELEASE ORDER FOR DELIVERY so no sale made

But what happened to the old fashioned approach in such circumstances …. Like Customer X wants a few tonnes of that stuff in our over fill warehouses so just deliver it now and worry about the paper work later

Bloody circus if you ask me.

Yes, Ronnie Xue could show them how to manage warehousing...