Has there been much feedback from brokers on demand ?
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Has there been much feedback from brokers on demand ?
For what its worth , Market Analysis say avoid , expensive , priced for perfection.
Do they have a website where you can access their research ? Be interesting to see their point of view ...
www.stockmarket.co.nz
But subscriber only
no, I'm not......
Charm offensive has spread to Sharetrader. Lease, Farmerhamilton has made a disclosure do you need to too ?
Yes i could never understand how they could say that about fonterra, they where the first stock i bought and luckily i ignored there advice. Did show me that so called experts dont know what they are talking about some times. Id be buying synlait if i had spare cash.
No charm offensive from me JoshuaTree ( are you a mega U2 fan ? ) just stating facts/the obvious. Although being extremely long the stock obviously I want it to do well and the IPO to "get away" successfully.
Dairy prices went ballistic during Feb/Mar/Apr ... came back around 10/12% and the last two auctions the volatility has died away and prices have been firm. However in the meantime the Kiwi$ has fallen from 86c to 77c so in NZD terms we are pretty much at record levels. Synlait's P&L suggests they are doing very well and every time the Kiwi$ drops 1/2c the tail wind just gathers more steam , especially if USD pricing of WMP and SMP remain firm.
This time next month the new season will be kicking off , Synlait will be floated and FarmerHamilton will be a happy chappy !!
I need to go back to the prospectus as one thing I dont understand is how this effects the farm gate price.
This will become less of an issue as Synlait moves more to value added products (ie. baby formula) but milk powder will still be the bulk of its sales.
This is why the Fonterra starting forecast for next year is $7 !!
My point being, is there any benefit to the Dairy company since all it does is increase the farmgate price (ie. cost of sales). Is it linked directly or does the dairy company take a margin.
I note that Synlaits milk supply cost is linked to the Farmgate price (less upto 25c)
Some of us have different number of posts per page. I assume you are refering to post #89:
http://www.sharetrader.co.nz/showthr...842#post413842
CJ, you are quite correct - the FX rate influences the price Synlait will have to pay for supply. They are in direct competition for supply of raw material, and in order to compete they will have to largely pass on any perceived FX benefits to suppliers. FH should be pushing this line for Synlait Farms, not Milk
For me, the volumes current holders sell into Selldown Co will be the most telling action for the IPO.
Thanks Cj ,lease. Its just sounding like a good ole H/C ramp at times. Sure dairy and proteins are hot and sexy atm(sheesh i dont even know how may udders a cow has) and yes fonterra has been a great performer( for my family too). Maybe it will be a good stag/ inv but it may not be a dead cert( like mighty river for e.g.). And chances are it will list at the higher end as well so do your homework well folks ,and assume nothing.
Agree that the lower the NZD the higher the COGS ... ie Farmgate Milk Price BUT ... Synlait Milk receive their margin in USD not NZD so when the fx rate falls theoretically their profits in NZ should rise , sure the input costs go up ( as the Fonterra payout rises ) but the margin they make converting raw milk into high value formula and powders ( don't forget the fat ... they make a lot of money from the little AMF plant that no one talks about ) is in USD which obviously is a lot more NZ$ at .77 rather than .85.
5 days to go to book build , hopefully Portugal, Greece , Turkey & Egypt can keep it together for another few days !!
I've been pondering this issue as well. I'm not going to be providing answers but this is how I see it:
The farmgate milk price is based on the 'world price' - essentially the world price less costs that Fonterra incurs in collecting the milk and (not too sure) basic processing costs. The farmgate milk price also accounts to an extent the opportunity costs of milk collection. And because the farmgate milk price is paid by Synlait to farmer-suppliers, indeed a higher farmgate milk price means additional costs of production for Synlait.
I think it will be all doom and gloom if the story stopped here. But the flipside is that dairy-exports are also linked to the 'world price'. While a higher world dairy prices would mean a higher farmgate price, it also means a higher price that milk powders, baby formula etc command, translating to higher revenue.
I wouldn't have a clue how the COGS effect would weigh against the revenue effect so I won't elaborate further. Rather I'm more interested in pondering how Synlait will be affected when Fonterra enters the Chinese baby formula market.
So who's participating in the IPO, I'm going to try and get a few.
heres a list of top companies selling infant formula in china
ADY
- Abbott
- Beingmate
- Brightdairy
- Dumex
- Heilongjiang longdan
- Liaoning Huishan Dairy Group
- Mead Johnson
- Mengniu
- Nanshan Bywise
- Nestle
- Sanyuan
- Scient
- Shanghai Chenguan Dairy Co.,Ltd
- Shanxi Guchengruye
- Synutra
- Tibet Yak Milk
- Wandashan
- Wissun
- Wyeth
- Xian Yinqiao Group
- YASHILY
- Yili
this list of companies is written about in the Chinese Infant Formula Milk Powder Industry 2013 research report http://www.researchandmarkets.com/re...chinese_infant
and i see some of them are in trouble
http://nz.news.yahoo.com/a/-/world/1...consolidation/
yep some have dropped their infant milk prices already , but they still do very nicely.
Also i see fonterra will present a strategy http://www.nzherald.co.nz/agribusine...ectid=10894266 to expand the local milk pool which could be of benefit to companies like synlait and others
A few of my friends want to register their interest, but seems no brokers accept their registration. This share is hot!
They are too late I'd say. I had to put in for a firm allocation by last Friday, but may not be the same for every broker.
My broker has plenty
My broker is a provincial........there's only one postal delivery a week to the big smoke:D
Craigs, said theres some there if i wanted any.
All sell orders will be in now from existing shareholders , the size of the IPO will now be known. Book build participants to do their stuff on Monday and Tuesday and we will know the exit & entry price for the IPO probably Wed morning.
Markets have been kind this week thanks to ECB & BoE ... my guess is somewhere in the $2.45-$2.55 area.
Searching the web to see if any info on size of issue has been published. Synlait Ltd sell orders were due in 5pm last Friday so bookbuild participants currently jockeying for shares will know how big the IPO will be $110m ? , $120m ? .... $130m ?
Anyone heard ?
My broker access indication is that they are not participating on basis that in light of recent IPOs both they and clients would be safer to buy on market. This listing seems more blind than anything to date---non standard governance and unknown quantity of shares available. How does book build ascribe a value to those uncertainties?
Ive a friend in China overseeing 400 workers building a drying plant. He's worked all over the world and says he has never seen so many luxury cars. also says Synlait is being scrutinized by chinese govt for selling some of its products as kiwi made when they are actually rebranding someone else's. Govt also investigating price fixing by suppliers into china "Its very expensive here in in supermarket. Its a goldrush of sorts in China"(infant formula).
The uncertainty that will remain is how the market views a "non standard governance" listing. It really belongs on "Unlisted"! No matter how they spin it Bright has practical and legal control with a minority holding.And notwithstanding Bright's expressed optimism for the Company they were not prepared to protect their majority by further investment. Is future development also to fall on other shareholders?
And no one seemed to quite get to grips with what those are either! Perhaps obscurity is the answer.
Intringingly Fonterra Farmers also seem to have been keen to quit their shareholdings because of high prices. Also interesting to note comment 1 June: Chief executive Theo Spierings said shareholders and Fonterra unit holders should expect the strong lift in international dairy powder prices to create "a more challenging environment" for Fonterra's earnings in the first half of the 2014 financial year to July 31.
Set at $2.20
"The IPO comprises $75 million in new capital to repay debt and fund Synlait Milk’s growth initiatives and a secondary offer of $38.7 million being 17.6 million existing shares originating from participating shareholders of Synlait Limited"
Im suprised at 2.20, I was expecting atleast 2.50. Now it will be interesting to see how much scaling occurs.
ASB have just advised they didn't get an allocation. Are any brokers still offering more?
Just got this email from ASB Sec - so looks like I won't be getting an allocation:
Dear Client
Synlait Milk Limited
Thank you for your expression of interest in the offer of fully paid ordinary shares (“Shares”) in Synlait Milk Limited.
Unfortunately ASB Securities was unable to secure an allocation of shares in the offer.
We are unable to offer you shares on the primary market through the Initial Public Offer “IPO” period, however can assist with purchasing the shares on the secondary market when they list on NZX main board, expected listing date, 23 July 2013.
Thank you for your continued support and please accept our apologies for not being able to provide you the opportunity to invest in shares in this offer.
Yours sincerely
Does anyone know which brokers got allocations for this? I got an email from ASB saying they didn't get an allocation.
Very sadly, have called quite a few brokers and none of them can offer me to subscribe. Joint managers - FNZ & Goldman Sachs told me the offer is heavily oversubscribed.
I have just spoken with my broker at Craigs,who advised me Craigs received 20% of what they applied for.
Looks as though you had to be with the lead brokers to get a decent allocation.
My broker was very surprised at the price.He expected over $2.50.
He felt MRP disaster meant they wanted it to stag well.
I don't get it... if it is heavily oversubscribed why is the issue price not higher than it is set at?
I would not have thought the purpose of a book build was to get a new share to stag well although it might suit brokers. If it was,farmers were ill advised to sell in. Next intrique will be to see how many will sell out their $300,000 worth allowed by escrow if it does indeed stag well.
Scaled to 30% of original request.
NZ Herald this morning :A large European dairy cooperative has gazumped the Synlait Milk capital raising to emerge with a strategic stake in the Canterbury-based processor before its sharemarket listing on July 23, sources say.......
While Synlait Milk is understood to be happy with the addition, the emergence of a major new participant in the initial public offer (IPO) process has left potential investors high and dry.
And this is why... only 30%
http://www.nzherald.co.nz/business/n...ectid=10896452
http://www.nzherald.co.nz/business/n...ectid=10896452
It will be interesting to see what stake they managed to secure. The article suggests over 5% but you have to wonder if it is worthwhile for them to hold less than 10%.
Having said that, with two other major holders already on the register, they clearly are interested in a minority stake, as a takeover would be impossible.
Gutteed I missed out as with the low IPO price and the high level of scaling (heard 20% and NZSilver states 30% above), this is going to go off like a frog in a sock. I will wait to see where it settles once the stags have had their fun but I think my exposure to the dairy industry will remain at zero.
High and dry?
What BS - the story I heard is that local institutions and investors bid at the very low end so missed out.
What would you do if you were Synlait? Give the shares to those who bid low or reward those who bid high(er)?
Gee whiz, NZ fund managers sure know how to whinge and whine!
I offered to pay $2.65 and got what i asked for with no scaling back.
So it sounds like institutions has stuffed this up for the second time - not being interested years ago when the IPO was first mooted and now this time by bidding too low, probably hoping to get a bargin following the MRP debacle.
Oh well - lets move on.
No. just through my normal broker. Have no idea how they did it reading this forum ? The only thing i can think of is they applied for loads more than needed which could be dodgy if it went wrong.
ill go with hoodwegt - protecting their supplier status ?
More thoughts on large investor: http://www.stuff.co.nz/business/farm...ional-investor
I asked my broker through Forsyth Barr if I needed to make a bid price and all he wanted was an amount I was prepared to spend. Still waiting to hear if I got any. Gutted.
Strategic investor is Royal Friesland-Campina . BIG Netherlands dairy company ... Fonterra will not be best pleased.
2012 Revs : Euro 10.3 B .... whew !!!
from the company website
FrieslandCampina purchases shares in New Zealand milk processor Synlait Milk Ltd.
FrieslandCampina Investments Holding B.V.(1), a subsidiary of Royal FrieslandCampina N.V., has purchased a 7.5 percent interest in Synlait Milk Ltd. The dairy company is located in New Zealand's South Island, near Christchurch. Completion of this transaction is subject to listing of Synlait Milk Ltd on the New Zealand Stock Exchange, which is expected to occur on 23 July 2013 (NZST)(2). With this initial public offering the company wants to raise capital to finance its growth.
Synlait Milk plans to use the capital raised to finance, among other things, a new spray dryer and an on-site blending and consumer packaging plant. By acquiring this interest, FrieslandCampina is supporting the company's growth ambitions.
Roelof Joosten, Chief Operating Officer of FrieslandCampina Ingredients: “In recent years, we have developed a close working relationship with Synlait Milk, a supplier of high-quality raw materials. With this investment, we are supporting our supply of raw materials and also the growth of Synlait Milk.”
Synlait Milk began processing milk in 2008 and currently has the capacity to process 550 million litres of raw milk, which it procures from around 155 dairy farms in the Canterbury region, into approximately 95,000 metric tonnes of products each year. The company focuses exclusively on business customers.
How can a company like that step in during the IPO process & grab those shares. Sorry I'm a novice and may ask a few questions on here.
Of interest
Top 20 global dairy companies, 2012
Rank Company Country $ U.S. (Billion) 1 Nestlé Switzerland 25.9 2 Danone France 19.5 3 Lactalis France 18.8 4 Fonterra New Zealand 15.7 5 FrieslandCampina Netherlands 13.4 6 Dairy Farmers of America U.S. 13 7 Dean Foods U.S. 11.7 8 Arla Foods Denmark/Sweden 10.3 9 Kraft Foods U.S. 7.7 10 Meiji Japan 7.4 11 Unilever* Netherland/UK 7.2 12 Saputo Canada 6.9 13 DMK Germany 6.4 14 Sodiaal* France 6.1 15 Yili China 5.8 16 Mengniu China 5.8 17 Bongrain France 5.5 18 Muller* Germany 4.6 19 Schreiber Foods* U.S. 4.5 20 Land O’Lakes U.S. 4.
Read more: http://dairybusiness.com/seo/headlin...#ixzz2Ym9RWYIc
So who will be buying on day one. Looks like this is shaping up to be an excellent long term play with a new supportive shareholder on board. I would have thought getting in up to $2.60 should pay dividends in the long run.
if synliat is the manufacturer and atm are the seller of the end product doesnt the seller make more money ?
I am considering buying more.And yes most probably around the $2.60 mark.
My wife and I both were allocated 3,000 shares each.At this stage I will take our holdings to 5,000 each.
I am also looking to add to our EBO,and SKL holdings.I have money coming and going at present,so when the dust settles I will see what I have,and where each SP is at the time.May even take my HNZ holding up to match the wife's holding,although she enjoys getting a bigger divie than me.!!!!
I'm still having difficulty reconciling the low IPO price with the range of comments of people missing out, being scaled 20 or 30% or getting full amount applied for and the comment that Friesland agressively bid for its stake. Both scaling and agressive bidding seem totally at odds with a low book build price. Did you get the full amount you applied for or was your application also scaled.
I applied for $15,000 worth for both myself and my wife.Total of $30,000.
We are to get 3,000 shares each.Total 6,000 shares at $2.20 is $13,200.I deal with Craigs ChCh.
Two friends applied through Hamilton Hindin and Greene [ChCh broker].One received 3,000,the other received 2,000.I do not know what/or how many they applied for.I think Synlait minimum parcel is 2,000 shares.I think the wife and I were a bit lucky,as I heard Craigs received 20% of what they applied for.May differ with each Craigs branch,and each advisor in each branch.I don't know.[and I am not going to ask!]
I doubt that you'll be able to make sense of it without being a party to the actual process.
In general terms, those bidders (brokers) who bid highest get the most shares, even though they're all placed at the same price. After that,it's up to the individual firms as to how they allocate them to clients.
At least, that's how it has been explained to me.
But in the various IPOs I have paticipated in I have simply been invited to participate on the basis of an indicative price range
(flexible at both ends). I have never been invited to suggest my price--surely that is the reason for the company giving an indicative price in its prospectus/application. Percy might like to indicate if he was invited to suggest a price--I assume from his last post he simply indicated the total amount he wanted to invest. I had simply indicated the number I wanted.In this case the brokers presumably knew they had heaps of clients prepared to buy on the basis of the indicative range but the price was fixed at the low end. From the other side existing shareholders had to sell in on the basis of the indicative price and must be baffled how they have been sold out at the bottom end with with unsatisfied demand (i.e. massive scaling). To adopt CJ's colourful expression shareholders who sold in might also go "off like a frog in a sock"!
No, price was not mentioned,just the total amount we wanted to invest.
I have received the prospectus today,and have to let my broker know on Monday should I decide not to go ahead.
I agree, 1leon, I've never been invited to suggest a price. But it's the parties to the bidding process, ie the brokers and other instos, who bid their prices and get allocated blocks of shares. After that, we're in their hands as to how many they allocate individual investors.
Of course, it's also in the interests of the company to ensure a healthy market for the shares once they're listed. So there is a tension between the company's interests and those of any shareholders selling into the issue. Depending on the level of their holding, post issue, they will also have a keen interest in the performance of the shares, once listed.
I don't want to be seen to be greedy but we are a little disappointed at $2.20 given the level of interest which appears to be out there. Just to diversify a little we are selling 40% of our holding in the IPO ( also the escrow feature meant if you were a big holder then you could only sell $300k worth in the next 15 months ) so to play it safe we decided to sell some and have the option to sell a few more post listing.
I will be buying stocks like Coca-Cola,Colgate Palmolive,Bristol Myers and Eaton for instance with the proceeds.
Will probably keep 125,000 Synlait Milk for long term along with same number of Synlait Farms. Will sell gradually as values increase in 10% increments, however won't start selling any more SML until $2.80
I received my prospectus in the mail today. Quite a comprehensive document. Page 178 gives a reasonable description of the book build process. I allowed $7000.00 for 3000 shares, so price is a little less than I was expecting. Perhaps they want to ensure a successful float, and some happy new shareholders. I look forward to July 23.
I am long my holding at an effective 41c so although 220c might be a tad low we are still pretty pleased.
Here the "tension" was somewhat more complicated. The bulk of the IPO was by far coming from new allocation, not existing selling in. Further even those selling in could hold back $300,000 to sell on listing and were only restrained about a year on holdings retained above that level. If in fact this issue was grossly oversubscribed it did not require listing at the bottom of the indicative range to ensure a healthy market. The complicating factor here is that we do not have any idea how many shareholders are waiting to throw their $300,000 worth in on listing.I wonder whether the real answer is that the institutions were reluctant to go above $2.20 even though private clients with no access to the numbers wereprepared to go to $2.65.The reported suggestion that FrieslandCampina bid vigorously seems to hint other institutions weren't keen to even bid that far.
There are probably only about 40 shareholders who own $300k + so the amount that might be still to be sold is a maximum of about $12m .... discl. me included
Hi 1leon, I was asked what price i was prepared to pay for the shares by F Barr for the wife. we had a chat and decided $25000 at $2.65 and $25000 at $2.15 so i was guaranteed some but they were scaled back and she got 4500
My other broker for myself i just went in at $2.65 thinking i would be scaled but somehow i wasn't [and he wont tell me how] and have coughed up $50000 which i was not expecting so i hope they go up.
I have perhaps also overlooked smaller holders who have sold down part and of course there may also be staggers wanting out.
It is interesting to compare the sell down of Synlait Milk and Synlait Farms holders. My rough mental arithmetic suggests a sell down in excess of 11% in Synlait Milk but since Synlait Farms arrived on Unlisted in May there have been sales of less than 1% in Farms shares. And Synlait Farms has generally lacked sellers more than buyers. Does this suggest that the original shareholders are happier staying in the farms than the processor and do not have the same confidence on Synlait Milk projections?
Discl. bought Synlait Farms but do not have allocation of Synlait Milk