Maybe NZ has oversold. Oz closed at AUD$9.62 or NZ$9.97
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Maybe NZ has oversold. Oz closed at AUD$9.62 or NZ$9.97
I enjoyed your analysis baa baa. I'm not sure where this one is going, I appreciate the concerns posters have made regarding management and lack of announcement regarding a2 pricing adjustment, but I felt the market over reacted today so purchased more at $9.36.
I feel positive about pokeno because of the significant increase in production it will bring and their diversification into the liquid milk market down south. I feel the green wash is just fashionably corporate responsibility, not necessarily bad but also not particularly important and should not be held up as a trophy when things aren't going well financially.
The CEO commented in an interview that seasonality played a role and that he didn't think today's result was far from what they had indicated to market. I don't know exactly what he was referring to. I like many investors was seriously taken by surprise by the missing 4-8 million from npat that we were expecting.
It is bad - there is no doubt about that.
Every manufacturer knows that every single step they take needs to be a step that adds value to the manufacturing process chain. Unless going green achieves some cost saving or increase in revenue there is absolutely no reason for it. By stopping burning coal they risk significantly increasing energy costs and will not do one single teeny smidge to improve teh "global warming" disaster. Ask them - how many parts per billion of CO2 difference will their plan make to the atmosphere - I bet they dont answer.
In the meantime every minute they spend pondering global warming or implementing diversity is a minute they are not focusing on improving manufacturing efficiencies.
I have no doubt that Fonterra can supply ATM with exactly the same product that Synlait do and if Synlait had not accepted the price they did from ATM then Fonterra would have been very happy to supply.
It is always a race to the bottom with processors, I have been watching it for 40 years in the meat industry.
I understand SML has agreed to supply ATM for 5 yrs.
I agree, a future supply of A2 IF from Fonterra is very likely, and my guess is that this will be used in other Asian markets such as Sth Korea, Japan and Singapore.... and possibly USA. ( I'm unsure if Fonterra is registered/approved to supply A2 IF in China.)
ATM will be aware that it needs to lessen its longterm IF sales reliance on China (as well as a need to diversify its IF supply)
Also on RNZ morning report this morning, it was reported that a key reason for SML's reported lower margins is that SML was relying on production/sales of its own brand of IF to lift its margins to offset those lower margins negotiated by ATM..... however China is playing hard with SML's registration approvals, and there is a 'delay' which has caught SML out. So no Chinese registration of SML's IF..... yet.
JMHO... DYOR ( I hold no SML)
Those registrations, or lack of them, are a worry
Leon didn’t sound too convincing on the radio this morning about getting them this year
Could be a big drag on earnings
The number of believers deserting the company (or taking their money/profits) yesterday just shows a company can go from hero to zero very quickly.
Well, I would not be that harsh. They are clearly not at ZERO, and I don't see them getting there. Just a healthy correction by de-hyping ;):
Synlait is a good company and a much better milkprocessor than their big competitor Fonterror, and even they do have a value above Zero. I think Synlaits focus on high value products (like A2 milk formula and lactoferrin) might help, though there is obviously something to say about the benefits (but as well cost) of diversification.
They are currently (at $9.75) on a (3 year) forward PE of 17.8. Might rise somehow after the analysts recalculated their numbers. What would be more realistic? 12.5 - allowing still for some growth - this would put their SP slightly below $7. If I pick a PE of 10 (boring old cyclical agriculture) than it still would be a SP of $5.50;
Again - analysts will review their forecast earnings, which will further depress above numbers, but I don't see them dropping below say $4, which still would be a nice rise from the $3 the company traded for in 2016. Good solid company, just had a hyped up overshoot and changed to a less tested CEO with a funny taste for colours.
Time will tell. Certainly no reason to despair .... the time to buy back in will come, though changing their colour schema (including the person introducing it) might potentially speed up this process ;);