SML - Synlait Milk Ltd

[Beagle]

The elevated prices wasn’t Synlait’s making ....just punters / ‘investors’ seeing something that was never there and priced it accordingly. Many of these ‘investors’ were just momentum traders who got on the band wagon and proclaimed what a great company Synlait was.

Synlait was and still is essentially a capital intensive commodity producer ....nothing real special that would command a irrational / exuberant share price

Synlait as a company is a pretty solid one - has a long term strategy and is allowing that strategy to play out. Much to be admired about how they are positioning themselves for the future.

Sadly, as is the case of many companies, Synlait the company is judged by its share price - which unfortunately they have no control over or the irrationality or exuberance of the punters / investors’ that set the share price.

I have expressed a wide range of concerns regarding very poor governance, extreme risk taking with Pokeno, extremely poor and very "economical" shareholder communication about pertinent factors, debt level's, share price reacting before announcements, (leaky ship), very slow and lack of progress with other brand accreditation, poor financial performance and last but certainly not least expending vast amounts of management time and resources getting accreditation to elevating people and the planet to the same level as shareholders all without obtaining a special resolution for their radical ESG approach.

With all due respect I think you have the cart before the horse. The share price is the market reacting to the above, not the other way around.
Now it appears we may be able to add very poor due diligence of operational systems regarding the cheese factory acquisition to the list. Why would this surprise anyone with a company so single mindedly laser focused on all things ESG ?

I put it to you and others that Leon is an extremely poor CEO and has lost any mandate he had to manage this company. He needs to go.

[winner69]

SML shareprice sinking closer to book value of 340 and based on current financial performance (returns unlikely to cover its cost of capital) it should go lower

So even at 386 market expecting good earnings growth in future

Guru analysts seem hopeful for better times with targets ranging from 460 to 587

[ratkin]

SML shareprice sinking closer to book value of 340 and based on current financial performance (returns unlikely to cover its cost of capital) it should go lower

So even at 386 market expecting good earnings growth in future

Guru analysts seem hopeful for better times with targets ranging from 460 to 587

They should have stayed in Dunsandel, rapidly heading back towards their listing price

[BlackPeter]

SML shareprice sinking closer to book value of 340 and based on current financial performance (returns unlikely to cover its cost of capital) it should go lower

So even at 386 market expecting good earnings growth in future

Guru analysts seem hopeful for better times with targets ranging from 460 to 587

OK - lets test the value of the guru analyst forecasts, shall we?

In February 2020 SML share price peaked at $8.51; I know, difficult to imagine such heights these days.
At that stage the same guru analysts predicted that the share price will go down to $7.57 (consensus prediction) though for some funny reason they still recommended a strong hold (5.76 out of 10); Peak Share price in February 2021 was $5.43. Sigh - I know, so high ...

Anyway, good people the guru analysts, they knew that SML was overvalued and predicted a drop. Missed however somehow the order of magnitude of the drop, didn't they?

Not quite sure I would use their recommendations these days other than for entertainment purposes ... btw - I see they moved their buy recommendation upwards (now 6.88 out of 10).

On the other hand - assuming SML does not bite the dust (I don't), they need to go up again at some stage. Question is just - where is the bottom? TA might be a more useful tool to determine that ...

[sb9]

Holy smoke, Leon can't get anything right going. He's reaching new bottom with each announcement ..

[bull....]

big downgrade today

The ongoing uncertainty of The a2 Milk Company’s expected demand for the remainder of FY21 and FY22

Given the significant volatility and uncertainty that is affecting Synlait at this time due to the above factors, the company’s Board and Management see a broad range of outcomes still possible in FY21. However, the company’s previous guidance, that the overall FY21 NPAT result will be approximately half that of the FY20 NPAT result, will now not be attainable.

https://www.nzx.com/announcements/368584

[Baa_Baa]

SML shareprice sinking closer to book value of 340 and based on current financial performance (returns unlikely to cover its cost of capital) it should go lower

So even at 386 market expecting good earnings growth in future

Guru analysts seem hopeful for better times with targets ranging from 460 to 587

Ouch, looks like your BV will be in play very soon.

[winner69]

So half of last years’s profit too optimistic

I’d say he was too embarrassed to say the word LOSS

That’s covered by a ‘broad range of outcomes still possible’ isn’t it?

[Baa_Baa]

On the other hand - assuming SML does not bite the dust (I don't), they need to go up again at some stage. Question is just - where is the bottom? TA might be a more useful tool to determine that ...

TA not that helpful, a fairly wide support band between $3.75 and $2.95 from 2017 .. crikey, we're talking 4 years of lost SP capital. Big downgrades don't respect TA supports. Might see a capitulation event on this one.

[ratkin]

What an ugly announcement, at least when/if it eventually turns the tree will have been well and truly shaken. Anyone still holding obviously thick skinned, but this will test their resolve to the limit.