SML - Synlait Milk Ltd

[Beagle]

$8.51 now and heading south at a fast rate of knots. Noe more than $2 per share lower than when the seriousness of issues at Pokeno first came to light.
Just a reminder folks to keep in mind that this is a company with a huge load of debt as all their recent and planned expansion has been facilitated through bank debt...which is okay if everything goes to plan...but leaves the company very vulnerable if it doesn't. Keep that in mind before you get temped to dip your toes in the water and get an "apparent bargain"

Two key reasons why I will not invest at any price.
1. Management have proved they can not be trusted to disclose material information to shareholders in a timely manner. Multiple breeches of good faith and concealment.
2. Management have proved they are arrogant and proceeded with the development despite the risk of appeal. To my mind this amounts to "Gross Recklessness"

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[winner69]

Book Value is $2.60 odd

So even at $8.50 heaps and heaps of solid growth and good stuff built into the current share price.

Priced as if one is looking through pink tinted glasses

[bull....]

Book Value is $2.60 odd

So even at $8.50 heaps and heaps of solid growth and good stuff built into the current share price.

Priced as if one is looking through pink tinted glasses

its absurd the multiples given to a manufacturer , a2 premium built in is the only reason it is this price

[Beagle]

Makes me wonder how the market will react when they next choose to update on Pokeno.

They're in a weak and very vulnerable position and its clear all previous attempts to negotiate a financial compensation have failed which would suggest the next update will be a mea cupla involving a very substantial figure or potentially worse a site relocation. Either way its going to be ugly... I reckon the first $2 decline was just because management have proved they're incompetent...then we get into the serious costs and then for good measure the consequential contractual consequences to suppliers and end users. Every indication this is going to be extremely ugly for shareholders and we've only seen part of that at this stage in my opinion.
I have thought for the last few weeks that this stock is a very good short (for those that are into that sort of thing).

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[nzsharetrade]

"China to boost market share of domestic baby formula"

"The National Development and Reform Commission (NDRC), China's top economic planning agency, released an action plan that aims to improve the quality of domestically made baby formula and increase its market share to above 60 percent."

the local brand is about 40%, someone needs to go to make the room. I still believe SML is in better position than ATM

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[nzsharetrade]

To do that NDRC has to get the consumer on side. That means they need to trust local product - that is an enormous hurdle, based on past domestic milk powder production problems. A2 is not only a trusted brand, it also helps the little darlings tummy's and all good Chinese mums want happy baby tummnys.

Sure, I understand that until they made up something for A2 to carry. I guess my point is bright dairy products with SML supply will be considered as part of the "local brand". it looks like they are also trying to attract people to build factory in CN (no sure who would do that in next 10 years.) I just believe the best way to do business is sitting behind NOT at front line in China at moment.