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

[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