SML - Synlait Milk Ltd

[Lego_Man]

Another shocking update this morning. They're not even trying to sugar coat it now.

[Rawz]

Another shocking update this morning. They're not even trying to sugar coat it now.

Where’s the link?

[Sideshow Bob]

Where’s the link?

https://www.nzx.com/announcements/425973

Synlait Milk Limited (Synlait) currently expects its total Net Profit After Tax (NPAT) for the six-month period ended 31 January 2024 (HY24) to be a net loss in the range of ($17) million to ($21) million.

The range is based on Synlait’s initial consolidated result, which is subject to further review and may be subject to further adjustments as the company prepares its HY24 financial statements for release on Monday 25 March 2024. The HY24 result remains subject to review procedures by Synlait's auditor, and the range excludes any additional adjustments, including accruals, provisions, and impairments, which are still being assessed.

The previously announced guidance stated that Synlait expected its HY24 NPAT to be down on HY23, mainly due to increased financing costs and changes in margin. For reference, Synlait’s HY23 NPAT was $4.8 million.

The HY24 result has mainly been impacted by:

• Increased financing and operational costs.
• Ingredient margin reductions.
• Advanced Nutrition margin reductions.

In September 2023, Synlait stated its earnings before interest, taxes, depreciation, and amortisation (EBITDA) performance was expected to improve in FY24, compared to FY23. Synlait’s expectation is now that the FY24 EBITDA result is expected to be broadly flat or down on FY23.

The Board and Management are actively working on the need to deleverage Synlait’s balance sheet as a priority. Synlait will provide an update when it releases its HY24 result in March.

[whatsup]

Very sharp falling knife with this one now !

[Newman]

Another shocking update this morning. They're not even trying to sugar coat it now.

Capital raising seems less likely before the due date of Symlait paying banks back $130m. China is in its New Year holidays till the weekend, and I suspect Bright Dairy would appoint a new director quickly to Synlait and agree on the terms of capital raising as small shareholders expected.

What would happen if no capital raising is completed before March 30? Would the share price drop to 20 cents?

[whatsup]

SMLO10's 24% atm !!

[Balance]

SMLO10's 24% atm !!

Been 24% for the last week.

[Balance]

Capital raising seems less likely before the due date of Symlait paying banks back $130m. China is in its New Year holidays till the weekend, and I suspect Bright Dairy would appoint a new director quickly to Synlait and agree on the terms of capital raising as small shareholders expected.

What would happen if no capital raising is completed before March 30? Would the share price drop to 20 cents?

Sky TV & NZK show that CR's rights price can get down towards 10c rather than 20c.

That is on the cards if a CR takes place.

[bull....]

I dont see how a capital raising will save them now. they were to slow to do one.
even a 1 billion share issue at 20c would only raise 200 million.
hopefully an announvcemnt of sale of assets and a cap raise might buy them time for operating conditions to improve but time running out
receivership looking most likely is my guess. hope im wrong

[Rawz]

I listened this podcast yesterday while running errands in Auckland yesterday https://www.theinvestorspodcast.com/...-w-ian-cassel/

Ian Cassel is one of my favorite guests to listen to as he only invests in Mircocaps, which I prefer. You can type his name into Spotify and a bunch of interviews will pop up.

Anways, Ian and the host were discussing when to average down. And basically the answer was to never ever ever ever do it when a company reports bad numbers. Im not sure when SML troubles started but over the last 12 months i know its been bad news after bad. And looking at the chart SML is down 80% over the last 12 months (probably 80% for the 12 months before that too). They went on to talk further about when to avg down and the conclusion was basically only if the market is irrational with its pricing vs value but in a good fundamental news period. Summary.. never avg down only avg up.