SML - Synlait Milk Ltd

[Beagle]

Yes, nice bounce off 100 day MA. Seen a significant divergence in the correlation between ATM and SML in the last couple of months. SML the value pick of the two right at the minute I would think but its hard to separate them in terms of their long term prospects which are of course inextricably linked so I have a bob or three on both. Possible merger down the track ?

[BlackPeter]

Yes, nice bounce off 100 day MA. Seen a significant divergence in the correlation between ATM and SML in the last couple of months. SML the value pick of the two right at the minute I would think but its hard to separate them in terms of their long term prospects which are of course inextricably linked so I have a bob or three on both. Possible merger down the track ?

Same here (being invested in both), but not so sure about the merger idea ... SML has more than one suitor and ATM has more than one processor (though I think SML is their only baby formula processor - and this is where the $$$$'s are). I don't think they (or ATM) would gain by giving up this "diversity". Just think at SML's venture into selling fresh milk into the SI, think Lactoferrin ($$), think grass fed milk they sell through Munchkin in the US. Why should they endanger any of these other ventures?

And while they have a strong common interest (A2 baby formula) - I would prefer to see SML being able to survive without A2 (just in case sh*t happens), and I think A2 should try to be independent as well (though I am not sure, they are - SML is holding all these invaluable Chinese import licences for A2's baby formula). Maybe SML is where the real value is ...

[mfd]

Today's boost to A2 is presumably due to the expansion in America, so not relevant to synlait as far as I'm aware.

[BlackPeter]

Today's boost to A2 is presumably due to the expansion in America, so not relevant to synlait as far as I'm aware.

Depends on whether they intend to sell their baby formula in the US. In my view they would be stupid if they didn't, so, yes - I think there should be some impact on SML as well.

[Beagle]

Same here (being invested in both), but not so sure about the merger idea ... SML has more than one suitor and ATM has more than one processor (though I think SML is their only baby formula processor - and this is where the $$$$'s are). I don't think they (or ATM) would gain by giving up this "diversity". Just think at SML's venture into selling fresh milk into the SI, think Lactoferrin ($$), think grass fed milk they sell through Munchkin in the US. Why should they endanger any of these other ventures?

And while they have a strong common interest (A2 baby formula) - I would prefer to see SML being able to survive without A2 (just in case sh*t happens), and I think A2 should try to be independent as well (though I am not sure, they are - SML is holding all these invaluable Chinese import licences for A2's baby formula). Maybe SML is where the real value is ...

Good post BP. I wasn't suggesting that any possible contemplated merger would or could endanger any of Synlait's planned expansion, rather was perhaps just suggesting that there could be more synergies from a merger and expansion on multiple fronts, combination of marketing efforts ? but as you suggest they have their own unique aspirations so perhaps not an ideal fit ?

[Ggcc]

It would not surprise me if A2M won't allocate all they could to shareholders through dividend and increase their stake in Synlait down the track. I hope they will do that, as they both benefit from each other's business.

[Beagle]

Behind the paywall article on NBR saying ATM still struggling to get enough supply ? Seeing as Synlait only recently completed projects to double their canning and drying capacity one would hope this is simply a logistical issue at this stage or getting the completed product to market...or perhaps ATM's product demand is off the charts ? Thought folks ?

[Nasi Goreng]

Yes, nice bounce off 100 day MA. Seen a significant divergence in the correlation between ATM and SML in the last couple of months. SML the value pick of the two right at the minute I would think but its hard to separate them in terms of their long term prospects which are of course inextricably linked so I have a bob or three on both. Possible merger down the track ?

Well done for noticing Synlaits respect of the 100 day MA. Take a look at the 3 year chart. This was my post back in July 2016 and it still continues to respect the 100 day MA.

The 2 year SML chart is looking very good at the moment. The 1st year being a very well defined down trend with lots of lower lows each time finding resistance at the 100 day moving avg, the trend now is up and finding support at the 100 day MA. It looks like it will make new highs soon.

[minimoke]

In todays announcement looks like SML have hired a very competent person to Director of quality, regulatory and Lab serves. No glass ceilings there.

[petty]

Yea good announcement. Mention of the lack of gender diversity at the exec level was raised at the AGM. It was something the board and Exec were aware of and good to see a highly qualified individual in this role. Secondly its promising that Synlait are capable of securing high caliber staff. Watching for future CEO announcement.