SML - Synlait Milk Ltd

[Beagle]

SML weekly chart log scale, brand colour way, sensitively diversified rainbow MA's tell the sad story.

That's shocking pink if ever I saw it It's going to take a belter of a result and outlook tomorrow to turn that around.

[Sideshow Bob]

https://www.nzx.com/announcements/360480

ynlait FY20 result published

28/9/2020, 8:31 amFLLYRSynlait Full Year 2020 Result Published
Synlait Milk Limited (Synlait) today published its financial result for the 12 months ended 31 July 2020.
Please find the following materials attached:
• Synlait FY20 Financial Statements
• Synlait FY20 Investor Presentation
• Synlait FY20 Media Release
• Synlait Shareholder Letter
• NZX Results Template

Financial highlights:

• Revenue up 27% to $1.3 billion
• Earnings before interest, taxes, depreciation, and amortization (EBITDA) up 13% to $171.4 million
• Net Profit After Tax (NPAT) down 9.0% to $75.2 million
• Consumer-packaged infant formula sales up 15% to 49,180 MT
• Lactoferrin sales up 46% to 30 MT
FY21 guidance statement:
• There continues to be significant global uncertainty regarding COVID-19.
• While Synlait has proven its ability to maintain operational continuity over recent months, in terms of demand for the products it manufactures, it expects:
• Consumer-packaged infant formula volumes to be similar year-on-year, with lower demand in the first half of FY21 due to higher than normal stock levels in the supply chain. Synlait expects a return to growth in the second half of FY21 once stocks have cleared.
• Strong underlying EBITDA and operating cash flows to continue, with growth delivered from a full year of Dairyworks earnings and the integration of Talbot Forest Cheese.
• No disruption to manufacturing or demand for its ingredient and lactoferrin business.
• This guidance is subject to the unpredictable effects of COVID-19, with consumer behaviour, channel dynamics and supply chain disruptions all subject to change.
• This is offset by the carrying costs of investing in Synlait Pokeno and Synlait Dunsandel’s Advanced Dairy Liquid Packaging facility. Earnings from these investments are expected to be delivered in FY22 and beyond.
• As disclosed today, Synlait is in the process of finalising a long-term supply agreement with a new, multinational customer for packaged products which is expected to have a positive impact on earnings from FY23.
• Against this, we are targeting a similar, or slight improvement on, our FY20 NPAT result.
• A further update will be provided at Synlait’s half year result in March 2021.

Conference call details:

Synlait CEO Leon Clement and CFO Angela Dixon will hold a briefing on the results at 11.00am NZST / 8.00am AEST time.
Participants can register for the briefing at: https://s1.c-conf.com/diamondpass/10007351-invite.html
Please note that registered participants will receive a personalised dial in number upon registration. Participants are encouraged to register ahead of time for easy access. A transcript and recording of the briefing will be available on Synlait’s website shortly afterwards.
For further information please contact:

Media
Linda Chalmers
Senior Communications Advisor – External
P: +64 21 951 347
E: linda.chalmers@synlait.com
Investors
Hannah Lynch
Corporate Affairs Manager
P: +64 21 252 8990
E: hannah.lynch@synlait.com

[winner69]

EBITDA up 13%

That’s pretty impressive

http://nzx-prod-s7fsd7f98s.s3-websit...480/331664.pdf

[BlackPeter]

Hmm - I just wish they would pick a bit more contrast in their financial statements. Light grey (and tiny) font on a sort of dirty whitish background is ridiculous. I assume this is supposed to make the odd pink colour to better stand out of the light grey ... but it clearly does nothing to increase readability ...

Looking at the numbers I could decipher so far ... revenues up (even slightly above consensus forecast), however earnings down (even more than forecast). Looks like they do have a margin problem. Not good to have a growth company when it is only the revenues which are growing while the earnings shrink.

Liabilities to assets are rising again (one of the things you don't really want to see growing in times of a crisis) - and pretty much at the upper limit (60%) I would still consider as acceptable for a manufacturer. Better nothing goes wrong for them this year ... but oops - what about the Pokeno risk? Shareholders better put some money for the next CR aside.

RoE dropped from 16.7% down to 12.4%. Not terrible, but nothing spectacular either, and again - the trend somehow looks wrong.

First return of various big investments expected in 2022 and 2023. Hmm ... and this in combination with quite high uncertainties about the price of some of their star earners. Lactoferrin just not the consistent outperformer they thought it would be when they invested into the plant.

... and the good old Damocles sword (Pokeno) keeps dangling over them ... how do they say: "On the high seas and in court, we are in God's hands" ... which turns any investment decision with them into a question of hope or faith.

Not an investment strategy I would prefer ...

[Beagle]

Hmm - I just wish they would pick a bit more contrast in their financial statements. Light grey (and tiny) font on a sort of dirty whitish background is ridiculous. I assume this is supposed to make the odd pink colour to better stand out of the light grey ... but it clearly does nothing to increase readability ...

Looking at the numbers I could decipher so far ... revenues up (even slightly above consensus forecast), however earnings down (even more than forecast). Looks like they do have a margin problem. Not good to have a growth company when it is only the revenues which are growing while the earnings shrink.

Liabilities to assets are rising again (one of the things you don't really want to see growing in times of a crisis) - and pretty much at the upper limit (60%) I would still consider as acceptable for a manufacturer. Better nothing goes wrong for them this year ... but oops - what about the Pokeno risk? Shareholders better put some money for the next CR aside.

RoE dropped from 16.7% down to 12.4%. Not terrible, but nothing spectacular either, and again - the trend somehow looks wrong.

First return of various big investments expected in 2022 and 2023. Hmm ... and this in combination with quite high uncertainties about the price of some of their star earners. Lactoferrin just not the consistent outperformer they thought it would be when they invested into the plant.

... and the good old Damocles sword (Pokeno) keeps dangling over them ... how do they say: "On the high seas and in court, we are in God's hands" ... which turns any investment decision with them into a question of hope or faith.

Not an investment strategy I would prefer ...

Well summed up BP. I couldn't agree more or have said it better. Trust us, we know what we're doing and everything will come right in FY23. Sorry Leon...I don't trust you and your total obsession with all things pink.

[BlackPeter]

... just noticed the minor irritation ATM reported on this morning:

http://nzx-prod-s7fsd7f98s.s3-websit...483/331673.pdf

In September we have started to observe emerging additional disruption to the corporate daigou /
reseller channel, particularly due to the Stage 4 lockdown in Victoria.
As a result of all these issues, we are now witnessing a contraction in the daigou channel beyond our
previous expectations and without the replenishment orders that would typically be anticipated at this
point.
This disruption in the daigou channel is impacting our September sales and it is currently anticipated
that this will continue for the remainder of the first half of FY21. Sales in the daigou channel represent
a significant proportion of infant formula sales in our Australia & New Zealand (ANZ) business and, as
such, we now expect ANZ revenue to be materially below plan for the first half.

Given that all this IF is supplied by SML does this leave me wondering, whether this trend might have any impact on the supplier of this product?

[Beagle]

Agreed again BP. ATM sales are forecast to "decline", (can you believe it !!) in the first half and to me the second half forecast looks "hopeful"

Synlait is a very interesting case study for those that should be incorporating technical analysis with their investment approach.

Going forward I can foresee this testing new multi year lows and then with their very high debt level if they lose their Supreme court case the share price could get really ugly with a deeply discounted capital raise.

I am tempted to think there could be some value here at some point in the future but with the current culture of the company...why would anyone bother ?

[Beagle]

"Good leaders know when to step up and deliver. Great leaders know when to step down and let others deliver". SML has neither... Moosie

[Beagle]

https://www.goodreturns.co.nz/articl...or+28+Sep+2020

Not a great day for our new German friend. Heading down to test the multi year March 2020 low of $4.36 ?

[flyinglizard]

A2 has many cards to play, but SML may be in trouble.

If A2 uses cost saving strategy to purchase Mataura Valley Milk Factory, to product the A2 products alone, how about SML in the long term?

https://www.stuff.co.nz/business/far...or-270-million