SML - Synlait Milk Ltd

**Nasi Goreng** · 21-02-2018, 12:55 PM

As a long term investor in SML I can understand the market reaction to today’s news.

My gut reaction was initially this is not good for SML but with ATM’s growth agenda it makes complete sense that they need multiple partners. In the last year SML has doubled its canning capacity and bought a facility in Auckland.

The SML growth story is well in tact but despite all this... it makes sense that a $1 billion company can’t be the sole supplier to an $8 billion company. Think about that for a moment...

There is no indication that the supply relationship between SML and ATM is damaged, reading between the lines, it will likely strengthen all 3 parties which will allow SML to continue its growth agenda without the pressure to keep up with all of ATM’s supply needs.

Looks pretty good to me and I’m going to sit back and look forward to another bumper earnings report and want to hear more about further SML growth opportunities going forward.

**mfd** · 21-02-2018, 01:09 PM

I'm sure synlait will continue to do well from the link to ATM, but it's obvious to me the real growth prospects are with ATM not SML. Synlait are only exposed to a part of the ATM business and are unlikely to benefit from planned expansions in the US, Europe, SE Asia, Middle East unless they can compete on price with fonterra and local milk production/processing. A2 are big enough to negotiate now and have the capital to build their own facilities if that works out best.

**Nasi Goreng** · 21-02-2018, 01:23 PM

And that’s why the value of ATM is $8B and SML $1B.

Both companies can double in size from here and even if ATM accelerates faster, there aren’t many companies with the prospects of these two so I expect the panic to cease soon enough.

**couta1** · 21-02-2018, 01:42 PM

Originally Posted by Nasi Goreng

And that’s why the value of ATM is $8B and SML $1B.

Both companies can double in size from here and even if ATM accelerates faster, there aren’t many companies with the prospects of these two so I expect the panic to cease soon enough.

Lots of small reef fish holders in this company and when a kingfish(aka Fonterra) arrives on the scene, they scatter. Disc-Bleeding heavily on this one, but will hang in there as SML is more than just A2.

**sb9** · 21-02-2018, 01:45 PM

Originally Posted by couta1

Lots of small reef fish holders in this company and when a kingfish(aka Fonterra) arrives on the scene, they scatter. Disc-Bleeding heavily on this one, but will hang in there as SML is more than just A2.

It'll come alright come reporting time next month. And don't forget A2 has bought 8.2% stake in SML last year. Surely, they value that investment with all seriousness and don't put that relationship in jeopardy.

**steveb** · 21-02-2018, 01:46 PM

Originally Posted by couta1

Lots of small reef fish holders in this company and when a kingfish(aka Fonterra) arrives on the scene, they scatter. Disc-Bleeding heavily on this one, but will hang in there as SML is more than just A2.

The dead cat will bounce tomorrow can't see any reason why you would sell at $6.28 at the mo.

**Blair** · 21-02-2018, 02:23 PM

Originally Posted by minimoke

I've just placed an order for a few more. May as well apply my ATM "profits" to something

Ditto, but first time buyer.

Sold a bit early as it turns out with ATM. Not early enough for it to have been a mistake, but still.
Bought some SML at $6.27... will see how it goes.

**minimoke** · 21-02-2018, 02:25 PM

Originally Posted by Blair

Ditto, but first time buyer.

Sold a bit early as it turns out with ATM. Not early enough for it to have been a mistake, but still.
Bought some SML at $6.27... will see how it goes.

Hope you do better than me - when I buy price goes down. Very comforting though that ATM is going up at a greater rate of knots that SML is going down.