SML - Synlait Milk Ltd

[blah]

My point being, is there any benefit to the Dairy company since all it does is increase the farmgate price (ie. cost of sales). Is it linked directly or does the dairy company take a margin.

I note that Synlaits milk supply cost is linked to the Farmgate price (less upto 25c)

I've been pondering this issue as well. I'm not going to be providing answers but this is how I see it:

The farmgate milk price is based on the 'world price' - essentially the world price less costs that Fonterra incurs in collecting the milk and (not too sure) basic processing costs. The farmgate milk price also accounts to an extent the opportunity costs of milk collection. And because the farmgate milk price is paid by Synlait to farmer-suppliers, indeed a higher farmgate milk price means additional costs of production for Synlait.

I think it will be all doom and gloom if the story stopped here. But the flipside is that dairy-exports are also linked to the 'world price'. While a higher world dairy prices would mean a higher farmgate price, it also means a higher price that milk powders, baby formula etc command, translating to higher revenue.

I wouldn't have a clue how the COGS effect would weigh against the revenue effect so I won't elaborate further. Rather I'm more interested in pondering how Synlait will be affected when Fonterra enters the Chinese baby formula market.

[NZSilver]

So who's participating in the IPO, I'm going to try and get a few.

[CJ]

So who's participating in the IPO, I'm going to try and get a few.

I've asked for an allocation (from ASB) but they haven't come back asking for anything binding at this stage.

Not sure what my chances are at getting any given they aren't the lead broker.

[bull....]

heres a list of top companies selling infant formula in china

ADY
- Abbott
- Beingmate
- Brightdairy
- Dumex
- Heilongjiang longdan
- Liaoning Huishan Dairy Group
- Mead Johnson
- Mengniu
- Nanshan Bywise
- Nestle
- Sanyuan
- Scient
- Shanghai Chenguan Dairy Co.,Ltd
- Shanxi Guchengruye
- Synutra
- Tibet Yak Milk
- Wandashan
- Wissun
- Wyeth
- Xian Yinqiao Group
- YASHILY
- Yili

this list of companies is written about in the Chinese Infant Formula Milk Powder Industry 2013 research report http://www.researchandmarkets.com/re...chinese_infant

and i see some of them are in trouble

http://nz.news.yahoo.com/a/-/world/1...consolidation/

[lowrolling]

http://nz.news.yahoo.com/a/-/world/1...consolidation/

Reduced margins will come from this. Not a good sign for Synlait who are aiming for 40-50% of their business to be producing infant formula.

[bull....]

Reduced margins will come from this. Not a good sign for Synlait who are aiming for 40-50% of their business to be producing infant formula.

yep some have dropped their infant milk prices already , but they still do very nicely.

Also i see fonterra will present a strategy http://www.nzherald.co.nz/agribusine...ectid=10894266 to expand the local milk pool which could be of benefit to companies like synlait and others

[FarmerHamilton]

yep some have dropped their infant milk prices already , but they still do very nicely.

Also i see fonterra will present a strategy http://www.nzherald.co.nz/agribusine...ectid=10894266 to expand the local milk pool which could be of benefit to companies like synlait and others

You can take a horse to water but you can't make it drink .... ( the French fizzy stuff is far nicer )


Ancient chinese proverb ????

You get my point ...

[Lease]

A few of my friends want to register their interest, but seems no brokers accept their registration. This share is hot!

[Xerof]

They are too late I'd say. I had to put in for a firm allocation by last Friday, but may not be the same for every broker.

[CJ]

They are too late I'd say. I had to put in for a firm allocation by last Friday, but may not be the same for every broker.

Thats early - book build isn't till next week.