Synlait Farms Limited (SNLF)

[CJ]

My bet would be first trade @ $1 if world markets stay bullish over the next few days.

85c / $1.00 ( 30k / 60k volume )

Your bet or your bid?

60,000 shares traded at $1 ....

So we now have a starting point.

[FarmerHamilton]

Yes, you'd think it would be a coincidence if the buyer wanted exactly 60,000 which was the size of the offer. I see there are 75,000 now on offer at $1.05. The buyer might take those as well pretty quickly and then that big 175,000 lot at $1.15 could be in there sights as well. GDT auction Wednesday morning .... global markets look pretty "bulled up" at present .... NZ economy on a roll

[FarmerHamilton]

Yes, you'd think it would be a coincidence if the buyer wanted exactly 60,000 which was the size of the offer. I see there are 75,000 now on offer at $1.05. The buyer might take those as well pretty quickly and then that big 175,000 lot at $1.15 could be in there sights as well. GDT auction Wednesday morning .... global markets look pretty "bulled up" at present .... NZ economy on a roll

59,600 now offered at $1 and a fresh bid at $0.85c

Trading in SNLF is off and running !! ( be nice to see a 5c spread , or even 1c !! )

[Newman]

59,600 now offered at $1 and a fresh bid at $0.85c

Trading in SNLF is off and running !! ( be nice to see a 5c spread , or even 1c !! )

Some are desperate about talking up the share price before the company has to raise more equity to pay down debts. Who would take part in rights issue if they can buy at the market at 70% of the so-called net asset per share?

[FarmerHamilton]

Some are desperate about talking up the share price before the company has to raise more equity to pay down debts. Who would take part in rights issue if they can buy at the market at 70% of the so-called net asset per share?

Newman , what is your agenda ... you sound like you have a rather large chip on your shoulder.

[CJ]

Newman , what is your agenda ... you sound like you have a rather large chip on your shoulder.

Since you asked someone else, what's yours?

Are you involved with the company, currently an investor or just a keen farmer wondering if they should invest?

[FarmerHamilton]

Since you asked someone else, what's yours?

Are you involved with the company, currently an investor or just a keen farmer wondering if they should invest?

1. Active investor in Global equities
2. Queen Street farmer : shareholder in various equity partnerships and following Synlait Farms closely as a possible model for our own businesses in North island - value of my holdings approx $1.6m
3. Very interested in investing in Synlait Milk if we ever got the chance.

[Newman]

1. Active investor in Global equities
2. Queen Street farmer : shareholder in various equity partnerships and following Synlait Farms closely as a possible model for our own businesses in North island - value of my holdings approx $1.6m
3. Very interested in investing in Synlait Milk if we ever got the chance.

You must have researhed the company well. Could you provide some thoughts on my questions as follows?

1. What was the rationale for the separation of Synlait farms from Synlait Limited?

2. What kind of financial arrangements were made between Synlait Ltd and Synlait farms? For example, were the farms fairly valued compared to similar farms in Canterbury and farms in Waikato?

3. Whom Synlait Farms sell its milk to? Fonterra, Synlait Milk, or others? Does it get a fair price?

4. Where can I find a copy of the annual report of Synlait Limited and Synlait Farm? They are not on the website of Companies office.

5. Synlait Frams' investor presentation in March 2013 was not well prepared. Here are two examples: 1) on slide 15, the statement "water consents.. range in tenure from 10-35years". Its starting point is unclear. Is it from now or from the consents were given? 2) on slide 30, the equity should be 94 (194-100) millions not the 95 as stated. How reliable these guys are?

Thank you.

[FarmerHamilton]

You must have researhed the company well. Could you provide some thoughts on my questions as follows?

1. What was the rationale for the separation of Synlait farms from Synlait Limited?

2. What kind of financial arrangements were made between Synlait Ltd and Synlait farms? For example, were the farms fairly valued compared to similar farms in Canterbury and farms in Waikato?

3. Whom Synlait Farms sell its milk to? Fonterra, Synlait Milk, or others? Does it get a fair price?

4. Where can I find a copy of the annual report of Synlait Limited and Synlait Farm? They are not on the website of Companies office.

5. Synlait Frams' investor presentation in March 2013 was not well prepared. Here are two examples: 1) on slide 15, the statement "water consents.. range in tenure from 10-35years". Its starting point is unclear. Is it from now or from the consents were given? 2) on slide 30, the equity should be 94 (194-100) millions not the 95 as stated. How reliable these guys are?

Thank you.

The rational was I think that they tried to raise capital while they were combined and the feedback was that a different set of investors wanted exposure to farms and others wanted exposure to the processing business. Putting the two together probably hurt the value of their 49% stake in Synlait Milk so it is now separate. Shareholders in the previous Synlait Limited now have shares in Synlait Farms which are obviously traded on the Unlisted market and also Synlait Limited which has as its only asset a 49% share in Synlait Milk ( Bright Dairy & Food of China own the other 51% )
It will be interesting to see how it pans out as the Synlait Milk business would be a "HOT" listing for the NZX at present if the two shareholders were looking to raise capital or both reduce their stakes to say 35/40%. Bright owning 51% obviously gives them the final say ...

Your Q2 is irrelevant as the same set of shareholders still own all the previous assets , it has just been split up into two entities.

Q3. Synlait Farms sells all its milk to Synlait Milk. It receives the same published price as the other 80 odd suppliers to SML. Totally transparent transaction. Something similar to Fonterra minus the benefit of not having to have capital tied up in supplier shares.

Q4. Not too sure, new report will be out in next few months ( financial Y/E 31 May )

Q5. Most consents would be for at least 10 years from now I would think, and highly likely to be renewed when they approach the end date. 95 instead of 94 is probably a rounding thing ... 94.52 has popped into the presentation as 95 , I don't know really.

92c bid now , $1 offered ... last $1 decent bids and offers. Hot sector : no denying that.

[Newman]

Dairy prices fall 7.3%, milk powders down 10% in latest (May 1st) Fonterra auction.

This would make FarmerHamilton disappointed. Further, NBR (last week) mentioned the problem of milk contaminated with chemical DCD in Caterburry farms.

In the past decade, farmers get rich largely by capital gains, which is not certain in the future.