SML - Synlait Milk Ltd

[1leon]

Bright have indicated they will not participate in the IPO so their current 51% stake will be diluted down to probably near 40% so I am assuming they are happy long term investors, I would guess they have an off take agreement which guarantees them a certain tonnage of product at market prices each season. They will also go from having board control to just a representation. If the IPO is big enough to get them in the NZX50 then tracker finds will need to buy and you'd have to think they will be on the radar of the big AgriFunds around the world .

There is a view, with which I don't entirely agree, that 30% is effective control. I wouldn't be entirely sanguine about "probably 40%" if that is in fact what Bright will reduce to. I am very conscious I risk being acused of sino phobia and would be pleased if anyone could provide any examples of Chinese NZ long term investment for the continuing prosperity of all shareholders. If you throw Fonterra ( NZ infant formulas quality again a live issue) and Zespri scandels into the mix,the investment future tends more to the highly speculative than than conservative!
http://www.odt.co.nz/news/national/2...bad-news-china

[FarmerHamilton]

There is a view, with which I don't entirely agree, that 30% is effective control. I wouldn't be entirely sanguine about "probably 40%" if that is in fact what Bright will reduce to. I am very conscious I risk being acused of sino phobia and would be pleased if anyone could provide any examples of Chinese NZ long term investment for the continuing prosperity of all shareholders. If you throw Fonterra ( NZ infant formulas quality again a live issue) and Zespri scandels into the mix,the investment future tends more to the highly speculative than than conservative!
http://www.odt.co.nz/news/national/2...bad-news-china

I agree 40% is still a large shareholding , but I think Bright are reasonably "hand's off" with the day to day management of the stainless steel and leave that to the local experts. They may have more of a say in strategic decisions like the one to go into Lactoferrin , but even then I imagine management have a fair degree of autonomy.

Nice rally in US Stockmarket this a.m. but the Kiwi$ up over 1c ... very volatile the little NZD at present!

[FarmerHamilton]

I agree 40% is still a large shareholding , but I think Bright are reasonably "hand's off" with the day to day management of the stainless steel and leave that to the local experts. They may have more of a say in strategic decisions like the one to go into Lactoferrin , but even then I imagine management have a fair degree of autonomy.

Nice rally in US Stockmarket this a.m. but the Kiwi$ up over 1c ... very volatile the little NZD at present!

I would have thought if the IPO prospectus was on the printing presses then the company would have probably used $0.80c for its FX assumtion for 13/14 season. With the kiwi hitting 11 months lows there may be a need for some re-calculating of the numbers by investors. I imagine with $500m revenue in USD for next season a 1-2c move will be highly leveraged to the bottom line. The hedge book and FX forcasts will make for interesting reading. Just like F&P Healthcare trades very much on the FX movements of the Kiwi/USD cross so may Synlait Milk ...

[randoman]

There is a view, with which I don't entirely agree, that 30% is effective control. I wouldn't be entirely sanguine about "probably 40%" if that is in fact what Bright will reduce to. I am very conscious I risk being acused of sino phobia and would be pleased if anyone could provide any examples of Chinese NZ long term investment for the continuing prosperity of all shareholders. If you throw Fonterra ( NZ infant formulas quality again a live issue) and Zespri scandels into the mix,the investment future tends more to the highly speculative than than conservative!
http://www.odt.co.nz/news/national/2...bad-news-china

Whilst I can't really comment on the Chinese long/short-term investment and their motivations regarding shareholders, I do agree with general comments I've read in the past that the Chinese are very keen to secure protein sources.