SML - Synlait Milk Ltd

[Nasi Goreng]

Was reading the herald article today about Fonterras debt load and couldn't help but compare them to Synlait.

Fonterra is a slow moving juggernaught with significant debt who have had to due to their size focus on commodity returns and low % of value add. They also have many stakeholders as part of decision making process which can only make decisions on direction more complex.

If you look at Synlait, their debt is not insignificant but they are now we'll set up with a high proportion of their business being value add, they have a strong relationship with A2 and are doing well off the back of this.

A small business really with the opportunity to do well over the next few years. It would not surprise me to see further acquisitions at some stage which could become bargains in the long term.

Does anyone have any guesstimates on H1 results due at end of March? It would not surprise me to see $15M NPAT.

[Hectorplains]

http://www.scoop.co.nz/stories/BU1603/S00435/synlait-may-need-new-investment-for-formula-production.htm"March 11 (BusinessDesk) - South Island dairy processor Synlait Milk will need to consider investing in expanding its blending/canning facility as early as next year given the rapid growth in A2 infant formula sales and the launch of the Munchkin Grass Fed infant formula range, say First NZ Capital analysts."

vs

Tuesday, 8 December 2015, Press Release: Synlait Managing Director and Chief Executive Officer Dr John Penno pointed to the completion of Synlait’s growth initiative programme as a key milestone in the business’ strategy to make more from milk.“We’re now geared up to achieve our strategy. With one of the largest and highest specification infant formula production sites globally, we’ve created an integrated supply chain from source to our customers,” said Dr Penno

The focus over the next two years will be on improving operational excellence, pushing harder on its value-add strategy, reducing debt, and improving its return on capital.
Chief financial officer Nigel Greenwood provided shareholders an update after completing renegotiation with a banking syndicate of its long-term loans, with capital expenditure under its growth strategy having pushed up debt levels.
It has decreased working capital facility requirements set at $35 million for the 2016 financial year. A new five-year revolver facility includes capital expenditure that previously came under the working capital loan and is set at $245 million for this financial year, Greenwood said.

Further questions too about the timeline for start of production for Munchkins grass fed.

Interim result is two weeks away. I like where this stock is placed . However, it needs a clear message communicated to investors about where this company is heading - an area they've been found lacking in previously.

[Sideshow Bob]

Also posted on the A2 thread, but added here also:

http://www.scoop.co.nz/stories/BU160...-suppliers.htm

[Absolute144]

Results are out 31.3.2016. .
Only a few days away. in surprised by the lack of activity on this thread especially given the share price rise over the last month or so.

Is it possible its been flying under the radar?

[tzbang]

Surprised nobody commenting today, first-half underlying net profit of $12.3 million for the six months to January compared to $400,000 a year ago..Synlait expecting a four-fold increase in canned infant formula sales compared to last year, mainly off the back of A2. SP on the climb

[ratkin]

Surprised nobody commenting today, first-half underlying net profit of $12.3 million for the six months to January compared to $400,000 a year ago..Synlait expecting a four-fold increase in canned infant formula sales compared to last year, mainly off the back of A2. SP on the climb

Going along very nicely. Really ramped up production the last few months, they went on a big recruitment drive before Christmas, putting on new shifts. Seem to have gone up a gear or two.

[Absolute144]

Yep, $5000000 in shares traded today normal $20000 -$80000.
I expect we may see SSH notice soon.
My forecast for the year end is NPAT 26-30 million , outperform would be be 30-32 mill. Share price 3.80 4.20

Note the lack of commenting on this thread over the last few weeks and the strong buying up to today. the pros know but they don't want to share. This is one of my horses for the share comp too.

Really keen to know who's buying large.

[lambton]

Yep, $5000000 in shares traded today normal $20000 -$80000.
I expect we may see SSH notice soon.
My forecast for the year end is NPAT 26-30 million , outperform would be be 30-32 mill. Share price 3.80 4.20

Note the lack of commenting on this thread over the last few weeks and the strong buying up to today. the pros know but they don't want to share. This is one of my horses for the share comp too.

Really keen to know who's buying large.

Chinese? - Holding and enjoying the ride.

[BlackPeter]

Yep, $5000000 in shares traded today normal $20000 -$80000.
I expect we may see SSH notice soon.
My forecast for the year end is NPAT 26-30 million , outperform would be be 30-32 mill. Share price 3.80 4.20

Note the lack of commenting on this thread over the last few weeks and the strong buying up to today. the pros know but they don't want to share. This is one of my horses for the share comp too.

Really keen to know who's buying large.

Certainly a good result (though not unexpected for anybody following the company). I would however suggest that the "pros" bought either in at lower prices (below $2.50) or are waiting for the next dip. It is not normally a good strategy to buy immediately after a positive announcement ... and while SML earns money (which is good) is it as well still a growth company (not paying dividends) and therefore more exposed to the ups and downs of the share market.

More likely than not that the hype will fade at some stage again ... and I am as well sure, that both the milk market as well as the Asian markets are still good for some bad news to come. The pros prefer to buy after a bad news

[Sideshow Bob]

http://viewer.zmags.com/publication/...a3#/182c1aa3/5

Farmers Weekly Article re Synlait