SML - Synlait Milk Ltd

[Baa_Baa]

Is it good news?
More like not bad news
It only grants the right to appeal. It doesn't comment on the possibility of the appeals success, other than considering that it wont waste the Courts time, so in a very minor sense I guess its a nod. But... could still well fail.

In the Meantime until mid-2020 when the Supreme Court Hearing happens and makes its judgement, it looks like a prudent decision to just get on with business and process all that milk at Pokeno. Get the China certifications and build the supply side.

It would have been idiotic and poor decision making to have just stopped everything after the appeal court ruling just in case it didn’t work out.

Too many folk here have hoped for a train wreck when in actual fact it appears Synlait have taken a prudent path just getting on with the business.

All the nonsense about pink fonts, diversity etc just diminishes the otherwise stellar reputations of the detractors who grasp at every straw trying to detract from the good management decisions.

Egg on faces.

In any event, it will be many months until we know the outcome of the court hearings on the covenants. Meanwhile its business As usual and little space for the non holding detractors to exercise their lessening influence.

Clearly the market already knows that in as much as the share price has debunked the outspoken naysayers.

[Beagle]

Only time will tell if management are complete idiots with Pokeno or their legal team knew their stuff. Far, far to early to start the crowing as though some victory is already assured and that's just about as arrogant as Synlait's approach with Pokeno itself :p Yeah, run the factory, get all the approvals and sign up all the farmers and effectively play Russian Roulette with shareholders money with three bullets in the gun. What a marvelously prudent way to manage risk.

Some companies put themselves into a position where they could easily derail and that could easily have happened today. Far to early to start the bleating like a lamb lost from its mother about other people's posts. If they finally win their day in the Supreme court you can have your little victory dance if that's what rings your bells, and not before.

If Synlait are smart this won't see the light of day in the Supreme court appeal and they will settle this thing out of court.

[winner69]

Synlait Chair up firvChairperson of the Year at Deloittes big annual event soon

[BlackPeter]

In the Meantime until mid-2020 when the Supreme Court Hearing happens and makes its judgement, it looks like a prudent decision to just get on with business and process all that milk at Pokeno. Get the China certifications and build the supply side.

It would have been idiotic and poor decision making to have just stopped everything after the appeal court ruling just in case it didn’t work out.

Too many folk here have hoped for a train wreck when in actual fact it appears Synlait have taken a prudent path just getting on with the business.

All the nonsense about pink fonts, diversity etc just diminishes the otherwise stellar reputations of the detractors who grasp at every straw trying to detract from the good management decisions.

Egg on faces.

In any event, it will be many months until we know the outcome of the court hearings on the covenants. Meanwhile its business As usual and little space for the non holding detractors to exercise their lessening influence.

Clearly the market already knows that in as much as the share price has debunked the outspoken naysayers.

A very unbalanced post. And the egg you would love to dish out has not yet left the pan ...

SML management took an absolutely unnecessary risk. And sure - the company might at the end well end up being lucky, though we don't know yet. However - bragging before the final judgement call is as dumb as drinking and driving without safety belt and bragging half way home that anybody warning not to drink and drive must be stupid.

If they survive a dumb decision due to sheer luck, it does not mean that they made a good decision, doesn't it?

Any indication so far they learned from taking unnecessary risks?

[Beagle]

Continuing with your analogy BP, I think its clear some people on here post at night when they're drunk and aggressive, (hopefully not half way through a journey in their car).

[dreamcatcher]

Hahahaha ...............the Musketeers should read posts on another forum where another non holder has been raging for some time.

Must have been drunk 10.05pm "play Russian Roulette with shareholders money with three bullets in the gun"

Nice to see BP your post been so balanced eh ........"A very unbalanced post. And the egg you would love to dish out has not yet left the pan"

[Beagle]

Wasn't drunk and I stand by my reference to Synlait's gung-ho approach to risk "management".

[BlackPeter]

Hahahaha ...............the Musketeers should read posts on another forum where another non holder has been raging for some time.

Must have been drunk 10.05pm "play Russian Roulette with shareholders money with three bullets in the gun"

Nice to see BP your post been so balanced eh ........"A very unbalanced post. And the egg you would love to dish out has not yet left the pan"

Oops - I didn't notice that you consider this thread as the Synlait cheer club. Anybody who does not agree with you girls seems to be unwelcome?

Markets only work if there is a diversity of views, and so do these forums. I feel sorry for you that you and Baa don't seem to be able to take that.

Ah yes ... and it was Baa dishing out the egg, not me :p;

[Beagle]

Interesting for the first time in quite a while there's some volume going through today and it would appear notwithstanding yesterday's decision by the Supreme court there's plenty of volume available at $9.40. Many months of journey before we see if the train gets derailed. :sleep:

[petty]

Good to see some senior managers taking positions!

[waterboy]

Good to see some senior managers taking positions!

Would be good but looks to be employee shares rather than buying on market

[petty]

Share Scheme?

[petty]

Ahhh I see. I didnt read far enough down. Gotya

[winner69]

Ahhh I see. I didnt read far enough down. Gotya

Pretty good bonuses eh

[winner69]

Made me look at Annual Report

They say 211 people earnt over $100,000 last year.

Looks like 159 did the year before

[winner69]

Also noted Ruth Richardson a Director

Shows you how much attention I paid over the years

[BlackPeter]

Also noted Ruth Richardson a Director

Shows you how much attention I paid over the years

How could you oversee her at the AGM's? Always stood out like an exotic parrot in a flock of sparrows ...

[Ggcc]

Made me look at Annual Report

They say 211 people earnt over $100,000 last year.

Looks like 159 did the year before
Eventually that might become the minimum wage under labour

[RTM]

It will be price sensitive if it doesn't for their way.
Oh...and the same if it does go their way.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/344125/311618.pdf

29 & 30 April 2020

[sb9]

It will be price sensitive if it doesn't for their way.
Oh...and the same if it does go their way.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/344125/311618.pdf

29 & 30 April 2020

Hope there's an out of court settlement before that long drawn out date which is about 6 months away....

[sb9]

We've ASM in a week's time on next Wed 27th, it'll be interesting how that culminates on back of today's A2M's meeting.

[Beagle]

I'd bet my last dollar ATM screwed them down even further on their extended supply contract announced today. SML are ATM's whipping boy...

[pierre]

I'd bet my last dollar ATM screwed them down even further on their extended supply contract announced today. SML are ATM's whipping boy...

I think SML is your whipping boy too Beagle :)

No doubt they've screwed them down - but not too hard - don't forget ATM owns a slice of SML.

[mfd]

I think SML is your whipping boy too Beagle :)

No doubt they've screwed them down - but not too hard - don't forget ATM owns a slice of SML.

A2's synlait holdings contributed about 16 million dollars to last year's profits of 287 million. I'm not sure that's enough to make it worth them going easy on synlait, although I'm sure they have an interest in paying them enough to ensure their survival.

[bull....]

possibly raising money to pay out someone?

https://www.nzx.com/announcements/344722

[Beagle]

Gearing with senior debt last time I looked was a whopping 57%, possibly quite different now, DYOR. Investors would do well to consider the word "subordinated" and what it means in the context of this company. That won't stop the issue being successful because all a lot of retail investors will see is the Synlait name, (without any understanding of the Pokeno risk) and the interest rate.

Probably wise as a contingency to raise some money now and they can always tap shareholders for more if the custard really hits the fan.

[BlackPeter]

possibly raising money to pay out someone?

https://www.nzx.com/announcements/344722

Interesting idea. They say to repay existing bank debt, but who knows.

Order of magnitude ($150m with option for up to $50 m over-subscriptions) would be roughly half of the maximum damage an unfavorable (for them) court decision could inflict.

Interest rate not yet fixed, but Chris Lee says they expect interest rate to be set at roughly 4%. This would be 1 to 1.5% higher than current blue chips bonds. Quite a substantial risk penalty if he is right ...

[Nasi Goreng]

Gearing with senior debt last time I looked was a whopping 57%, possibly quite different now, DYOR. Investors would do well to consider the word "subordinated" and what it means in the context of this company. That won't stop the issue being successful because all a lot of retail investors will see is the Synlait name, (without any understanding of the Pokeno risk) and the interest rate.

Probably wise as a contingency to raise some money now and they can always tap shareholders for more if the custard really hits the fan.

I was half expecting you to suggest the $150m is a nice backstop for the court cases, it’s the first thing I thought. As a holder I don’t think it’s a bad move although I really can’t see the custard flying as vividly as you can.

[peat]

unsecured AND subordinated ,
nasty.

[Sideshow Bob]

Flew over the plant last week on the approached into Chch.

As well as the font, they had a couple of lovely bright pink paths or roading through the plant.

Sure W69 would have loved it.

[petty]

Anyone go at AGM today?

[Marilyn Munroe]

Anyone go at AGM today?

Me.

A target of doubling revenue was announced. This caused me to ponder the fate of other primary industry processors who attempted this.

Boop boop de do
Marilyn

[BlackPeter]

Me.

A target of doubling revenue was announced. This caused me to ponder the fate of other primary industry processors who attempted this.

Boop boop de do
Marilyn

Did they attach any time frame to this goal?

[petty]

I wasnt at the meeting so cant say for sure but other talks I have heard I think its 2025. Took ten years to get to 1 billion revenue and I think they want to get the next billion in half that time.

[BlackPeter]

I wasnt at the meeting so cant say for sure but other talks I have heard I think its 2025. Took ten years to get to 1 billion revenue and I think they want to get the next billion in half that time.

Interesting. And given that Fonterrors current revenue is still ten times larger than their 2025 goal (if this is the year), this might not be that hard to achieve. They just need to buy a couple of Fonterror plants and take the revenue with the losses :sleep:; I suppose they didn't state any profit targets, didn't they?

[Marilyn Munroe]

Did they attach any time frame to this goal?

Yes they did but i can't recall what it was.

Boop boop de do
Marilyn

[Sideshow Bob]

https://issuu.com/farmersweeklynz/docs/fw_02-12_issuu/1?ff&showOtherPublicationsAsSuggestions=true

Page 16

[BlackPeter]

https://issuu.com/farmersweeklynz/docs/fw_02-12_issuu/1?ff&showOtherPublicationsAsSuggestions=true

Page 16

cheers. So - five years it is.

Don't like this focus on doubling the top line, wrong focus for share holders. If they link their internal incentive schemes to this goal they might even get what they ask for - never mind the bottom line. Isn't this the FBU way to run a business?

Just looking at their more recent enterprises - selling fresh milk through PAM's and buying a small cheese maker might well fit into a strategy of increasing revenue no matter what the cost ... and yes, revenue clearly grew already faster than earnings.

Their focus should be on adding real value .... but if it must be a "mindless" money target, than at least they should look at the bottom line ...

[Marilyn Munroe]

... buying a small cheese maker might well fit into a strategy of increasing revenue no matter what the cost ... and yes, revenue clearly grew already faster than earnings.
...

One of the top table at the meeting explained the production of infant formula and cheese were complementary processes.

The purchase of Talbot Forest and Dairy Works was to enable the optimization of raw milk.

Boop boop de do
Marilyn

[Beagle]

unsecured AND subordinated ,
nasty.

Minimum of 3.7%, will be close to that because 10 year Govt stock is 1.3%. So high 3% somewhere for five years deeply subordinated and unsecured.
What a "compelling" offer...

[BlackPeter]

One of the top table at the meeting explained the production of infant formula and cheese were complementary processes.

The purchase of Talbot Forest and Dairy Works was to enable the optimization of raw milk.

Boop boop de do
Marilyn

I remember they told me that a year ago as well, so at least they are consistent, though at that stage Leon referred mainly to optimizing their truck tours (reduces their need to send empty trucks around). But maybe this is what they meant this year as well.

May be - though I am not convinced that the same benefits apply for delivering liquid milk as a house brand to supermarkets - and, whatever it is - their overall margins did shrink this year.

Lets hope this does not develop into a trend ...

[peat]

Minimum of 3.7%, will be close to that because 10 year Govt stock is 1.3%. So high 3% somewhere for five years deeply subordinated and unsecured.
What a "compelling" offer...

that said its hard to get 3.7% for fixed interest and as Craigs says in their latest quarterly a good portfolio will still have a decent percentage of fixed interest and quite a bit of that should be corporate debt (as long as it doesn't behave like equity in times of stress).

[sb9]

SML receives GACC infant formula approval for Alk facilityhttps://www.nzx.com/announcements/345502

Another step in right direction, onwards and upwards...

[dreamcatcher]

[QUOTE=sb9;780913]SML receives GACC infant formula approval for Alk facility

https://www.nzx.com/announcements/345502

Another step in right direction, onwards and upwards...[/QUOTE


Step one GACC received hopefully followed by SAMR which I believe is close for SML two brands
Brand registrationsOnce approved and listed by GACC as an infant formula manufacturer, your product brands must also be approved by China’s State Administration of Market Regulation (SAMR). SAMR is responsible for food safety, inspections, testing and quality supervision.
Prior to 2019 this process was managed by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), and the China Food and Drug Administration (CFDA).
The department has no formal role in the SAMR registration process however we understand that:


a link to the application forms should be obtained from SAMR. There is a copy on our website (https://www.agriculture.gov.au/export/controlled-goods/dairy/din/2017-01), however this may not be the most current version.
applications must be submitted in Mandarin to SAMR directly in hard copy and a soft copy submitted through the SAMR website.
SAMR may request an on-site audit at the manufacturing establishment prior to registering infant formula brands. If an audit is requested at your establishment please notify us by emailing dairyeggsfish@agriculture.gov.au



https://www.agriculture.gov.au/export/controlled-goods/dairy/registered-establishment/china-requirements

[Beagle]

Interest rate set at 3.83% for this deeply subordinated and unsecured bond http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/345591/313531.pdf
I am not interested in taking what effectively amounts to an equity risk for a very modest fixed interest return.

[RTM]

Interest rate set at 3.83% for this deeply subordinated and unsecured bond http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/345591/313531.pdf
I am not interested in taking what effectively amounts to an equity risk for a very modest fixed interest return.

Do you hold some bonds Beagle ?

[Beagle]

Do you hold some bonds Beagle ?

I am not interested in taking what effectively amounts to an equity risk for a very modest fixed interest return.

[RTM]

I am not interested in taking what effectively amounts to an equity risk for a very modest fixed interest return.

I meant in general. Not Synlait.

[Beagle]

I meant in general. Not Synlait.

No bonds per se. I hold some REIT's and have held several of the gentailiers as a form of bond alternative, am very happy with the returns.
I am very wary of the potential for capital losses on bonds at present going forward into 2020 and beyond. 2.8% on short term deposit with Heartland a much safer bet for people wanting fixed interest in my opinion. Long bond corporate debt generally looks like a risky bet to me going forward from here with the current extraordinarily low, (100 year lows ?) rates on offer. (Acknowledge anyone with good quality long bonds has had a good few years of returns lately)...but going forward ????
What do you think mate ? If you must hold bonds I'd be keeping the maturity very short at this stage.

[RTM]

No bonds per se. I hold some REIT's and have held several of the gentailiers as a form of bond alternative, am very happy with the returns.
I am very wary of the potential for capital losses on bonds at present going forward into 2020 and beyond. 2.8% on short term deposit with Heartland a much safer bet for people wanting fixed interest in my opinion. Long bond corporate debt generally looks like a risky bet to me going forward from here with the current extraordinarily low, (100 year lows ?) rates on offer. (Acknowledge anyone with good quality long bonds has had a good few years of returns lately)...but going forward ????
What do you think mate ? If you must hold bonds I'd be keeping the maturity very short at this stage.

Thanks Beagle.
I set up my money using Craigs guidelines...and they recommended a decent chunk...20-30% maybe, can't recall, in bonds. So yes, I have some.
I only subscribed to new issues, started 5-7 years ago, so interest rates that I have are pretty decent. Some have matured, I am not replacing them at current low interest rates. I've been lucky with the ones I have with the direction that interest rates have moved. And yes...have some REITS as well...PFI, VHP and three retirement villages which I classify in there rightly or wrongly as well.

[Rowdy Flat]

https://www.stuff.co.nz/timaru-herald/news/118643014/talbot-forest-cheese-to-bump-employee-numbers-up-26

That's a positive start to implementing their plan - I'm liking the "make full use of our site's existing capacity and capability." Good for Temuka too - previously only famous for ugly brown pottery.

[justakiwi]

Oi, that’s my town you’re dissing ;)


Good for Temuka too - previously only famous for ugly brown pottery.

[Cadalac123]

What's the story with SML? People just worried about Pokeno site legal issues? Company has been a dog but fundamentally legal issues seem to be the only concern?

[dreamcatcher]

What's the story with SML? People just worried about Pokeno site legal issues? Company has been a dog but fundamentally legal issues seem to be the only concern?

Ground hog day till April when Pokeno site issues addressed finally (hopefully) and expecting a favorable result ...any new business announcements probably waiting on that result. Couple of new brands waiting on Chinese SAMR approval. If the ducks line up SP could bounce quickly as small number of retail sellers around.

Continue to hold and importantly in-profit without any further buy/sells but cannot say I'm overjoyed with management.

[Mr Slothbear]

What's the story with SML? People just worried about Pokeno site legal issues? Company has been a dog but fundamentally legal issues seem to be the only concern?


its on a PE of 19.5 so seems very fully valued considering its mediocre margins, mediocre management and very capital intensive. i don’t think their legal issues are much of an issue. The court and legal stuff will be a non event, A2 will guarentee synlaits survival and future filling of IMF shiploads but that doesn’t mean shareholders will get much. Their best hope is the new brands their developing but surely theres going to be a lot of pressure that these will play second fiddle to A2 orders

[winner69]

Hope helping farmers to this degree doesn’t affect shareholders too much

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/347562/315751.pdf

[Baa_Baa]

Hope helping farmers to this degree doesn’t affect shareholders too much

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/347562/315751.pdf

Helping or competing? Fonterra Dec forecast 7-7.60 EPS.15-.25

[winner69]

Helping or competing? Fonterra Dec forecast 7-7.60 EPS.15-.25

Hope it doesn’t affect Synlait margins too much

Some say A2 screwed them last year ...can they pass increases on?

[Sideshow Bob]

Hope helping farmers to this degree doesn’t affect shareholders too much

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/347562/315751.pdf

It is a forecast, and without supply, they ain't got nothing....

As for margins, just have to sell betterer or have betterer cost structure than Fonterror…..

[GTM 3442]

Hope helping farmers to this degree doesn’t affect shareholders too much

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/347562/315751.pdf

I've always been irritated to have been compulsorily bought out of Synlait Farms, back in the day. Always nice to have two clips at the ticket. . .

[BlackPeter]

What the heck is happening with Synlait? Everybody else (including ATM) seems to have shrugged off the virus fever, but Synlait just keeps dropping.


10987

Just for clarity: Synlait is the blue line, the brown line is the NZX50 ... what an amazing investment Synlait was the last 6 months ...

Running out of pink pixels?

Next day in court approaching?

Who knows ...

[Beagle]

In the Meantime until mid-2020 when the Supreme Court Hearing happens and makes its judgement, it looks like a prudent decision to just get on with business and process all that milk at Pokeno. Get the China certifications and build the supply side.

It would have been idiotic and poor decision making to have just stopped everything after the appeal court ruling just in case it didn’t work out.

Too many folk here have hoped for a train wreck when in actual fact it appears Synlait have taken a prudent path just getting on with the business.

All the nonsense about pink fonts, diversity etc just diminishes the otherwise stellar reputations of the detractors who grasp at every straw trying to detract from the good management decisions.

Egg on faces.

In any event, it will be many months until we know the outcome of the court hearings on the covenants. Meanwhile its business As usual and little space for the non holding detractors to exercise their lessening influence.

Clearly the market already knows that in as much as the share price has debunked the outspoken naysayers.


Only time will tell if management are complete idiots with Pokeno or their legal team knew their stuff. Far, far to early to start the crowing as though some victory is already assured and that's just about as arrogant as Synlait's approach with Pokeno itself :p Yeah, run the factory, get all the approvals and sign up all the farmers and effectively play Russian Roulette with shareholders money with three bullets in the gun. What a marvelously prudent way to manage risk.

Some companies put themselves into a position where they could easily derail and that could easily have happened today. Far to early to start the bleating like a lamb lost from its mother about other people's posts. If they finally win their day in the Supreme court you can have your little victory dance if that's what rings your bells, and not before.

If Synlait are smart this won't see the light of day in the Supreme court appeal and they will settle this thing out of court.


What the heck is happening with Synlait? Everybody else (including ATM) seems to have shrugged off the virus fever, but Synlait just keeps dropping.



Just for clarity: Synlait is the blue line, the brown line is the NZX50 ... what an amazing investment Synlait was the last 6 months ...

Running out of pink pixels?

Next day in court approaching?

Who knows ...

Yes what an "amazing" investment alright as forewarned very, very clearly by myself. Just a reminder that this is a very heavily geared company, (about 57% last time I looked which was quite a while ago now) and faces what amounts to a binary outcome with their last port of call for relief with the supreme court. The risk should be crystal clear and is only now just starting to be reflected in the share price.

From a technical perspective the break down through clear long term support at $8.50 to a new one year low of $8.25 is quite ominous especially on a day when the market bounced back quite nicely. Maybe if they make their pink font even more super sized in the next announcement that will help ?

[dreamcatcher]

Big numbers yesterday 665,482 for a stock that normally barely raises a few peanuts daily. Personally not tempted to sell down as stock is in my target and time range. Court decision now a whisker away but happy for impatient people that wish to sell.

All stocks have their day and this one will also with the DOW having another massive overnight day .....................

[Beagle]

Quite big numbers yesterday too and another move down to a fresh 12 month low on high volume during a day when the NZX50 bounced strongly !
Looking pretty ominous as the one year chart shows 11001

[winner69]

Quite big numbers yesterday too and another move down to a fresh 12 month low on high volume during a day when the NZX50 bounced strongly !
Looking pretty ominous as the one year chart shows 11001

Market finally realising there’s nothing really special about Synlait and it’s slowly rerating it down from its outrageous highs. Madness took the price to near $13 eh and even $10 was outrageous.

Lot more downside for this capital intensive producer.

[winner69]

Analysts revised their targets upwards as the share price kept going up

They’re a bit slack in following the share price down

Now holiday season over they’ll start revising their targets. ...DOWN I fear

[Beagle]

Haven't said it for a while so it possibly bears repeating but I am staggered at their arrogance to build and commission the Pokeno plant in the face of an existing legal ruling against them.

Management are betting the entire profit the company has made in the last 6 years on a successful appeal at the Supreme court. While not an existential threat to the company if it loses it will be profoundly damaging both in terms of building a new facility in the Waikato and with relationships with suppliers, customers and staff.

Don't want to predict what the share price will be if they lose other than to say it will be extremely ugly.

What concerns me about this company apart from everything else previously mentioned is there appears to be more leaks than a sieve. On pending good news it rises before the announcement.
What are we then to make of the current break down through the $8.50 support line ?
All out of court attempts to settle this have been fully exhausted and Synlait have been told to get stuffed and the aggrieved party think they have a water tight case in the Supreme court ?
Are Synlait about to be totally snookered with their facility at Pokeno ? A cease and desist operations order has been sought ?

One thing for sure, you cannot rely on Synlait management to be totally forthcoming that's for sure !!

[winner69]

After a global search for a new CEO Synlait appointed Leon as their new man ...a high calibre man who knew the industry inside out

Since he commenced Synlait’s market cap has fallen by about $600m

That’s some effort

[winner69]

I don’t think Leon has purchased any shares

And the LTI thinks keep on lapsing as well

Hope he’s paid pretty well,

[Beagle]

After a global search for a new CEO Synlait appointed Leon as their new man ...a high calibre man who knew the industry inside out

Since he commenced Synlait’s market cap has fallen by about $600m

That’s some effort

Sure is mate but the company has made having a comprehensive diversity and inclusion culture their absolute top priority as well as focusing on ensuring other ESG matters are best possible practice so shareholders are heaps better off because they know every whim and nuance of other stakeholders is being fully catered for :D

I have just realized the crux of the problem...the size of the pink font in their 2020 NZX releases is too small http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/347576/315769.pdf

Share price was way higher in June 2019, over $10 when they used to do their announcements and PINK FONT this way
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/335714/301239.pdf

Fix that back to how it was and all will be forgiven :D...see...this management fix it stuff is pretty easy when you know what you're doing.

The day of judgement is coming soon http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/344125/311618.pdf

[winner69]

Jacinda enjoyed her trip to Dunsandel recently ...planted a native tree ...one of zillions they are going to plant

Like the pink coloured pathways ....clashes with Jacinda though

[Beagle]

Jacinda should have known to wear pink lipstick and a pink outfit.

[winner69]

Synlait share price heading into the 700s

Probably got a fair way to fall yet.

[Beagle]

Synlait share price heading into the 700s

Probably got a fair way to fall yet.

Have to say I agree with that. A test of the long term $3.50 support line could be coming if things go completely pear shaped at the Supreme Court. Shares probably worth somewhat more than that if they lose but when it gets ugly, things often overshoot to the downside.

[dreamcatcher]

Have to say I agree with that. A test of the long term $3.50 support line could be coming if things go completely pear shaped at the Supreme Court. Shares probably worth somewhat more than that if they lose but when it gets ugly, things often overshoot to the downside.

Typical scaremongering tricks of shorters "FEAR" works with the lemmings though.

Any ideas what would happen to SP when they win court case which is highly expected and new businesses sign on ?

[Beagle]

Typical scaremongering tricks of shorters "FEAR" works with the lemmings though.

Any ideas what would happen to SP when they win court case which is highly expected and new businesses sign on ?

Price looks about right to me if they win. A loss on the other hand with all the downstream effects to suppliers, customers, staff and relocation costs....will be VERY UGLY.

[dreamcatcher]

Price looks about right to me if they win. A loss on the other hand with all the downstream effects to suppliers, customers, staff and relocation costs....will be VERY UGLY.

Were you not the same "Beagle" that barked all the way to about $13 before your glass broke.......

[Beagle]

Were you not the same "Beagle" that barked all the way to about $13 before your glass broke.......

Been a LOT of water under the bridge in the last 20 months since this last looked good including a change in the CEO that brought a new culture where LGTBQ matters appear to be the #1 priority of the group followed by other ESG matters and lets play Russian Rolette with shareholders money.

[winner69]

Well the share price has gone into the 700s

What happens when companies get re-rated down from outrageous evaluations

Remember Book Value is about $3.50 at present ......so heaps and heaps of future valued added in the current share price...irrespective what happens at Pokeno

[Baa_Baa]

Well the share price has gone into the 700s

What happens when companies get re-rated down from outrageous evaluations

Remember Book Value is about $3.50 at present ......so heaps and heaps of future valued added in the current share price...irrespective what happens at Pokeno

Technically the SP is buggered, I posted a chart in another place and the decent SP support broke down today so given the sentiment and the market at the moment I'd expect a test of the $6.50 range. If as you say BV is $3.50 that will give cause to consider whether the SP should be 2-3x.

For the record I don't buy into all the teasing about pink fonts, rainbow, diversity or even the doom sayers supreme court outcome. This is a good company with locked in supply into a growth market for a long time, all I focus on now is a buy-in point ... it will come.

[winner69]

Wonder if the carnage will continue today ......Synlaits shareprice sure is taking a beating.

Reckon 650 could be the bottom this time around - 100% retracement from all high time highs has a nice ring to it

Overvalued at 650 a year or so ago and the milk hype doubles the shareprice to about 1300 and the ‘bubble’ bursts and it goes back to about fair value of 650.

Just checked ...jeez it hit 1365 intraday once ....madness prevailed ...Milk was addictive

[BlackPeter]

...

For the record I don't buy into all the teasing about pink fonts, rainbow, diversity or even the doom sayers supreme court outcome. This is a good company with locked in supply into a growth market for a long time, all I focus on now is a buy-in point ... it will come.

You are right ... the day to buy in again will come, and I might at some stage be as well back on the share register.

Looking at the causes for teasing SML - sure, not all that important, but you (well, at least me ;)); still wonder whether the new CEO has got his priorities right. I personally prefer managers who care about customer satisfaction and shareholders funds, rather than about creating pretty ugly pink dots and panels in presentations.

While I fully accept the old Latin saying "de gustibus non est disputandum" - fact is that the priorities of the new CEO clearly didn't help to keep the SP up. And sure - it is always nice for companies to do good (no matter whether this is related to human rights or to the climate change), but if they forget about that to look after their bottom line and the key interests of the shareholders, we (and shareholders in particular) do have a problem.

I think SML is a good company, but I think as well that the board made a number of potentially quite catastrophic mistakes. The mishandling of the legal situation around Pokeno and hiring the Ex Fonterra CEO are only two of them. Notice as well that the key decisions related to Pokeno have been made before Clement took up his job - i.e. just replacing him won't resolve the current situation.

[winner69]

Good positive start Synlait today

Suppose punters think it’s fallen enough so it’s all upwards from here

[sb9]

Good positive start Synlait today

Suppose punters think it’s fallen enough so it’s all upwards from here

Looks like you're very fixated on the minute to minute movement on this for some reason.

[Beagle]

You are right ... the day to buy in again will come, and I might at some stage be as well back on the share register.

Looking at the causes for teasing SML - sure, not all that important, but you (well, at least me ;)); still wonder whether the new CEO has got his priorities right. I personally prefer managers who care about customer satisfaction and shareholders funds, rather than about creating pretty ugly pink dots and panels in presentations.

While I fully accept the old Latin saying "de gustibus non est disputandum" - fact is that the priorities of the new CEO clearly didn't help to keep the SP up. And sure - it is always nice for companies to do good (no matter whether this is related to human rights or to the climate change), but if they forget about that to look after their bottom line and the key interests of the shareholders, we (and shareholders in particular) do have a problem.

I think SML is a good company, but I think as well that the board made a number of potentially quite catastrophic mistakes. The mishandling of the legal situation around Pokeno and hiring the Ex Fonterra CEO are only two of them. Notice as well that the key decisions related to Pokeno have been made before Clement took up his job - i.e. just replacing him won't resolve the current situation.

Excellent post and as you quite rightly point out this ~ $300m (plus all downstream supplier, staff and customer effects) game of Russian Roulette was started by John Penno who is now a director.

I agree with the vast majority of your post but a good company surely includes good management clearly focused on what really matters to shareholders and good directors focused on ensuring management don't expose shareholders to any extraordinary untoward risks. $300m is more than the total profit this company has made in the last 6 years so if they lose at the Supreme court then this has indeed been a catastrophic failure of management and the board.

To me it looks like the directors gave Penno free reign to do whatever he liked and you know the old saying, if you give someone enough rope, they eventually hang themselves. That he's now a director presiding over and therefore sanctioning the current culture of the company gives me no comfort whatsoever.

"Good company", really ?

[winner69]

Looks like you're very fixated on the minute to minute movement on this for some reason.

Could be I’m having a punt ..or maybe just an insatiable morbid fascination with slow motion train wrecks

[winner69]

Bots or sharesie punters doing well ....got share price up to 814

17 trades worth $2000 and price up 14 cents

[Beagle]

Could be I’m having a punt ..or maybe just an insatiable morbid fascination with slow motion train wrecks[

I don't know about you but I am definitely guilty as charged on that count !

[winner69]

I don't know about you but I am definitely guilty as charged on that count !

You learn heaps from watching slow motion train wrecks eh

Pre-mortems (as opposed to post-mortems) are also great. Like at the time Synlait hit 13 bucks plus one asked the question ‘jeez, the share price just hit 8 bucks’ and did a post-mortem as to what happened we might have foreseen all this.

[BlackPeter]

Excellent post and as you quite rightly point out this ~ $300m (plus all downstream supplier, staff and customer effects) game of Russian Roulette was started by John Penno who is now a director.

I agree with the vast majority of your post but a good company surely includes good management clearly focused on what really matters to shareholders and good directors focused on ensuring management don't expose shareholders to any extraordinary untoward risks. $300m is more than the total profit this company has made in the last 6 years so if they lose at the Supreme court then this has indeed been a catastrophic failure of management and the board.

To me it looks like the directors gave Penno free reign to do whatever he liked and you know the old saying, if you give someone enough rope, they eventually hang themselves. That he's now a director presiding over and therefore sanctioning the current culture of the company gives me no comfort whatsoever.

"Good company", really ?

Fair enough. I probably should have said "Synlait used to be a company I thought to be good" ;);

I used to have a lot of respect for the likes of John Penno, Nigel Greenwood and Graeme Milne (and met all of them several times in person), but must admit that I am not quite sure where they have been on the decisions to build Pokeno where it now is and to hire the new CEO. Wondering as well whether all the commercial agreements with ATM have always been in Synlait's best interest.

I know their premises in Dunsandel quite well und think that they are well planned and managed. Staff is switched on and makes the impression it is standing behind the company. I guess this would be as well part of the "goodness" of a company.

In terms of business - they started a lot of "test-balloons" with supposed high value ventures (A2 IF - worked, normal milk powder - volume but small margin, Interferon - sort of worked, night milk - haven't heard from that for some time, grass fed - not sure) and moving now into the normal low margin side of the milk business (Pams, cheese manufacturing). Clearly - some of their attempts worked and others didn't.

Not sure, whether their success rate is particular great, but more concerned that with A2 IF being their as far as I know only reliable high margin product they are critically dependent on ATM. So dependent that they are in my view not anymore able to act in their own interest (even if they would know what this is) every time ATM asks them to bend over ... and dependence on one major customer is probably not how you recognize a good company.

So yes, quite difficult to say how "good" they really are.

[Beagle]

Fair assessment of the situation BP. Fair bit of debate and chatter on CNBC questioning whether CEO's are given too much freedom by boards. Good example right here is the current and former CEO. Board appears to have been asleep at the wheel, at least in recent years.

[winner69]

Fair assessment of the situation BP. Fair bit of debate and chatter on CNBC questioning whether CEO's are given too much freedom by boards. Good example right here is the current and former CEO. Board appears to have been asleep at the wheel, at least in recent years.

Board make up interesting -

seems to have 3 Bright reps as well as Ruth Richardson ...hmm

Bill Roest doing a good job with Metro Glass as well as his Synlait role ...maybe just having a bit of bad luck lately.

Penno - probably runs the place and bamboozles them with science

Milne doesn’t inspire me as Chairman

That leaves Knowles well known from his Kiwibank days so probably a sensible guy.

[winner69]

Synlait Senior Leadership Team has 11 in it

Only 2 females ...the Quality person and the Legal person......not even a female HR person.


All eleven look rather caucasion as well.

Maybe their favourite colour pink means something after (now now winner don’t be naughty)

[BlackPeter]

Board make up interesting -

seems to have 3 Bright reps as well as Ruth Richardson ...hmm

Bill Roest doing a good job with Metro Glass as well as his Synlait role ...maybe just having a bit of bad luck lately.

Penno - probably runs the place and bamboozles them with science

Milne doesn’t inspire me as Chairman

That leaves Knowles well known from his Kiwibank days so probably a sensible guy.

I guess fair enough regarding the Bright guys (though actually, I think, I saw in one of the last meetings as well a Bright gal). Hard to get warm with them, they do keep separate and I wonder whether they do that in board meetings as well. Probably exchanging their views on the latest cell phone or similar.

Ruth however always adds color to any AGM I saw her in ... but yes, I know what you mean.

Related to the others ... it is really hard to assess the quality of a board member from the outside, but I do agree with your assessment on John Penno's role ...

[Sideshow Bob]

Synlait updates full year 2020 guidance outlook
13/2/2020, 8:30 amMKTUPDTE Synlait Milk Limited (Synlait) expects its full year 2020 (FY20) earnings guidance to be between $70 million and $85 million net profit after tax (NPAT).
The previously announced earnings guidance was for profits to continue to grow in FY20, with the rate of profitability increasing at least at a similar rate to FY19 over FY18. Current information now indicates this rate of growth will not be achieved. This is as a result of:
• significantly lower than anticipated infant base powder sales due to China infant nutrition market consolidation causing a reduction in demand from brand owners who are yet to receive brand registration;
• lactoferrin prices being more volatile than previously anticipated; and
• while Synlait still anticipates growth in consumer-packaged infant formula sales volumes over the full year, this growth is not as strong as initially envisaged. The a2 Milk Company’s contributon to this growth has not changed.
Half year 2020 (HY20) guidance outlook
Synlait feels it prudent to update shareholders on its expected HY20 performance, given its updated full year guidance.
Synlait expects its HY20 NPAT to be in the range of $26.5 million to $28.5 million for the six months ended 31 January 2020. Synlait’s HY19 NPAT was $37.3 million. While sales of consumer-packaged infant formula volumes have increased against the corresponding half year period, Synlait’s HY20 result will be impacted by:
• increased incremental interest, manufacturing and SG&A costs associated with the Pokeno and advanced liquid dairy packaging facilities;
• lower sales volumes of ingredient products than anticipated due to sales phasing and product mix impacts; and
• lower sales of infant base powders due to the China infant nutrition market consolidation.
On-going focus on strategic opportunities
Synlait continues to invest in long-term strategic opportunities, which do incur additional costs at the expense of short-term earnings.
Synlait recognises it has significant capacity available at its new advanced liquid dairy packaging facility at Dunsandel and its infant-capable manufacturing facility in Pokeno. Its teams remain focused on developing and delivering on new opportunities with existing and prospective customers. While Synlait is working on some exciting opportunities, which have created a strong customer pipeline, new and material agreements have not yet been finalised.
Synlait Chair Graeme Milne commented: “Naturally, the Synlait team expected a stronger FY20 financial performance. We remain confident that the decision to focus on our medium to long-term strategic opportunities will over time improve shareholder value and the sustainability of our business.”
Synlait CEO Leon Clement commented: “As anticipated our new investments have resulted in a higher cost profile, which has not yet been absorbed by an offsetting increase in revenue, as Synlait steps up to its next level of growth.”
“The pace and quality at which our teams have delivered on recent growth projects has been impressive, and now we are focused on ensuring we optimise these new facilities. In the meantime, we are moderating our costs while we bring our new investments to life in terms of capacity and capability. We remain confident, and on-track, to deliver on our medium to long term objectives.”
Synlait looks forward to a fuller discussion around its HY20 performance and progress on its long-term strategic initiatives on Thursday 19 March 2020 when it announces its half year result.
Impact of Coronavirus on Synlait’s outlook
Synlait takes the health and wellbeing of its employees and its food safety responsibilities very seriously. The spread of Coronavirus, and the risk it poses to Synlait’s business is being carefully monitored. Globally there is uncertainty about Coronavirus’ impact on supply chains and consumer demand.
Therefore, while Synlait can confirm there has been no material short-term impact on its financial performance in connection with the Coronavirus outbreak, it represents some downside risk going forward. This was considered as part of the broader outlook update and contributed to Synlait’s decision to issue a wider guidance range at this stage, which was extended down to $70 million.
Leon Clement commented: “Synlait is an export-based business and our reputation has been built, and is maintained, on ensuring we put people, food safety and quality at the heart of what we do. This will continue to inform our response to this situation. We are not currently experiencing any supply chain disruption; however, we are monitoring the situation very closely and felt it prudent to front foot potential impacts.”
FY20 guidance summary
Updated FY20 guidance as at 13 February 2020:
Synlait expects FY20 earnings guidance to be between $70 million and $85 million net profit after tax. Notwithstanding that, Synlait still anticipates strong growth in consumer-packaged infant formula sales volumes over the full year. Factors contributing to this performance include:
• incremental costs of the new Pokeno facility impacting standard manufacturing costs;
• lower sales of infant base powders due to the China infant nutrition market consolidation;
• higher SG&A costs due to increased business size and the continued focus on investing in future growth opportunities; and
• a positive impact of a full year of operation of the expanded lactoferrin facility, albeit with more pricing volatility.
Previous FY20 guidance as at 12 September 2019:
We expect our FY20 profits to continue to grow, with the rate of profitability increasing at least at a similar rate to that of FY19 over FY18. Our expected earnings growth will be driven by:
• continuation of strong momentum from the second half of FY19 where we sold 24,932 MT of consumer-packaged infant formula;
• a full year of operation of the advanced liquid dairy packaging facility and the first sales of long-life products in the second half of FY20;
• continued progression of our Everyday Dairy strategy;
• a full year of operation of the expanded lactoferrin facility; and
• a contribution from Synlait Pokeno, which will be commissioned shortly.
Conference call at 10.00am (NZST) today
Synlait CEO Leon Clement and CFO Nigel Greenwood will hold a conference call at 10:00am NZST/8:00am AEST time today to discuss this announcement.
The conference call numbers for participants can be accessed at https://s1.c-conf.com/num/Chorus-Call-NZ-Participant-Dial-In-Numbers.pdf. Please ask for the Synlait conference call. The reference ID is: 10004224
For more information about Synlait visit www.synlait.com or contact:

[bull....]

if people had studied stock price behaviour from some important past announcements you will have noticed it sells off heavy and then rebounds. played out just like last big sell off.

anyway i still think metrics are rediculous for a manufacturerer

be interesting if it still trades the same. wonder if big support at 8 will get crushed. anyway still think its way overvalued for a manufacturer

[BlackPeter]

The previously announced earnings guidance was for profits to continue to grow in FY20, with the rate of profitability increasing at least at a similar rate to FY19 over FY18. Current information now indicates this rate of growth will not be achieved. This is as a result of: [/FONT]
• significantly lower than anticipated infant base powder sales due to China infant nutrition market consolidation causing a reduction in demand from brand owners who are yet to receive brand registration;


Still struggling to understand above sentence ... I guess I get that it is an earnings downgrade, but not quite sure what they wanted to say with the first of so many reasons (in bold above).

I thought Synlait does have all necessary Chinese registrations.

Are they saying above that they have not?

[winner69]

So H1 profit going to be down 25% to 30% ...but jeez if things go right we’re going to make heaps in H2

Guidance FY20 npat is $70m to $85m - I’d guarantee it’ll end up below $70m (FY19 was $82.7m ..hmm)

This announcement no surprise to me ....been coming for a few months I reckon.

Now the bad news is out there the share price will probably go up today

[winner69]

No growth ..actually declining earnings ....with other risks like pokeno ...trading at more than 20 times earnings

Book Value about $4

[BlackPeter]

So H1 profit going to be down 25% to 30% ...but jeez if things go right we’re going to make heaps in H2

Guidance FY20 npat is $70m to $85m - I’d guarantee it’ll end up below $70m (FY19 was $82.7m ..hmm)

This announcement no surprise to me ....been coming for a few months I reckon.

Now the bad news is out there the share price will probably go up today

Don't they say downgrades come in threes? Lets face it - they have not really seen the full impact of the CUVID-19 hype in their sales numbers ... probably only coming in over the next couple of months (given they ship this stuff by ship - i.e. a month or so lag time).

[winner69]

Don't they say downgrades come in threes? Lets face it - they have not really seen the full impact of the CUVID-19 hype in their sales numbers ... probably only coming in over the next couple of months (given they ship this stuff by ship - i.e. a month or so lag time).

These days downgrades comes in more than threes ...it becomes a habit and one follows another for years

[BlackPeter]

These days downgrades comes in more than threes ...it becomes a habit and one follows another for years

Just crunching the numbers. If we believe for a moment the NPAT forecast for FY20, then this would be EPS of 43 cents. Last year it was 46 cents, and the year before 42 cents. This means Synlait stopped being a growth company and had an earnings peak in 2019. Great job Leon, but this is another story ...

Even if we believe they might be able to keep the current earnings of a bit above 40 cent per share ... how much is a cyclical agricultural company which stopped growing really worth? PE of 10?

This would put a fair share price somewhere between $4 and $4.50 ... still some way to drop.

And above is assuming no more margin squeeze from ATM, no significant market issues with Corona virus and a happy outcome with Pokeno.

Ouch.

[bull....]

heaven forbid if a2 has a slowdown in growth

[BlackPeter]

heaven forbid if a2 has a slowdown in growth

I recon A2 can always buy or better franchise some more factories and herds ... but yes, A2 without growth would be like champagne without bubbles ...

[Beagle]

Just crunching the numbers. If we believe for a moment the NPAT forecast for FY20, then this would be EPS of 43 cents. Last year it was 46 cents, and the year before 42 cents. This means Synlait stopped being a growth company and had an earnings peak in 2019. Great job Leon, but this is another story ...

Even if we believe they might be able to keep the current earnings of a bit above 40 cent per share ... how much is a cyclical agricultural company which stopped growing really worth? PE of 10?

This would put a fair share price somewhere between $4 and $4.50 ... still some way to drop.

And above is assuming no more margin squeeze from ATM, no significant market issues with Corona virus and a happy outcome with Pokeno.

Ouch.

I estimate total value destruction from an adverse outcome with the Supreme Court as much as $500m inclusive of new land acquisition, rebuild of facility and all downstream effects with customers, suppliers and staff, not far short of $3 per share. Well worth remembering that this company is very highly geared.
Good luck to shareholders, you're going to need it as this has the potential to get extremely ugly.

I would not be a buyer at the price you mentioned BP. Factor in the above possible impact of Pokeno on a 50/50 likelihood of losing this suggests fair value about $1.50 lower than you suggest, ouch !!

[bull....]

These days downgrades comes in more than threes ...it becomes a habit and one follows another for years

pokeno result might see them paying out millions. way overvalued

[couta1]

heaven forbid if a2 has a slowdown in growth Without A2 this business would be toast.

[BlackPeter]

Ouch - this is a bloodbath. Just looked into the depth. SP dived through the $7 handle and at current it looks like the next deal will have already a 6 handle (both bidders and sellers are there, they just can't agree on the exact amount) - this was fast ...

[bull....]

Without A2 this business would be toast.

no chance of them losing a2 business only margin , manufacturers always get screwed on price over time more and more a2 wont be any different.

[BigBob]

Ouch - this is a bloodbath. Just looked into the depth. SP dived through the $7 handle and at current it looks like the next deal will have already a 6 handle (both bidders and sellers are there, they just can't agree on the exact amount) - this was fast ...

It doesn't look great does it.... !! Fairly light volume though....

[BigBob]

It doesn't look great does it.... !! Fairly light volume though....

ehhh.... I said that a bit too early... !!

[100101]

Maybe this is why Synlait didn't subscribe to Morningstar. South Sea Bubble comes to mind.

[ratkin]

They should have stayed in Dunsandel, did too much too soon.

Can guarantee the next update will have a big dollop of coronavirus excuses, not hopeful it will meet it's targets.
Always said I would buy back in at 6 dollars, not so sure now, lots of debt, and lots of expenses

[BlackPeter]

They should have stayed in Dunsandel, did too much too soon.

Can guarantee the next update will have a big dollop of coronavirus excuses, not hopeful it will meet it's targets.
Always said I would buy back in at 6 dollars, not so sure now

Make that a $3 handle and a change of board and CEO - in that case I might be interested ...

[ratkin]

Make that a $3 handle and a change of board and CEO - in that case I might be interested ...

Big debt and big expenses, not a good combination

[Balance]

Big debt and big expenses, not a good combination

AM Q TO BUY - NEED MORE SCARE MONGERING PLEASE.

Sitting at $4.50.

[Sideshow Bob]

AM Q TO BUY - NEED MORE SCARE MONGERING PLEASE.

Sitting at $4.50.

…………...:t_up:

[BlackPeter]

AM Q TO BUY - NEED MORE SCARE MONGERING PLEASE.

Sitting at $4.50.

You are sure you want to buy already after the first downgrade? This is not the Balance I remember ... :)

Though on reflection - might offer a nice dead cat ride for a trader ...

[Beagle]

Big debt and big expenses, not a good combination

Big Debt, Big expenses and Extraordinary BIG risk with their last hope of legal remedy with the Supreme Court with Pokeno.
Not an existential threat BUT combined with the above and possible material virus impact...oh my goodness.
Very unlikely to meet their FY20 forecast in my opinion. This today, in my opinion is just the first of a series of very bad news to come, more downgrades and then the legal bombshell.

Expect a deeply discounted major capital raise if they lose their Supreme Court case as they have no other viable way to build a replacement facility, i.e. they are up to their eye-balls in debt already.

[44wishlists]

Could be interesting. I wonder if ATM will use this as an opportunity to squeeze further on price they are paying for manufacturing and/or withhold some business to get even better terms and perhaps the opportunity to pick up the pieces in time

At the end of the day, A2M still holds 8% of SML, and as a business partner, I don't think they want SM1 to be burnt and finished, or at least until they found another reliable partner(s), whether if this is feasible in the short to medium term, that another subject of debate. How GB or next A2M CEO will negotiate the deal with SM1 in the upcoming years will be interesting. I don't think A2M will increase their stake any further at this stage, however, A2M maybe eyeing on increase partnership with Bridge Dairy via this opportunity if SM1 really do go into any form of hardship.

[RupertBear]

Synlait share price heading into the 700s

Probably got a fair way to fall yet.

Good call Winner, your post got me thinking and I sold what was left of my holdings that day @ $8.02 for a small profit, which has ended up being a lucky escape, so thanks for posting your thoughts :)

[Sideshow Bob]

At the end of the day, A2M still holds 8% of SML, and as a business partner, I don't think they want SM1 to be burnt and finished, or at least until they found another reliable partner(s), whether if this is feasible in the short to medium term, that another subject of debate. How GB or next A2M CEO will negotiate the deal with SM1 in the upcoming years will be interesting. I don't think A2M will increase their stake any further at this stage, however, A2M maybe eyeing on increase partnership with Bridge Dairy via this opportunity if SM1 really do go into any form of hardship.

A2 own 17.39%.

On paper, down $46.5m today!

Bright own 39.04%.

[44wishlists]

A2 own 17.39%.

On paper, down $46.5m today!

Bright own 39.04%.

Thanks for the correction!

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12308209&utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+14+F ebruary+2020

Spending on legal fees and ensuring the have the most comprehensive and leading inclusiveness and LGTBQ and ESG culture of any company on the NZX is sure to continue with reckless abandon....Muppets.

[Nasi Goreng]

I think having good environmental policy and an inclusive culture around people is good for any organisation. It attracts good people and they are a big part of success.

In saying that, business must perform well and the ball has been dropped here a number of times. I had held since 2014 but have been trimming this last year due to chain of events. Sold out completely yesterday which is disappointing but I’m not keen on a 2nd or 3rd shock.

[Davexl]

You are sure you want to buy already after the first downgrade? This is not the Balance I remember ... :)

Though on reflection - might offer a nice dead cat ride for a trader ...

Just an observation but USUALLY after a large percentage drop, there is a dead Cat Bounce - except when the price action is dead flat to dropping at the close, when you can expect a further drop to occur the following day and NOT a bounce - which is what has happened today. Lesson from hard experience!

Also of course there may be further broker downgrades to come.

[winner69]

FFS what’s going on some would say ...Synlait share price down to the 640’s

Still being rerated down and of course the target PE x earnings just got lower with earnings downgrade

Book value about 4 bucks

[Beagle]

FFS what’s going on some would say ...Synlait share price down to the 640’s

Still being rerated down and of course the target PE x earnings just got lower with earnings downgrade

Book value about 4 bucks

You ain't seen nothing yet. Wait till $2-3 per share in value is destroyed if they lose their Pokeno case at the Supreme Court and have to go to ATM with their begging bowl in hand. A year or two back a 1:1 takeover by ATM might have been on the cards. This time next year a 1:5 might be generous !

Leon a real champion for LGTBQ rights though so shareholders can take enormous comfort from that.

[winner69]

deleted a post that was not really warranted in the circumstances

[dreamcatcher]

Jarden 11th Feb 2020

"Synlait Milk led the market higher, up 4.6 percent at $8.27 on slightly below average volumes. Jarden upgraded its recommendation on the stock to 'neutral' with the 12-month target price increasing to $8.84 from $8.50. Analyst Arie Dekker said in a note to clients that the risk-reward is now more balanced, with valuation still focused on long-term return."

[Sideshow Bob]

Jarden 11th Feb 2020

"Synlait Milk led the market higher, up 4.6 percent at $8.27 on slightly below average volumes. Jarden upgraded its recommendation on the stock to 'neutral' with the 12-month target price increasing to $8.84 from $8.50. Analyst Arie Dekker said in a note to clients that the risk-reward is now more balanced, with valuation still focused on long-term return."

No doubt that brings a lot of comfort for shareholders who have seen a couple of bucks shaved off the share price in the last couple of days.

[Beagle]

Haven't said it for a while so it possibly bears repeating but I am staggered at their arrogance to build and commission the Pokeno plant in the face of an existing legal ruling against them.

Management are betting the entire profit the company has made in the last 6 years on a successful appeal at the Supreme court. While not an existential threat to the company if it loses it will be profoundly damaging both in terms of building a new facility in the Waikato and with relationships with suppliers, customers and staff.

Don't want to predict what the share price will be if they lose other than to say it will be extremely ugly.

What concerns me about this company apart from everything else previously mentioned is there appears to be more leaks than a sieve. On pending good news it rises before the announcement.
What are we then to make of the current break down through the $8.50 support line ?
All out of court attempts to settle this have been fully exhausted and Synlait have been told to get stuffed and the aggrieved party think they have a water tight case in the Supreme court ?
Are Synlait about to be totally snookered with their facility at Pokeno ? A cease and desist operations order has been sought ?

One thing for sure, you cannot rely on Synlait management to be totally forthcoming that's for sure !!Posted 8 February 2020.


Jarden 11th Feb 2020

"Synlait Milk led the market higher, up 4.6 percent at $8.27 on slightly below average volumes. Jarden upgraded its recommendation on the stock to 'neutral' with the 12-month target price increasing to $8.84 from $8.50. Analyst Arie Dekker said in a note to clients that the risk-reward is now more balanced, with valuation still focused on long-term return."

Jarden's analysts have access to company visits, I do not. I'll leave it to others to judge who called this one right. This is certainly not the first time I have noticed the share price move materially ON STRONG VOLUME , just before a price sensitive announcement. Its very safe to say there are more leaks than a sieve so that's yet another blow to management credibility at least in my eyes.

Jarden's subsequently adjusted fair value down after this most recent announcement...for what its worth and I think that's very little, they are somewhere in the late $7 range as a 12 month price target now. How they can value it at that with the unknown of the Supreme court case is anyone's guess ? Maybe they are ingratiating themselves to company management and the board in the hope of lining themselves up to manage the massive fully underwritten rights issue when it all goes pear shaped so they can make millions in underwriting fees ?

[winner69]

Beagle - share price less than half what it was a while ago

A 50% discount makes it really really cheap

[Beagle]

Beagle - share price less than half what it was a while ago

A 50% discount makes it really really cheap

:lol: :lol: You're in good form today mate. What will it be when it gets to a quarter of $13 at $3.25 ? Really really really really cheap or a train wreck in the middle of a derailment

[winner69]

If diversity, inclusiveness and sustainability are very high on Synlait’s priorities the page on their website showing the senior leadership team is a bad look ....a team of 11 ..all very Caucasian looking and 2 females (quality and legal)

There’s been studies done that improving gender mix (ie more female) often improves overall competency with the displacement of mediocre men.

Maybe that next on the agenda for Synlait.

[BlackPeter]

If diversity, inclusiveness and sustainability are very high on Synlait’s priorities the page on their website showing the senior leadership team is a bad look ....a team of 11 ..all very Caucasian looking and 2 females (quality and legal)

There’s been studies done that improving gender mix (ie more female) often improves overall competency with the displacement of mediocre men.

Maybe that next on the agenda for Synlait.

They probably should start with the board (though there would be at least one mediocre woman to replace as well) and the CEO ...

[Beagle]

If diversity, inclusiveness and sustainability are very high on Synlait’s priorities the page on their website showing the senior leadership team is a bad look ....a team of 11 ..all very Caucasian looking and 2 females (quality and legal)

There’s been studies done that improving gender mix (ie more female) often improves overall competency with the displacement of mediocre men.

Maybe that next on the agenda for Synlait.

Way more important than Pokeno eh
https://www.synlait.com/people/ Trouble is you study this too much. With pink its all about appearance and this photo presents the image they want you to see. You're not meant to scratch beneath the surface and read the detail lol. Nice balance of 50/50 male female apart from Leon who heads the table but we know LOVES PINK, say no more...

Ruth Richarson and that Bill Roest as directors. Oh my goodness, no wonder this company is such a "winner"

[winner69]

There’s more to PINK than that beagle

Remember recent ASM when shareholder gave the Board etc a standing ovation for such an amazing result and then Leon went on to say:

“Pink is the colour of disruption and difference. Our new wordmark is friendly and more appropriate for a company working with flowing milk. We think together they work really well to tell the world who we are.”

[winner69]

....and Chris Lee once said Synlait deserves to be of the first chapters in a book of ‘Great NZ Corporate Successes’

From where it’s come from Spose it still deserves to be included.

[Beagle]

They won't even make $60m this year, you read it from me first. I don't fancy their chances at the Supreme Court either. This would have been settled already if the other party didn't think they had a bullet proof case.

[dreamcatcher]

They won't even make $60m this year, you read it from me first. I don't fancy their chances at the Supreme Court either. This would have been settled already if the other party didn't think they had a bullet proof case.

Personal thoughts "stopping the build was the goal" not the money but who actually signed off on the build still unknown ?
Between 6th & 7th Jan over 1.12m shares traded on 13th SP collapses with 1.28m traded the pudding was the extra 343K on the 14th

Jarden's valuation released 11th a few days before tumble, my question did Jarden partake in the short? Was shorting the stock on company news just a way to increase (cheaper) holdings as small numbers move SML SP big up/down.

GS update 13/Jan SM1 will provide further details on its longer-term strategy on 19th March 2020 when it announces its 1H20 result. "We forecast 1H20 NPAT of NZ$27.7mn vs company guidance for 1H20 NPAT of between NZ$26.5mn and NZ$28.5mn"

My preference has been to hold through turbulence

[Lola]

....and Chris Lee once said Synlait deserves to be of the first chapters in a book of ‘Great NZ Corporate Successes’

From where it’s come from Spose it still deserves to be included.

He’s always been brilliant that man. Never been wrong. In his view anyway. But to be fair anybody with a view in everything will often stub their toe.

[Beagle]

Was quite unusual for Jarden to make their updated valuation of $8.84 on 11 February 2020 public knowledge, (seeing as one would assume they made a company visit before doing this) and this just immediately before a sizeable company downgrade. Major egg on face at the very least, some might even be tempted to read more into it.

What is more concerning is the sharp downward movement of the share price on high volume immediately before the downgrade.
This comes after a sharp upward rerating in the share price last year on heavy volume immediately preceding some good news. This reeks of insider trading on both occasions. Smells worse than rotten eggs.

I presume you are talking about who signed off on the decision to build the Pokeno facility in the first place despite the legal challenge and hostility ? John Penno was in charge then so he is the architect of this astronomically sized game of Pokeno Russian Roulette they are playing.

I choose to invest in companies where the directors exercise prudent judgement around managing business risk. Saying Synlait is a massive fail on that count is the understatement of the year.

[Cadalac123]

Sick of this BS insider trading. Seen it with SPY,SML, GTK and QEX now. NZX asleep most of the time.
Joke of a market.

[couta1]

Lol check out the 6 month chart, that cliff faced drop off looks scary but equally impressive. PS-Could be worth a punt soon.

[winner69]

Lol check out the 6 month chart, that cliff faced drop off looks scary but equally impressive. PS-Could be worth a punt soon.

Has to be a punt soon

A subject in the book “Great NZ Corporate Successes” at a 50% discount

Those opportunities don’t come often.

[Beagle]

Lol check out the 6 month chart, that cliff faced drop off looks scary but equally impressive. PS-Could be worth a punt soon.


Has to be a punt soon

A subject in the book “Great NZ Corporate Successes” at a 50% discount

Those opportunities don’t come often.

I know you two have a soft spot for unwanted mutts but be careful with this one.

I think there's a real chance if they lose at the Supreme Court this could go under $4. If that happens then its likely they will need a massive rights issue to get their excessive leverage down to a sensible level and fund a replacement facility somewhere else in the Waikato. Remember, Pokeno was 100% debt funded and you can be assured their financiers will be really "impressed" if its rendered effectively worthless !

[Lola]

I know you two have a soft spot for unwanted mutts but be careful with this one. Very hard to get rid of a really bad mange infestation. Even harder when management can't be trusted to apply the necessary remedies.

I think there's a real chance if they lose at the Supreme Court this could go under $4. If that happens then its likely they will need a massive rights issue to get their excessive leverage down to a sensible level and fund a replacement facility somewhere else in the Waikato. Remember, Pokeno was 100% debt funded and you can be assured their financiers will be really "impressed" if its rendered effectively worthless !

Questions should also be asked as what security of supply from farmers had been tied up before this plant was contemplated.
My guess is not much.

[Beagle]

Questions should also be asked as what security of supply from farmers had been tied up before this plant was contemplated.
My guess is not much.

I think they work on the principle of "build it and they will come" The real question is what happens to committed supplier contracts if Pokeno has to shut down and how much does that cost Synlait on top of the replacement capex for a new facility somewhere else ? How long would it take them to find another site and commission the plant, 2 years ? You think those farmers might get annoyed and take their milk somewhere else and never come back ?

[bull....]

I know you two have a soft spot for unwanted mutts but be careful with this one.

I think there's a real chance if they lose at the Supreme Court this could go under $4. If that happens then its likely they will need a massive rights issue to get their excessive leverage down to a sensible level and fund a replacement facility somewhere else in the Waikato. Remember, Pokeno was 100% debt funded and you can be assured their financiers will be really "impressed" if its rendered effectively worthless !

think its almost certain they will lose and have to make compensation payout. the dude will make many millions lol

[Beagle]

think its almost certain they will lose and have to make compensation payout. the dude will make many millions lol

I don't think he wants a compensation payout. Just wants them gone. The interesting thing with this case is covenant law goes back hundreds of years and I think its highly unlikely the Supreme Court will rule against that and start a new precedent so on the face of it Synlait really do look to be in very serious trouble.

We know they've already tried to settle this and I am sure more than one offer has been made, but all their overtures have obviously been rejected. If you go back and read the various NZX releases from Synlait over recent times about Pokeno they talk about how we're confident this can be resolved, mentioned many times and lots of other calming words but all Synliat assurances that they have this in hand have come to what ? You guessed it Nothing !...and its down to hoping the Supreme Court rule in their favour. Sometimes people are too driven to grow and succeed and without proper governance and checks and balances they trip up and fall on their face and this is shaping up as John Penno's crowning disgrace. The board also sanctioned his approach so the rest of the board should also all resign if they fail at the Supreme Court.

[bull....]

I don't think he wants a compensation payout. Just wants them gone. The interesting thing with this case is covenant law goes back hundreds of years and I think its highly unlikely the Supreme Court will rule against that and start a new precedent so on the face of it Synlait really do look to be in very serious trouble.

We know they've already tried to settle this and I am sure more than one offer has been made, but all their overtures have obviously been rejected. If you go back and read the various NZX releases from Synlait over recent times about Pokeno they talk about how we're confident this can be resolved, mentioned many times and lots of other calming words but all Synliat assurances that they have this in hand have come to what ? You guessed it Nothing !...and its down to hoping the Supreme Court rule in their favour. Sometimes people are too driven to grow and succeed and without proper governance and checks and balances they trip up and fall on their face and this is shaping up as John Penno's crowning disgrace. The board also sanctioned his approach so the rest of the board should also all resign if they fail at the Supreme Court.

payout or get out its lose lose for synliat

[Sideshow Bob]

Obviously forgot about cutting down those trees:

https://www.ruralnewsgroup.co.nz/rural-news/rural-opinion/hound/ironic-2020 (https://www.ruralnewsgroup.co.nz/rural-news/rural-opinion/hound/ironic-2020)

[Beagle]

I love that Hound's sense of humour. "Cuddler in-chief" and "glorified handbag carrier" lol

She obviously doesn't have very intelligent advisors otherwise she would have known to wear pink on the day to fit right in.

[dreamcatcher]

Covenant law outdated and needs replacing.

Only part of building on covenanted land but have every right to build on any un-covenanted land. I'm not a lawyer but fail to see any damage done to Mr Ye. If total land had a covenant and SML built I would understand him been upset.

Bring on April

[Beagle]

Covenant law outdated and needs replacing.

Only part of building on covenanted land but have every right to build on any un-covenanted land. I'm not a lawyer but fail to see any damage done to Mr Ye. If total land had a covenant and SML built I would understand him been upset.

Bring on April

Covenant law goes back hundreds of years and is one of the fundamental building blocks and principle's of property law. I can't see a N.Z. Court changing a law that old.

[Marilyn Munroe]

The board also sanctioned his approach so the rest of the board should also all resign if they fail at the Supreme Court.

The management and board deserve a smidgen of sympathy as they had a favourable High Court decision before the Court of Appeal went "hang on a minute mate".

My understanding is the covenantor was not a party to this case but entered the fray at the Appeal Court case. I find it unlkely they would not have had legal advice at some stage that overturning the covenant in conjunction with a third party and without the ovenantor being present to argue his corner is risky.

This could end up as another instance of being careful investiing in companies governed by former politicians. Will we have the mother of all resignations?

Bopp boop de do
Marilyn

[Sideshow Bob]

I love that Hound's sense of humour. "Cuddler in-chief" and "glorified handbag carrier" lol

She obviously doesn't have very intelligent advisors otherwise she would have known to wear pink on the day to fit right in.

I would say that particular publication would be well aware of the political leanings of their readership. Such comments would be lapped up!!

[Sideshow Bob]

The management and board deserve a smidgen of sympathy as they had a favourable High Court decision before the Court of Appeal went "hang on a minute mate".

My understanding is the covenantor was not a party to this case but entered the fray at the Appeal Court case. I find it unlkely they would not have had legal advice at some stage that overturning the covenant in conjunction with a third party and without the ovenantor being present to argue his corner is risky.

This could end up as another instance of being careful investiing in companies governed by former politicians. Will we have the mother of all resignations?

Bopp boop de do
Marilyn

Interesting that A2 have no representative on the board, however Bright have 3 seats around the table. With all due respect, knowledge or understanding of NZ legal systems is unlikely to be high up in their skill set.

Not that she is necessarily there for her legal skills, but there is only one director with a legal background......yep, you guessed it!

[Beagle]

Interesting that A2 have no representative on the board, however Bright have 3 seats around the table. With all due respect, knowledge or understanding of NZ legal systems is unlikely to be high up in their skill set.

Not that she is necessarily there for her legal skills, but there is only one director with a legal background......yep, you guessed it!

No wonder they're in the **** :lol:

[dreamcatcher]

The extra 343K pudding on the 14th now replaced by today's 530K

[winner69]

Shareprice going up solidly last few days ..up 7%

No worries here

[BlackPeter]

Shareprice going up solidly last few days ..up 7%

No worries here

Well, sure, huge surge back. Just make sure you don't look at the big picture:

11043

Not a lot of energy in this dead cat, isn't it?

[Beagle]

https://www.youtube.com/watch?v=Q2hR3KwTZMg

[dreamcatcher]

ONLY ONE company with A2 SAMR approval ..............SYNLAIT Understand Pokeno waiting on site inspection but can produce IF just not A2 for CHINESE physical stores.

[Oliver Mander]

Opinion article in NZ Herald today...
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12310634

[Beagle]

Opinion article in NZ Herald today...
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12310634

Very well written mate. If I remember correctly the decision for ATM to invest heaps more in Synlait at over $11 was another one of Herdlickers "brilliant" ones and done shortly after her appointment.

[Leftfield]

Interesting announcement by SML today. See it here. (https://www.nzx.com/announcements/349733)

[Beagle]

Just keep adding even more debt on top of their existing debt mountain and completely ignore the fact they might have a massive problem pending at Pokeno. What could possibly go wrong lol "Fabulous" governance and risk management.

In September 2018 Synlait and ATM were pacing each other's share price at just on $13 each and worth very close to the same value.
Synlait share price at the time of writing is worth less than a third of ATM. What a spectacular fall from grace in just 18 months !

[BlackPeter]

Interesting announcement by SML today. See it here. (https://www.nzx.com/announcements/349733)


Just keep adding even more debt on top of their existing debt mountain and completely ignore the fact they might have a massive problem pending at Pokeno. What could possibly go wrong lol "Fabulous" governance and risk management.

I guess in itself are the proposed reasons to buy the adjacent farmland sound. Both water rights as well as rail facility sound sensible and it gives them space to expand. Currently probably as well a good time to buy farmland at less inflated prices.

Agree however that another nearly $26 million of expenses might be problem for them if the Pokeno decision at the supreme court turns pear shaped ... Though - maybe they intend to use the additional space to relocate Pokeno if necessary - who knows?

[Leftfield]

...Less than 2 years ago Synlait and ATM were pacing each other's share price and worth very close to the same value.
Synlait share price at the time of writing is worth less than a third of ATM. What a spectacular fall from grace !

lol. As I recall it you were the one advocating SML v ATM as the best 'long term investment' back in those days (seem to remember you even ran a poll to prove your point!!?)

In addition your lawyerly verdict on Pokeno is yet to be proven.

Best to keep an open mind.

Just saying......I don't hold SML.

[Beagle]

TA a pretty useful tool in investors toolkit isn't it !
Best to be quick on your feet !

[percy]

Must be time for another name change?...."Twinkle Toes" or "TT" for short..............lol.

[whome]

Photo of Pokeno looking south. White dairy factory RHS is Yashili-Mengniu. White dairy factory LHS is the new Synlait plant. Hinds Pipes on the other side of Synlait. The land with the covenants extends behind these to the south, up and over the hills. Both Yashili and Hinds were established years before Synlait.
Why did the objector to Synlait not object to Yashili and Hinds who must have been subject to the same covenants. A judge may say the previous two set a precedent by building there with no objection heard, but it was only when a direct competitor in the form of Synlait turned up that the objector decided to play the covenant card. Hmmm... it will be a test of the strength of covenant law, or rather who can play god when deciding who to allow to be your neighbour. A similar situation was the blocking of building of PaknSave (I think it was) on Lincoln Road Henderson by a rival supermarket. Eventually they built but held up for years.
Maybe Synlait Pokeno will sell to Yashili next door then put all their efforts into Dunsandel where they already have the approvals to export IF to China.11107

[Beagle]

I've been calling SML a SELL since it was over $9. No need for a name change, many find the barking very helpful.
Beagles can be very quick on their feet especially when there's food involved lol

[Leftfield]

Photo of Pokeno looking south. White dairy factory RHS is Yashili-Mengniu. White dairy factory LHS is the new Synlait plant. Hinds Pipes on the other side of Synlait. The land with the covenants extends behind these to the south, up and over the hills. Both Yashili and Hinds were established years before Synlait.
Why did the objector to Synlait not object to Yashili and Hinds who must have been subject to the same covenants. A judge may say the previous two set a precedent by building there with no objection heard, but it was only when a direct competitor in the form of Synlait turned up that the objector decided to play the covenant card. Hmmm... it will be a test of the strength of covenant law, or rather who can play god when deciding who to allow to be your neighbour. A similar situation was the blocking of building of PaknSave (I think it was) on Lincoln Road Henderson by a rival supermarket. Eventually they built but held up for years.
Maybe Synlait Pokeno will sell to Yashili next door then put all their efforts into Dunsandel where they already have the approvals to export IF to China.11107

Thanks whome.... In addition, as I understand it there was a 'zoning change' by the local Pokeno authority.... the question as to whether a covenant should still be relevant following this zoning change is going to be interesting.

Some would say the zoning change made the covenant redundant. But hey, I'm no lawyer.

As I say - it pays to keep an open mind.

[BlackPeter]

TA a pretty useful tool in investors toolkit isn't it !
Best to be quick on your feet !


Must be time for another name change?...."Twinkle Toes" or "TT" for short..............lol.


I've been calling SML a SELL since it was over $9. No need for a name change, many find the barking very helpful.
Beagles can be very quick on their feet especially when there's food involved lol

Absolutely - while sometimes earmuffs might be of advantage ... I always find the beagles barking useful.

And yes, if the conditions change then everybody using their brain would reassess their position and change their mind as appropriate. They call that mental flexibility.

I noticed though that some other posters tend to stick sometimes with their decisions despite clear evidence that the story and the facts have changed. I know how to call this behavior as well, but it would not be polite to call it out.

Anyway - each to their own, but please, beagle - keep barking.

[Beagle]

Absolutely - while sometimes earmuffs might be of advantage ... I always find the beagles barking useful.

And yes, if the conditions change then everybody using their brain would reassess their position and change their mind as appropriate. They call that mental flexibility.

I noticed though that some other posters tend to stick sometimes with their decisions despite clear evidence that the story and the facts have changed. I know how to call this behavior as well, but it would not be polite to call it out.

Anyway - each to their own, but please, beagle - keep barking.

Thanks mate. The truth is some other people prefer cats and that's fine with me :)

[mondograss]

Thanks whome.... In addition, as I understand it there was a 'zoning change' by the local Pokeno authority.... the question as to whether a covenant should still be relevant following this zoning change is going to be interesting.

Some would say the zoning change made the covenant redundant. But hey, I'm no lawyer.

As I say - it pays to keep an open mind.

Council zoning can't override a covenant. It might result in the land being useless because you can neither comply with the zoning nor the covenant, but it can't override it. At most it might force a lifting of the covenant. Also the Yashili factory is adjacent to the covenanted land not on it, and the HINDS factory itself is not on the covenanted land though they own a part of it. See the map at the end of this:
https://forms.justice.govt.nz/search/Documents/pdf/jdo/65/alfresco/service/api/node/content/workspace/SpacesStore/f2e68638-58c3-4efd-8453-d46c9fa9d2b3/f2e68638-58c3-4efd-8453-d46c9fa9d2b3.pdf

[whome]

Thanks mondograss. Very interesting to see the legal outcome of this.

[couta1]

Absolutely - while sometimes earmuffs might be of advantage ... I always find the beagles barking useful.

And yes, if the conditions change then everybody using their brain would reassess their position and change their mind as appropriate. They call that mental flexibility.

I noticed though that some other posters tend to stick sometimes with their decisions despite clear evidence that the story and the facts have changed. I know how to call this behavior as well, but it would not be polite to call it out.

Anyway - each to their own, but please, beagle - keep barking. Our dog is a great watchdog being a wire hair foxy but when he wont stop barking incessantly at the next door cats or other nonsense things ,he gets a whack on the rear end with a rolled up newspaper as that's the only thing that will stop him.

[Beagle]

Our dog is a great watchdog being a wire hair foxy but when he wont stop barking incessantly at the next door cats or other nonsense things ,he gets a whack on the rear end with a rolled up newspaper as that's the only thing that will stop him.

Call the SPCA immediately :lol:

[couta1]

Call the SPCA immediately :lol: Okay, what's your address?

[Beagle]

Okay, what's your address?

:lol: :lol:

[Independent Observer AUNZ]

New CFO coming on board - facing some interesting and complex challenges! :)

[Mr Slothbear]

New farm purchase
https://www.stuff.co.nz/business/120183451/synlait-buys-dairy-farm-next-to-canterbury-factory-for-257m

[Marilyn Munroe]

New farm purchase
https://www.stuff.co.nz/business/120183451/synlait-buys-dairy-farm-next-to-canterbury-factory-for-257m

From the linked article; "To develop a rail siding which will allow containers to be shipped direct from Dunsandel to Lyttelton and will cut out 16,000 truck movements a year."

I drove past the nearby Bankside rail crossing loop today and noticed Kiwi Rail had deposited rail there. Maybe the siding is a go soon.

Boop boop de do
Marilyn

[Sideshow Bob]

From the linked article; "To develop a rail siding which will allow containers to be shipped direct from Dunsandel to Lyttelton and will cut out 16,000 truck movements a year."

I drove past the nearby Bankside rail crossing loop today and noticed Kiwi Rail had deposited rail there. Maybe the siding is a go soon.

Boop boop de do
Marilyn

Approx 24km to Inland Port at Lyttelton. Few truck trips to recoup purchase price.....especially when taking on more debt.

[winner69]

Pink book out for H1

As expected

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/350214/319114.pdf


....but if CASH IS KING these days their cash flow was a disaster ....let’s just put it down to timing issues.

[Sideshow Bob]

Pink book out for H1

As expected

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/350214/319114.pdf


....but if CASH IS KING these days their cash flow was a disaster ....let’s just put it down to timing issues.

A lot of pink there....that is pretty close to red.....Would have to hope that would right itself a little as milk flows drop off and inventories sell through.

Net debt of $447.4m!! :ohmy:

[dobby41]

Net debt of $447.4m!! :ohmy:

As in other downturns debt will be the killer for companies.

[BigBob]

Pretty decent run today on good volume...

Twinning with ATM again or something else...?

[sb9]

Not sure if its A2 increasing their stake or worse is behind, confidence seem to be coming back into this stock.

[Leftfield]

The pending court case is not going to get resolved in the current lockdown climate (ie hardly a priority)......might make the respective parties more motivated to reach a good deal.

Let's hope.

[BlackPeter]

Not sure if its A2 increasing their stake or worse is behind, confidence seem to be coming back into this stock.

Hardly any more shares A2 can buy without having to make a takeover offer. It is certainly not them buying. Theoretically they might have "friends" in the market doing it for them, but I am pretty sure this would be illegal - i.e. lets exclude that option either.

Obviously - it might be possible that some insiders think to know something about the negotiations around Pokeno ... leaky boat?

More likely in my view however that some funds are preparing for the big March 31 window dressing event - and FOMO investors running with them.

If it is the latter, than April fools day will be revealing.

[sb9]

Hardly any more shares A2 can buy without having to make a takeover offer. It is certainly not them buying. Theoretically they might have "friends" in the market doing it for them, but I am pretty sure this would be illegal - i.e. lets exclude that option either.

Obviously - it might be possible that some insiders think to know something about the negotiations around Pokeno ... leaky boat?

More likely in my view however that some funds are preparing for the big March 31 window dressing event - and FOMO investors running with them.

If it is the latter, than April fools day will be revealing.

Yes all very valid points, let's and wait see at least what April fools day will look like as that's most short term and obvious one to decipher.

[Ggcc]

Not sure if its A2 increasing their stake or worse is behind, confidence seem to be coming back into this stock.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/350456/319398.pdf

Look at the last comment A2MC has no plans to increase its shareholding in Synlait beyond 19.9%.

[Sideshow Bob]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/350456/319398.pdf

Look at the last comment A2MC has no plans to increase its shareholding in Synlait beyond 19.9%.

Tigger a takeover and pointless unless they do a deal with Bright - who I think off the top of my head are around 37%??

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/350456/319398.pdf

Look at the last comment A2MC has no plans to increase its shareholding in Synlait beyond 19.9%.

They said that last time they raised their stake some time ago.

[dobby41]

They said that last time they raised their stake some time ago.

Not past 19.9% though - will they want to trigger a takeover?

[Beagle]

Not past 19.9% though - will they want to trigger a takeover?

Not at this point.

[sb9]

Into the $6s range now...further investment by A2 seem to be having a positive impact for sure

[sb9]

Into the $6s range now...further investment by A2 seem to be having a positive impact for sure

Forward couple of days and we're knocking on $7s range now...

[kerryo]

Forward couple of days and we're knocking on $7s range now...

This is unbelievable, rises 6 trading days in a row, somebody knows something we don't.

[sb9]

This is unbelievable, rises 6 trading days in a row, somebody knows something we don't.

I'm picking that market sees positive view of the fact that there could be a seat on the board of SML from A2 management. Anyway, happy to be back in the black and up a bit.

[Beagle]

This is unbelievable, rises 6 trading days in a row, somebody knows something we don't.

There has been a fair bit of that sort of thing in the past.

[Leftfield]

And don't forget that ATM's recent purchase of SML at $4.95 have appreciated around 40%

Naaiiiice.

[winner69]

And don't forget that ATM's recent purchase of SML at $4.95 have appreciated around 40%

Naaiiiice.

There average price must have come down a bit .....might even be ahead.

[BlackPeter]

There average price must have come down a bit .....might even be ahead.

Wouldn't think so. Didn't they buy the first 17% of their now close to 20% holding well north of $10 per share?

And it was not even Jayne screwing that up ...

[winner69]

Wouldn't think so. Didn't they buy the first 17% of their now close to 20% holding well north of $10 per share?

And it was not even Jayne screwing that up ...

I think their average is now about $6.35

[Leftfield]

I think their average is now about $6.35

I reckon that's about right too...... perhaps av of $7.50 ...certainly not north of $10.

[SCOTTY]

This is unbelievable, rises 6 trading days in a row, somebody knows something we don't.

I think it is all the positive news of late:

- 11/3 - 582 hectares of farmland adjoining Dunsandel facility purchased. Increasing own dairy production. Importantly, potentially improving railway access for supply chain efficiencies - reducing 16,000 truck movements annually between the factory to Lyttelton Port.
- 19/3 - HY result published. Positive with FY February guidence confirmed.
- 1/4 - Dairyworks settlement complete. A NZ market leader in the Everyday dairy category; Half NZ cheese, 25% NZ butter plus milk powder and Deep South Icecream.

Looks exciting to me and I believe the reason for the market interest.

[BlackPeter]

Wouldn't think so. Didn't they buy the first 17% of their now close to 20% holding well north of $10 per share?

And it was not even Jayne screwing that up ...


I reckon that's about right too...... perhaps av of $7.50 ...certainly not north of $10.

Fair enough. Just checked. The first big parcel (they bought from Frislandia in March 2017) was around $3.20 per share ... and the second (similar number of shares bought in August 2018) was around $11 per share. That's the parcel I had in mind.

So, yes - average (before buying the last lot) was somewhat above $7 per share.

[Leftfield]

Fair enough. Just checked. The first big parcel (they bought from Frislandia in March 2017) was around $3.20 per share ... and the second (similar number of shares bought in August 2018) was around $11 per share. That's the parcel I had in mind.
So, yes - average (before buying the last lot) was somewhat above $7 per share.

Yes, it is tricky to calculate because (as I recall) they didn't always state the number of shares or av SP.
eg
March 2017 purchased 8.2% of SML at $3.20 (ish)
Aug 2018 purchased further 9.2% to take total stake to 17.4% for $162 mill. (I remember an av of $11.05 but may be wrong??)
March 2020 purchased further 2.44% to take total stake to 19.84% at $4.95

Can't help thinking an av holding price around current $7.00 levels is a useful yardstick.

[Beagle]

It will surprise nobody that Jayne was in charge when they paid out the really big bucks. One of her first decisions after being appointed if I remember correctly. The she started hiring all her old JetStar mates. What a "legend" she turned out to be.

[sb9]

Yes, it is tricky to calculate because (as I recall) they didn't always state the number of shares or av SP.
eg
March 2017 purchased 8.2% of SML at $3.20 (ish)
Aug 2018 purchased further 9.2% to take total stake to 17.4% for $162 mill. (I remember an av of $11.05 but may be wrong??)
March 2020 purchased further 2.44% to take total stake to 19.84% at $4.95

Can't help thinking an av holding price around current $7.00 levels is a useful yardstick.

Here are details of all investment by A2 Milk in SML and under who is in charge of A2, no wonder GB is our great man as always...




9/03/2017
14,634,119
$ 47,926,739.73
$ 3.28
GB


13/04/2018
1,700,000
$ 15,322,950.00
$ 9.01
JH


3/08/2018
14,840,527
$ 161,761,744.30
$ 10.90
JH


23/03/2020
4,400,000
$ 21,780,000.00
$ 4.95
GB









Total
35,574,646
$ 246,791,434.03
$ 6.94




Their av price of investment is tad under $7 at $6.94 which is pretty good.

[Baa_Baa]

It will surprise nobody that Jayne was in charge when they paid out the really big bucks. One of her first decisions after being appointed if I remember correctly. The she started hiring all her old JetStar mates. What a "legend" she turned out to be.

Get over it, for a non shareholder you’re stuck in ancient history. ATM is performing way better than most other stocks

[Leftfield]

Thanks sb 9 very helpful.

Well said Baa Baa.

[kiora]

I wonder role of Lactoferrin for Coronavirus?
https://www.synlait.com/news/synlait-to-double-lactoferrin-capacity-following-new-supply-agreement/
https://www.researchgate.net/figure/Lactoferrin-inhibits-SARS-pseudovirus-infection-of-HEK293E-ACE2-Myc-cells-A-D_fig10_51614957
"Lactoferrin blocks virus invasion"
/www.foodnavigator-asia.com/Article/2020/03/17/Fight-COVID-19-with-dairy-China-industry-associations-issue-consumption-guidelines-to-build-immune-resistance#

[Leftfield]

Market update FYI. See it here. (https://www.nzx.com/announcements/351358)

Disc - I followed Geoff in last time and have done so again...got out last time with healthy gains... now in again and a bit over exposed to dairy but WTH!

[Ggcc]

Market update FYI. See it here. (https://www.nzx.com/announcements/351358)

Disc - I followed Geoff in last time and have done so again...got out last time with healthy gains... now in again and a bit over exposed to dairy but WTH!
Great how companies are putting all these policies in place. Who Is policing this especially the including at home bit.

• introduced daily declarations as a prerequisite for anyone entering our sites. This includes confirming health and travel status and that physical distancing practices are always adhered to, including at home;

[sb9]

Couple of medium parcels (100k, 195k) and another large parcel (1.5ml) of shares were crossed at 7.32 a piece, somethings's in play??

[dreamcatcher]

Couple of medium parcels (100k, 195k) and another large parcel (1.5ml) of shares were crossed at 7.32 a piece, somethings's in play??

Probably NZ/Aus dollar

[Leftfield]

Couple of medium parcels (100k, 195k) and another large parcel (1.5ml) of shares were crossed at 7.32 a piece, somethings's in play??

FWIW the High Court Appeal hearing was set for 29/30 April...... possible settlement in the wind?
Given these Covid times, will the hearing even go ahead? Time will tell.

[dreamcatcher]

FWIW the High Court Appeal hearing was set for 29/30 April...... possible settlement in the wind?
Given these Covid times, will the hearing even go ahead? Time will tell.

I believe the objective was to slow SML build down which clearly didn't work. Danone and Yashili joining forces across the road would have welcomed the stoppage. SML has been a painful hold but winning court case would imo open the door to accepting long term contract at Pokeno.

May even be the key for their SAMR applications which is only waiting on site approval.

[alex f]

It’s the Supreme Court isn’t it?. First was High, then Appeal, now Supreme.
How long roughly will the judgement take to come out?
What happens if they lose?

[Leftfield]

It’s the Supreme Court isn’t it?. First was High, then Appeal, now Supreme.
How long roughly will the judgement take to come out?
What happens if they lose?

Ooop's yes Supreme Court, but sorry can't answer your other Q's.

[Leftfield]

Supply Manager buying a few on the market (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/352042/321233.pdf)..... a small vote of confidence.

[sb9]

Supply Manager buying a few on the market (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/352042/321233.pdf)..... a small vote of confidence.

Agree, nice little vote of confidence. From today's release, the supreme court hearing is delayed until 3rd and 4th June as expected due to covid scenario.

[Sideshow Bob]

https://www.nzx.com/announcements/352063

Date delayed for the Supreme Court announcement.

[limmy]

With the A2 train shot well past the $20 mark today, it must be time for the SML train to catch up ?

[winner69]

Synlait coping OK ....adaptability being the key

Main concern is disruption ...not debt

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12329211

[Master98]

price crashed to $6.5 with large volume Over 700k at last minute, can anyone give a clue?

[BigBob]

price crashed to $6.5 with large volume Over 700k at last minute, can anyone give a clue?

Supreme Court case starts on Tuesday... Last trading day before...

[Master98]

Supreme Court case starts on Tuesday... Last trading day before...
cheers, mate

[sb9]

Price on ASX y'day at close was 6.66 AU which is about 7.20 NZ.

[Nasi Goreng]

Is anyone following the court case? Looks like there is optimism in the share price. $6 or 8.50 by the end of the week if decision is made.

[petty]

Not me sorry. :scared:

[Master98]

Is anyone following the court case? Looks like there is optimism in the share price. $6 or 8.50 by the end of the week if decision is made.
what is the consequences if they lose the court case?

[Leftfield]

Is anyone following the court case? Looks like there is optimism in the share price. $6 or 8.50 by the end of the week if decision is made.

Hope to tomorrow.

[sb9]

Hope to tomorrow.

Behind paywall on NBR titled as below....(sorry I'm not a subscriber)

"Covenants over Synlait's Pokeno plant now largely irrelevant, court told"

I'm picking its good news for Synlait...

Disc - As a holder I'm biased though.

[Beagle]

Behind paywall on NBR titled as below....(sorry I'm not a subscriber)

"Covenants over Synlait's Pokeno plant now largely irrelevant, court told"

I'm picking its good news for Synlait...

Disc - As a holder I'm biased though.

Behind the paywall in the N.Z. Herald too. That statement is simply what Synlait's lawyer asserted.

[peat]

Behind paywall on NBR titled as below....(sorry I'm not a subscriber)

"Covenants over Synlait's Pokeno plant now largely irrelevant, court told"

I'm picking its good news for Synlait...

Disc - As a holder I'm biased though.

This is merely the appellants QC's opening speech asserting that to be so, when any one else knows that land titles and their bits and bobs don't usually care about these social dynamics. Owning land has been around for a long long time and the details of it don't just bow to changes such as development over 20 years (I wouldnt think).

Discl: no position

[Beagle]

Synlait's position is obstensibly other people have built dairy processing facilities nearby so it is perfectly okay for us to do so and ride roughshod over land covenants, a land ownership rights protection system that dates back well over 100 years. Lets spend $260m of shareholders money knowing that while doing so we're going directly against the Court of Appeal's decision. What could possibly go wrong lol

I would have thought shareholders have every expectation they can expect their directors to act in a prudent manner that doesn't expose them to untoward risk. Legal action against the directors coming if this all blows up in their face ?

[sb9]

Behind the paywall in the N.Z. Herald too. That statement is simply what Synlait's lawyer asserted.

Yes, did read that article on NZH through some other source....interesting opening comments from Synlait's lawyer, let's see what happens when case continues tomorrow.

[dreamcatcher]

Just for the record who wishes to buy SML......?

[BlackPeter]

Leon Clement (CEO of Synlait) presenting tonight over Zoom to NZSA members. While I would be surprised if he comments on an open court case, it still might be interesting how he sells the situation.

If you are not a NZSA member ... there is still an opportunity to join :): http://www.nzshareholders.co.nz/members.cfm

.

[ardentbuzz]

Just to clarify can the Supreme court descion be appealed or is this the end of the road??
I notice an article By Andrea Fox (its behind NZH paywall so cant read it all) that counsel for the holder of the covenant intends to bring to the case information that the land use not being not now available for a housing development which may turn the milk a bit sour for Synlait

[Beagle]

Supreme Court is the end of the road. Appeals to the Privvy Council in the U.K. are no longer allowed in the N.Z. Judicial system.

[Leftfield]

Won't be attending the SML hearing today..... other commitments and more fun watching VGL.

GLH.