SML - Synlait Milk Ltd

[percy]

percy, have you got yourself another job? Spin doctor? :p

Was not me,but had a good chuckle when I saw the headline.! lol.

[K1W1G0LD]

yes, Percy seems we are all well positioned now. But I'll bet Synlait gets to $4 before Heartland breaks the $ mark.:D

[percy]

yes, Percy seems we are all well positioned now. But I'll bet Synlait gets to $4 before Heartland breaks the $ mark.:D

You are most probably right,as I no longer hold SML.My selling was the buy signal!!!????????????????? lol.

[Baaarney]

Not on the list ..... but confident



GENERAL: SML: Synlait Milk confident of China registration





The initial list of registered New Zealand companies issued today by the


Certification and Accreditation Administration of the People's Republic of


China (CNCA) did not include Synlait Milk as an exporter of finished infant


formula into China. This announcement has been anticipated by the Company for


some time.





The Ministry for Primary Industries (MPI) has confirmed that it expects


Synlait Milk to receive registration following the approval of its Risk


Management Plan by MPI for its dry blending and consumer packaging facility.


Construction of this facility is scheduled for completion in June 2014.





Synlait Milk and its customers are well prepared and have ensured sufficient


stocks of product have been manufactured prior to 1 May or are held as stock


in market to cover the interim period before it receives registration.





Synlait Milk supports the Chinese regulatory changes designed to improve the


quality standards required of manufacturers supplying that market.


End CA:00250007 For:SML Type:GENERAL Time:2014-05-01 14:33:15

[000831]

They say that they may grant license in June.

The company is so sensitive to the SP.

[In4a$]

Bit of a worry, I thought SML would be one of the first on the list, but I am sure theyll get there

[jamiec26]

Bit of a worry, I thought SML would be one of the first on the list, but I am sure theyll get there

I would have thought that too. Surely when most of the company is owned by Bright Food in China it's has to be safe.

[K1W1G0LD]

I would have thought that too. Surely when most of the company is owned by Bright Food in China it's has to be safe.

Don't worry they're not investing in all this new plant for nothing. They can't afford not to receive registration.

[nextbigthing]

The market doesn't seem to care. Closed up today...

[Billy Boy]

I would have thought that too. Surely when most of the company is owned by Bright Food in China it's has to be safe.
.
We will all know in June
BB

[sommelier]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11250373

Potentially just a bit of 'lost in translation' - but if this piece is correct then Synlait's 'stockpiles' are actually worth whatever we can flog them for anywhere other than China.

[BlackPeter]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11250373

Potentially just a bit of 'lost in translation' - but if this piece is correct then Synlait's 'stockpiles' are actually worth whatever we can flog them for anywhere other than China.

yeah - heard that in the news and was worried as well. I guess a clarification from Synlait whether (and if yes how bad) they are effected would be appreciated.

[In4a$]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11250373

Potentially just a bit of 'lost in translation' - but if this piece is correct then Synlait's 'stockpiles' are actually worth whatever we can flog them for anywhere other than China.
I am playing it safe and taking a profit on some, buy again when this things settles

[Billy Boy]

They are updating their plant to meet the Chinese requirements. And have been
doing this for some time. Updates will be finished in June 2014.
Word on the grapevine.... this Chinese surplus is probably now going to India.
BB

[Billy Boy]

BB the biggest worry(for any exporter) is the damage that no being able to provide a constant supply chain of product will do.
Poeple move away from products that have supply issue's and there is plenty of choice in china.
Yes I agree, But these guys have known about the changes for some time, thats why
they are updating plant. It's this product that has been put up in a timing error (according the the Chinese)
Thats causing the problem. Did the "they's" miss inturperate . Seams so !!
BB

[Billy Boy]

BY the way .....we are not talking about total product here.
I forget the actual amount, someone else might know
BB

[K1W1G0LD]

The media are creating their usual sh*tstorm over this issue at present , does'nt help the shareprice and just creates uncertainty. But the Sky's not falling and theres little sense in running round in circtes, things will settle , Synlait will go on producing and selling product (to someone) and they'll get registration . trading will return to normal when that happens. I'm sure Bright dairy will be giving Synlait a rev up too.

[BlackPeter]

The media are creating their usual sh*tstorm over this issue at present , does'nt help the shareprice and just creates uncertainty. But the Sky's not falling and theres little sense in running round in circtes, things will settle , Synlait will go on producing and selling product (to someone) and they'll get registration . trading will return to normal when that happens. I'm sure Bright dairy will be giving Synlait a rev up too.

actually - I send yesterday a question to their investor relations asking what, if any impact the latest MPI announcement would have on them. Their response: "Any impact in relation to the announcement by MPI will have very little impact. We are continuing to work with MPI and CNCA to ensure any impact is minimised and if possible removed altogether."

So I guess its business as usual ...

[Billy Boy]

The media are creating their usual sh*tstorm over this issue at present , does'nt help the shareprice and just creates uncertainty. But the Sky's not falling and theres little sense in running round in circtes, things will settle , Synlait will go on producing and selling product (to someone) and they'll get registration . trading will return to normal when that happens. I'm sure Bright dairy will be giving Synlait a rev up too.

EXZAKALLY
Good post
BB

[K1W1G0LD]

actually - I send yesterday a question to their investor relations asking what, if any impact the latest MPI announcement would have on them. Their response: "Any impact in relation to the announcement by MPI will have very little impact. We are continuing to work with MPI and CNCA to ensure any impact is minimised and if possible removed altogether."

So I guess its business as usual ...

Good for you BP , hope you told them to pull finger!!

[percy]

Rather a large reduction in forecast earnings of $7.5mil to new forecast of $17.5mil to $22.5mil.

[iceman]

Rather a large reduction in forecast earnings of $7.5mil to new forecast of $17.5mil to $22.5mil.

They should have just stuck for the whole time to the prospectus forecast of $19.8 M which is smack bang in the middle of this new one :)

[Billy Boy]

They cud go below the $3.00 in the short term.

[Citizen Erased]

Well, that's one way to wipe out nine months of gains.

You'd feel like a right muppet if you bought in at around $4.00. Who, me? Now my SML holding is deeper underwater than DIL. :ohmy:

Just as well I booked profits and bailed out of PEB, otherwise I think I'd be hitting the bottle tonight.

[percy]

[QUOTE=percy;448932]Happily sold my SML at $3.85 as I thought ratios were stretched.

Above posted 11-12-2013.
Looked to have done the wrong thing at the time selling.
Does not look so silly now.!! lol.

[Fisherking]

I'm pretty close to through with this stock, the only thing keeping me in is the money I will lose if I sell.

From the announcement today:



A reduced advantage from a favourable product mix in the second half of the


year, and a consistently high New Zealand foreign exchange rate has resulted


in a reduction in forecast net profit after tax of approximately $7.5 million


for the financial year.

Really? The consistently high foreign exchange rate has resulted in a reduction in forecast net profit??? Are you really telling me you expected the foreign exchange rate to have dropped by now?? Based on what????

[Master98]

Well, that's one way to wipe out nine months of gains.

You'd feel like a right muppet if you bought in at around $4.00. Who, me? Now my SML holding is deeper underwater than DIL. :ohmy:

Just as well I booked profits and bailed out of PEB, otherwise I think I'd be hitting the bottle tonight.
No worry buddy, I am quite sure sp will bounce back follow the completion of china regulatory registration, I have 30k spare cash came from crown refund(GNE) , spend half buy into SML at $3.10 today, will buy more if sp continue sliding, just want a slice of diary sector, and diversity of portfolio.

[Master98]

Canterbury-based company Synlait Milk is confident it will soon be able to start sending infant formula to China again.
http://www.radionz.co.nz/news/national/246033/synlait-confident-of-exports-to-china

[winner69]

Announcement a couple weeks (profit downgrade) saw price drop 10%

Now back to the price pre announcement - punters did not need to panic after all

Mind you price had come down a bit in the days before the announcement

All honky dory now and steadily onwards and upwards from here

[MAC]

Has anyone any advice, or a progress report perhaps, on the commissioning status of the new dry blending and consumer packaging facility, due to be ready around about now ?

My understanding is that the CNCA (Certification and Accreditation Administration of the People's Republic of China) requires that dry blending and packaging be performed at the manufacturers facility. With SML constructing a new facility, it’s completion and subsequent approval is required before regulatory requirements can be satisfied, and a risk management plan approved by the MPI.

Should be any time now if the construction and commissioning schedule is on time.

https://www.nzx.com/files/attachments/193258.pdf.

[Master98]

Has anyone any advice, or a progress report perhaps, on the commissioning status of the new dry blending and consumer packaging facility, due to be ready around about now ?

My understanding is that the CNCA (Certification and Accreditation Administration of the People's Republic of China) requires that dry blending and packaging be performed at the manufacturers facility. With SML constructing a new facility, it’s completion and subsequent approval is required before regulatory requirements can be satisfied, and a risk management plan approved by the MPI.

Should be any time now if the construction and commissioning schedule is on time.

https://www.nzx.com/files/attachments/193258.pdf.

http://www.stuff.co.nz/business/farming/dairy/10172211/Synlait-Milk-rejigs-management-lineup
Synlait Milk is in the final stages of building a $27 million dry blending and consumer packaging facility, and expects to be granted registration to export finished infant formula to China following the approval of its plan by the Ministry for Primary Industries.

[MAC]

The MPI having completed it’s verification audits is good news, just awaits the Chinese regulators now.

http://www.radionz.co.nz/news/rural/249201/infant-formula-producers-still-waiting

[BlackPeter]

The MPI having completed it’s verification audits is good news, just awaits the Chinese regulators now.

http://www.radionz.co.nz/news/rural/249201/infant-formula-producers-still-waiting

Maybe somebody knows already a bit more (or is just optimistic?) ... huge volumes going through today (traded value already well beyond $1M) and price pushed up to 253. Somebody wants this stock.

[K1W1G0LD]

This company are not good at updating investors of their progress , here is a discussion I've had with them via email

Sent: Thursday, 17 July 2014 9:29 a.m.
To: Investors
Subject:

From your general news announcement dated 1/5/14

The Ministry for Primary Industries (MPI) has confirmed that it expects

Synlait Milk to receive registration following the approval of its Risk

Management Plan by MPI for its dry blending and consumer packaging facility.

Construction of this facility is scheduled for completion in June 2014.



We are now well into July , where is the update to investors/shareholders.


Here is their reply from Michael Wan (media enquiries) received this AM


Dear Greg

I can confirm that construction of the blending and consumer packaging facility is complete and commissioning began in June 2014. At this stage we have meet all deadlines as previously stated with no material change, and therefore we have not made any further update.

As per our previous announcements the next step is to obtain approval of our Risk Management Plan from the Ministry of Primary Industries. We expect to receive this following a final verification audit at the end of this month. We are confident of receiving the required Chinese regulatory approval to export finished infant formula into China following the approval of this plan.

Kind regards

Mike

[Citizen Erased]

This company are not good at updating investors of their progress , here is a discussion I've had with them via email


Thanks for that.

I think it's going to take a long time to recoup my losses on this stock.

[sharer]

Thanks to Kiwigold and Snapiti (& others). Most welcome sprinkles on an information desert.

[tzbang]

"Shares in A2 Milk Co jumped 9.8 percent from a 15-month low on news the milk marketer has won Chinese regulatory approval to export its a2 Platinum infant formula. Milk processor Synlait Milk [NZX: SML (https://nzx.com/markets/NZSX/securities/sml)] is still waiting for registration." http://www.nbr.co.nz/article/a2-milk-secures-chinese-licence-synlait-still-waiting-bd-159546

[K1W1G0LD]

"Shares in A2 Milk Co jumped 9.8 percent from a 15-month low on news the milk marketer has won Chinese regulatory approval to export its a2 Platinum infant formula. Milk processor Synlait Milk [NZX: SML (https://nzx.com/markets/NZSX/securities/sml)] is still waiting for registration." http://www.nbr.co.nz/article/a2-milk-secures-chinese-licence-synlait-still-waiting-bd-159546

Well ATM Chinese approval effect did'nt last long , too reliant on Synlaits fortunes here I believe.
good to see SML shareprice advancing in anticipation of registration being granted:)

[jamiec26]

6048 my small mind..keeping my self entertained on this stale stock.

[K1W1G0LD]

Interesting insight here from someone who should know , re milk prices in general and China in particular, from Stuff this AM.

Cloud over milk prices 'will lift'


GERARD HUTCHING

Dairy farmers take heart - Chinese demand and dairy prices will bounce back towards the end of the year.

That is the reassuring assessment from Myfarm CEO Andrew Watters whose company has 47 dairy farms under management across the country.

His optimism is based on recent reports from Goldman Sachs and the United States Department of Agriculture (USDA) forecasting a 30-50 per cent higher Chinese demand for whole milk powder this coming year.

"The fundamental drivers of good farm returns have not changed in the past few weeks. The fluctuation in milk prices between last season and this is just another example of the volatility that New Zealand dairy farmers have to manage," Watters says.

"Well run dairy farms with moderate debt and clear business plans can still generate good levels of operating profit at payouts $6.50 per kilogram of milksolids and above."

Many analysts are predicting the payout for next season will drop as low as $6/kg milksolids.

Half the dairy debt of $32 billion is held by 10 per cent of farmers, who will be hard hit by price falls.

Since February 18 the average whole milk powder price has fallen by 38 per cent, after reaching record highs.

Watters said although China had stockpiled milk powder, they would soon have exhausted those supplies.

Rising feed prices, food safety scares and foot and mouth disease problems meant their own farmers could not meet the expected demand. Chinese milk prices are now 30 per cent above the world average.

He said demand would not drop for another five years, guaranteeing prices would remain high.

US and EU farmers are potential competitors for the Chinese market but their costs of production are significantly above New Zealand's because of their more expensive confinement systems.

Westpac chief economist Dominick Stephens agreed with Watters' analysis.

"Temporarily the wholesalers have to clear their stocks before buying again and that temporarily depresses the price.

"Dairy auction prices will be down for the next two auctions till the last quarter of the year, but then we'll expect a substantial upturn," Stephens said.

Watters also discounted the EU and US as competitors in the whole milk powder market because they would have to switch from producing skim milk powder and cheese, and at present they did not have the capacity to process whole milk powder.

[The BOWMAN]

Always wondered how the current Chinese regulatory approval process will weigh in on the online auction price. Can China import WMP through the online auction? If yes, then how does the regulatory approval process kick in? If not, surely that will cause a major impact on demand and depress the auction price. Anyone knows?

[K1W1G0LD]

Getting meaningful information from this company is like getting blood from a stone.
here's the latest email communication from Michael Wan (media)



Hi G

The verification audit was carried out as scheduled. We are now waiting on the outcome from authorities before taking the next step of seeking Chinese registration.

Kind regards

Mike



From: G
Sent: Tuesday, 5 August 2014 4:04 p.m.
To: Michael Wan
Subject: Re: RE:

Michael. its now the 5th August , past your stated deadline of the end of July, any news on registration process yet ...............................or do we have to wait another month or two.

regards , G


when will Synlait be granted registration to resume exports to China , your guess is as good as mine, think of a timeframe then double it and you'll probably be about right . /U]

[zigzag]

I was thinking we would know by the end of July. They sure aren't much chop at keeping investors in the loop. Some kind of progress report would have been appreciated. The share-price seems to be falling in a vacuum of information. At the end of September they release the full year result, and then the remaining escrow shares are released. See what happens then. Thanks for posting the replies to your e-mails.

[Billy Boy]

k1w1gold... Tks for posting your email replies.
I am fast gaining the impression that Synliat may have missed out.
BB

[K1W1G0LD]

Thanks zigzag and BB , no they don't even seem to be aware that they are supposed to keep shareholders informed of delays which are negatively impacting their profits and the shareprice .
"Shareholders" , no, she'll be right mate !!? that good old kiwi attitude that just does'nt cut it in todays business world.
I'll bet they keep their major partners informed though!

[BlackPeter]

A number of agricultural exporters (including Synlait) planning a common Shanghai office. Might be the way to go to cost effectively approach the Chinese market?

http://www.nbr.co.nz/article/collaboration-competitors-signals-maturing-chinese-market-ties-jb-p-160713

[K1W1G0LD]

BP would've been good to hear this news directly from Synlait themselves rather than secondhand.

[BlackPeter]

BP would've been good to hear this news directly from Synlait themselves rather than secondhand.

True - its probably fair to say that good communication with shareholders does not seem to be one of their strengths!:mellow:

[BlackPeter]

Just in case somebody else on this forum was wondering as well how Synlait's recent projects are going - I contacted them end of last week (investor relations) and asked about progress on their blending and consumer packaging facility, as well as on Chinese approval.

Here is what Synlait told me yesterday in response:


construction of the blending and consumer packaging facility is complete; commissioning began in June 2014. At this stage they claim to have met all deadlines previously stated with no material change, and therefore they didn't see the need for any further update.
next step is to obtain approval of their Risk Management Plan by the Ministry of Primary Industries. This process is well underway and they are waiting on the outcome before taking the next step of seeking Chinese registration.
they are confident of receiving the required Chinese regulatory approval to export finished infant formula into China following the approval of this plan.


No concrete dates and they sort of dodged my question why many competitors already managed to get approval but they didn't. I take from their communication, that they didn't yet started the process to seek Chinese approval (waiting for PMI's approval of their risk management plan). However - it sounds like we can sleep well in the knowledge that commissioning goes according to plan.

[sharer]

So it is NZ bureaucrats holding things up ?

Thanks for the news efforts BP.

[K1W1G0LD]

Yes, welldone BP....................................but why do I have a sense of deja vu.

[BlackPeter]

Yes, welldone BP....................................but why do I have a sense of deja vu.

who knows, maybe it is cheaper for them to have unpaid share holders looking after their PR ...:sleep:

[zigzag]

Could be that because Synlait's plant is brand new, the process is taking longer than the companies with established production lines. Should maybe take a deep breath, and try not to be impatient. Another month and the annual result will be out, and all will be revealed, we hope.

[nextbigthing]

Perfect time to buy for a hold then Schnap

[zigzag]

yeh something like that.
Two stocks to short Trademe and Synlait.

Maybe Trademe. But looks like your Synlait short is out of the money at the moment.

[MAC]

Drove past the Synlait factory again today, the packaging plant from the outside (building exterior) has been complete for some time now, but there are still two largish cranes on site, looks like a 50T and maybe a 100T with a jib extension, presumably costing several hundred dollars a day each, and must be there for a purpose or for a contingency, they wouldn't just be sitting about accumulating cost.

I just wonder if they've had a few commissioning problems and need to change out or reconfigure some plant ?

[BlackPeter]

Drove past the Synlait factory again today, the packaging plant from the outside (building exterior) has been complete for some time now, but there are still two largish cranes on site, looks like a 50T and maybe a 100T with a jib extension, presumably costing several hundred dollars a day each, and must be there for a purpose or for a contingency, they wouldn't just be sitting about accumulating cost.

I just wonder if they've had a few commissioning problems and need to change out or reconfigure some plant ?

interesting - and, unless they are for some other project around, not quite consistent with the information I got from their share holder relations. Are you happy I use your information to check with them?

[MAC]

interesting - and, unless they are for some other project around, not quite consistent with the information I got from their share holder relations. Are you happy I use your information to check with them?

They could well be for another project or for an annual outage also, although they were parked up toward the North end. Thought someone may know ?

[zigzag]

Drove past the Synlait factory again today, the packaging plant from the outside (building exterior) has been complete for some time now, but there are still two largish cranes on site, looks like a 50T and maybe a 100T with a jib extension, presumably costing several hundred dollars a day each, and must be there for a purpose or for a contingency, they wouldn't just be sitting about accumulating cost.

I just wonder if they've had a few commissioning problems and need to change out or reconfigure some plant ?

Have you checked pages 8-11 of the interim report? There is quite a bit of construction still going on, apart from the packaging plant.

[mcdongle]

Its the new drier

[K1W1G0LD]

this article gives us some insite abouts whats currently happening with Synlait.

http://www.stuff.co.nz/business/china/10418651/Baby-steps-on-road-to-China

[jamiec26]

this article gives us some insite abouts whats currently happening with Synlait.

http://www.stuff.co.nz/business/china/10418651/Baby-steps-on-road-to-China

It's very frustrating reading this in the news and not announcements as a shareholder!

[BlackPeter]

It's very frustrating reading this in the news and not announcements as a shareholder!

Agreed - but the better way to fix this might be to tell Synlait themselves. I am e-mailing them from time to time and drop typically as well the comment that in my view their official share holder communication leaves room for improvement.

However, it feels that they don't hear that very often from others (I get the impression they don't communicate a lot ;)), and maybe they think that I am the only share holder who would want to get from them some more regular updates about their progress?

If every share holder who would like to know more about their progress would contact them on a regular basis, than maybe the penny would drop at some stage and they would start announcing their progress a bit more regular instead of only on an absolutely minimalistic basis.

Check out their contact us web page http://www.synlait.com/investors/contact-us/ and / or email investors@synlait.co.nz

and tell them how you feel about their share holder communication strategy.

[K1W1G0LD]

It's very frustrating reading this in the news and not announcements as a shareholder!

I agree, email michael Wan at Synlait at let him know how you feel about this. I have , but they really don't seem to care about their small shareholders!!

[K1W1G0LD]

and tell them how you feel about their share holder communication strategy

BP, they don't seem to have one!
But I'll bet they keep their major partners well advised.

[jamiec26]

Thanks team, you've spurred me to send an email. I'll update you if they reply.

Cheers Jamie

[K1W1G0LD]

Ha , this is a laugh ............here are the first two or three paragraphs from the Investors page on Synlaits website. They need to read their own propaganda a bit better.


Investors

Welcome to Synlait’s online investor relations centre. Here you can find the latest news, reports and information relating to our business.

We’re committed to maximising our performance and providing long-term sustainable returns to investors. We’re also committed to giving our investment community accurate, timely, and complete information about the activities of our business, so you have equal opportunity to view and act on information we release.
We strive to exhibit best practice in investor relations, and welcome any comments or suggestions as to how we can improve.

[jamiec26]

I got a reply yesterday.. Very bog standard. Information channels should be enhanced for shareholders not the limit of the NZX rules.


(http://www.synlait.com/site/uploads/2013/07/Continuous-Disclosure-Policy-July-2013.pdf)Thank you for your email. We endeavour to provide all shareholders with information in accordance with our continuous disclosure policy. The policy follows the NZX listing rules and is available on our online investor centre here (http://www.synlait.com/site/uploads/2013/07/Continuous-Disclosure-Policy-July-2013.pdf)

[K1W1G0LD]

I got a reply yesterday.. Very bog standard. Information channels should be enhanced for shareholders not the limit of the NZX rules.



Yes, I think their unhelpful attitude and the lack of up to date information coming from them is showing somewhat in the lack of liquidity and the stalled shareprice .

[Citizen Erased]

I got a reply yesterday.. Very bog standard. Information channels should be enhanced for shareholders not the limit of the NZX rules.



I'm trying to work out if their response/attitude is arrogant or simply incompetent.

[Citizen Erased]

Strong demand for Synlait Milk’s lactoferrin (http://www.scoop.co.nz/stories/BU1408/S00664/strong-demand-for-synlait-milks-lactoferrin.htm)


Used in the manufacture of infant formula, health food and pharmaceutical products, the bioactive protein provides significant anti-inflammatory protection and other health benefits...Following the upgrade of its Specialty Milks Dryer earlier this year, Synlait Milk became one of only two manufacturers world-wide with the capability to produce lactoferrin as a spray-dried powder.

[zigzag]

I'm trying to work out if their response/attitude is arrogant or simply incompetent.

Hopefully neither. They're just so busy creating shareholder value that they forgot about us. Dealing with bureaucracy - they could be just as frustrated as the rest of us.

[whipit]

Strong demand for Synlait Milk’s lactoferrin (http://www.scoop.co.nz/stories/BU1408/S00664/strong-demand-for-synlait-milks-lactoferrin.htm)

But a lot more that two companies produce powdered lactoferrin around the world.... Why do they not use the obvious option of spray drying too I wonder...?

[Citizen Erased]

But a lot more that two companies produce powdered lactoferrin around the world.... Why do they not use the obvious option of spray drying too I wonder...?

That's a good question. I found the answer on Synlait's website (http://www.synlait.com/products/specialty/spray-dried-lactoferrin/):


Typically, lactoferrin is freeze-dried and milled resulting in particles that can be more difficult to dissolve and therefore reducing its beneficial qualities...

[Spray drying] ensures maximum solubility and bioactivity of this protein.

Edit: That doesn't actually answer your question. Perhaps the old way of doing it is cheaper and/or the technology is fairly new.

[zigzag]

Babidge, CEO of ATM, has said that he believes Synlait will get Chinese accreditation in September. Final result due on 22nd Sept. so I hope we have some resolution by then.

[BlackPeter]

Babidge, CEO of ATM, has said that he believes Synlait will get Chinese accreditation in September. Final result due on 22nd Sept. so I hope we have some resolution by then.

not quite - if you are referring to todays NBR article
http://www.nbr.co.nz/article/a2-milk-hit-strong-kiwi-use-australian-cash-global-expansion-bd-161515

it says: "Babidge hopes it will be in September".

So lets hope that his hope has some solid foundation .... :scared:

[zigzag]

not quite - if you are referring to todays NBR article
http://www.nbr.co.nz/article/a2-milk-hit-strong-kiwi-use-australian-cash-global-expansion-bd-161515

it says: "Babidge hopes it will be in September".

So lets hope that his hope has some solid foundation .... :scared:

Hope/Believe. At least he didn't say "pray"

[MAC]

http://www.scoop.co.nz/stories/BU1408/S01017/synlait-milk-receives-mpi-approval.htm

[Xerof]

"The only exception is for exports of finished infant formula to China. Documentation required to support Synlait Milk’s application for registration as an exporter of finished infant formula to China was sent to the Chinese regulatory body today by MPI."

bugger

[sharer]

GENERAL: SML: Synlait Milk receives MPI approval
01:18p.m.





SML


28/08/2014 13:18


GENERAL





REL: 1318 HRS Synlait Milk Limited (NS)





GENERAL: SML: Synlait Milk receives MPI approval





Synlait Milk has received approval of its Risk Management Programme from the


Ministry for Primary Industries (MPI) for its dry blending and consumer


packaging plant.





The approval enables Synlait Milk to now pack and export retail-ready product


from its manufacturing site, having met the New Zealand food safety


requirements of the Animal Products Act 1999.





The only exception is for exports of finished infant formula to China.


Documentation required to support Synlait Milk's application for registration


as an exporter of finished infant formula to China was sent to the Chinese


regulatory body today by MPI.





Synlait Milk now looks forward with confidence to working with authorities in


New Zealand and China to achieve registration as soon as possible.


End CA:00254538 For:SML Type:GENERAL Time:2014-08-28 13:18:35

[tzbang]

The only exception is for exports of finished infant formula to China. :-(

[BlackPeter]

"The only exception is for exports of finished infant formula to China. Documentation required to support Synlait Milk’s application for registration as an exporter of finished infant formula to China was sent to the Chinese regulatory body today by MPI."

bugger
Yeah, but we knew that based on what they told us a couple of weeks ago. MPI approval (what they got now) is just an essential milestone on the way to get approval to export their milk powder to China. This is now the next step.

[K1W1G0LD]

Buyers 2 total 1600 shares
Sellers 17 total 99000 shares

Liquidity well and truly dried up.
If it was'nt sad it would be funny , plus 2 profit downgrades and maybe 1 more to come , not a glowing report card so far in 2014.

[winner69]

One consolation .....last downgrade had no long lasting impact. Quickly recovered to th 330/340 mark and has stayed there

[BlackPeter]

I would think another profit downgrade is a given as the China registration lingers on and on and on.......

You are probably right .. I guess the "outsourcing" of the Chinese baby formula must cut into the margin. On the other hand - the current tumbling of the milk price likely to increase margins (less money for farmers leaves more money for the middle man). So - with a bit of luck this might neutralize the margin shrinking due to (lack of) Chinese registration.

As well ... hope for a nice little spike when they announce their registration (hopefully later September), but might be wrong.

[MAC]

Well, it’s been two or three weeks now since SML applied for registration on 28th August.

ATM also said on 28th August that they ‘hope’ registration will be in September. Has SML actually since bothered to provide an expectation of the duration required though, haven’t been able to track one down.

Could be this September could be next September ?

https://www.nzx.com/files/attachments/199491.pdf

[K1W1G0LD]

Well, it’s been two or three weeks now since SML applied for registration on 28th August.

ATM also said on 28th August that they ‘hope’ registration will be in September. Has SML actually since bothered to provide an expectation of the duration required though, haven’t been able to track one down.

Could be this September could be next September ?

https://www.nzx.com/files/attachments/199491.pdf

This is the standard response from Synlait these days.

When we have material information regarding progress towards registration we will announce it as per the disclosure policy. Until then we are not in a position to release any updates.



Regards

Mike

not vey helpful at all, thats Michael Wan, c/o Media enquiries

[MAC]

It does unfortunately leave the market to its own devises to speculate a little doesn’t it, although it may simply just not be possibly for SML to accurately predict, they are dealing with commie bureaucrats after all, but one would have thought that they would have at least advised that the schedule is not entirely within their control.

Hopefully sooner rather than later for shareholders, and before the eschew period lapses, interim report’s due next week, perhaps all will be revealed, let’s see.

[zigzag]

It does unfortunately leave the market to its own devises to speculate a little doesn’t it, although it may simply just not be possibly for SML to accurately predict, they are dealing with commie bureaucrats after all, but one would have thought that they would have at least advised that the schedule is not entirely within their control.

Hopefully sooner rather than later for shareholders, and before the eschew period lapses, interim report’s due next week, perhaps all will be revealed, let’s see.

MAC. It is the annual result that is due next week, not the interim. Also note that Dr. John Penno is scheduled to speak at NZ Shareholder Assoc. meeting on Wednesday.

[MAC]

MAC. It is the annual result that is due next week, not the interim. Also note that Dr. John Penno is scheduled to speak at NZ Shareholder Assoc. meeting on Wednesday.

Good to hear, perhaps someone can provide some feedback, yes FY results.

[Newman]

How long can Synlait survive without the Chinese registration? This is the key question shareholders should ask at AGM.

[The Grinch]

I'm surprised that so many on here seem concerned about SML getting chinese registration. Its a given, they have ticked all the boxes and are a cut above a number that already have it.

Who cares whether it should have been three months ago is in the next six weeks or will take another six months Synlait are in a growth industry/based in a country best position to capitalise off that industry growth and part of a country wide focus to be a presence on this stage.

Disc: Don't hold but fingers crossed will pick some up this season when something comes left field - maybe a snazzy photographer catches them dumping milk and the media runs with it or over hyped fears around the canning plant/lactoferrin production when some negative news comes out. They have done alot in a short space of time - there bound to get caught out on something.

Regards
TG

[sharer]

...
Who cares whether it should have been three months ago is in the next six weeks or will take another six months ....

falling share price indicates many do care, maybe something seriously bad lurking ... ?

[Newman]

Bad news would not be released until the very last minute (AGM).

[K1W1G0LD]

http://www.stuff.co.nz/business/farming/dairy/10511867/Synlait-Milk-takes-top-award

[zigzag]

Good to hear, perhaps someone can provide some feedback, yes FY results.

I went to Dr John Pennos' presentation on Synlait last night. Great guy. Great presentation.He touched briefly on the Chinese registration process, but did not seem too distracted by it,as in it should happen in the next month. Their new processing/canning line is very best in class, so it is just as the Grinch was saying- Nothing to get worked up about. He mostly talked in general about Synlait, its history and future opportunities. He could not go into numbers, as the result and annual report will both be out on Monday.

[zigzag]

falling share price indicates many do care, maybe something seriously bad lurking ... ?

Listening to John Penno last night, he did not come across as a guy who is sitting on any bad news, but more as a guy who is excited about Synlait and its' future.

[MAC]

I went to Dr John Pennos' presentation on Synlait last night. Great guy. Great presentation.He touched briefly on the Chinese registration process, but did not seem too distracted by it,as in it should happen in the next month. Their new processing/canning line is very best in class, so it is just as the Grinch was saying. Nothing to get worked up about. He mostly talked in general about Synlait, its history and future opportunities. He could not go into numbers, as the result and annual report will both be out on Monday.

Thanks on behalf of myself and others I'm sure too Zigzag, much appreciated feedback.

[Baaarney]

Yes, thanks for the feedback. Will wait and see what news Monday holds

[noodles]

I went to Dr John Pennos' presentation on Synlait last night. Great guy. Great presentation.He touched briefly on the Chinese registration process, but did not seem too distracted by it,as in it should happen in the next month. Their new processing/canning line is very best in class, so it is just as the Grinch was saying- Nothing to get worked up about. He mostly talked in general about Synlait, its history and future opportunities. He could not go into numbers, as the result and annual report will both be out on Monday.
Funny, I was at the same presentation. I thought he took a long time to say not much. What he did communicate was that they are best in class, but he failed to communicate why they were a good investment.

[sharer]

I wonder if the recent news items about Danone's two new milk ventures in NZ may have important impact on Synlait businesses?
(Also their apparent rejection of further doing business with Fonterra in future sounds quite serious. Euro big boys throwing considerable weight around ... )

[sharer]

I meant to add my thanks also to recent posters above about that meeting presentation.
Now to join the patient peasants awaiting the formal results next week ...

[K1W1G0LD]

I went to Dr John Pennos' presentation on Synlait last night. Great guy. Great presentation.He touched briefly on the Chinese registration process, but did not seem too distracted by it,as in it should happen in the next month. Their new processing/canning line is very best in class, so it is just as the Grinch was saying- Nothing to get worked up about. He mostly talked in general about Synlait, its history and future opportunities. He could not go into numbers, as the result and annual report will both be out on Monday.

Yes, thanks for that feedback zigzag , I must learn to have more patience.

[zigzag]

Funny, I was at the same presentation. I thought he took a long time to say not much. What he did communicate was that they are best in class, but he failed to communicate why they were a good investment.

Noodles. They did have a question time, and Mr Penno stayed on for about 20 minutes afterwards, for quite a relaxed and friendly/informative chat, during which he fielded questions on all manner of topics.

[zigzag]

Interesting fact. In the drying process the main bi-product is a heap of water which they used to use to irrigate surrounding farmland, but now it is injected back into the water-table. They actually return more water than they take. I meant to ask if Judith Collins ever drank their milk, but we ran out of time.

[forest]

Funny, I was at the same presentation. I thought he took a long time to say not much. What he did communicate was that they are best in class, but he failed to communicate why they were a good investment.

Noodles I think you made a good observation. SML is more than likely a good company going forwards but the present share price nearly a dollar (45%) above last year IPO might not make buying now a good investment.

[K1W1G0LD]

Nice little 4% bounce today , even though it was on a few thousand shares. I guess we'll see if it's justified come monday.

[K1W1G0LD]

http://www.stuff.co.nz/business/farming/dairy/10522246/Synlait-focused-on-future

[In4a$]

Nice little 4% bounce today , even though it was on a few thousand shares. I guess we'll see if it's justified come monday.

Might be another bounce today,
Synlait Milk has posted a $19.6 million net profit after tax (NPAT) for the year ending 31 July 2014, an increase of 70% compared to the $11.5 million NPAT for FY2013, and in line with its prospective financial information (PFI) forecast of $19.7 million.
Revenue was $600 million in FY2014, an increase of 43% compared to $420 million for FY2013, and well ahead of the PFI forecast of $524 million.
Disc: Happy holder

[K1W1G0LD]

Might be another bounce today,
Synlait Milk has posted a $19.6 million net profit after tax (NPAT) for the year ending 31 July 2014, an increase of 70% compared to the $11.5 million NPAT for FY2013, and in line with its prospective financial information (PFI) forecast of $19.7 million.
Revenue was $600 million in FY2014, an increase of 43% compared to $420 million for FY2013, and well ahead of the PFI forecast of $524 million.
Disc: Happy holder

Yes, no further downgrade was good too , all we need now is positive announcement re registration .:)

[MAC]

https://www.nzx.com/files/attachments/200838.pdf

[winner69]

https://www.nzx.com/files/attachments/200838.pdf

What does Slide 26 actually lead to ......good or bad or just so so?

FY 2015 OUTLOOK - SYNLAIT
 Increased milk powder business committed to infant formula and nutritional market approaching 50% of total business.
 45% of business committed to four tier 1 customers.
 Forecasting 15MT of lactoferrin sales at prices in excess of
US$500,000 per MT.
 Overall expect a small increase in total volumes sold.
 Focus on executing build of dryer 3 and new administration and laboratory building.
 Announcing small investment in New Hope Nutritionals (25%) – akaraTM brand.
 Benefit of increased infant formula and nutritional sales largely balanced by increased operating and funding

[MAC]

A pretty much as per PFI expected earnings result really, no hint of a precise regulatory schedule,

Gross margins falling from 15.5% to 12.8%, unsurprising given the circumstance I guess,

“The lower infant formula margin together with the associated infant formula provisions and write-offs totalling $15.8 million primarily relate to manufactured infant formula inventories that were unable to be sold into the China market as a result of the Regulatory changes. Some of these inventories have expired and have since been sold as stock food, while the remainder have been provided to estimated net realisable values in order to sell this product.”

The outlook requires some brooding though in this context, some contemplation may be required in determining what “balanced” means;

“During FY2015 we will continue to invest in our growth initiatives, particularly D3. Improvements in returns through increased sales in the infant formula and nutritional markets will, however, be largely balanced by increased operating and funding costs. We are confident in our future outlook and look forward to continuing to work for shareholders during 2015.”

[Hawkeye]

http://www.nbr.co.nz/article/synlait-milk-full-year-profit-rises-70-take-25-stake-new-hope-nutritional-bd-162759

[winner69]

What does Slide 26 actually lead to ......good or bad or just so so?

FY 2015 OUTLOOK - SYNLAIT
 Increased milk powder business committed to infant formula and nutritional market approaching 50% of total business.
 45% of business committed to four tier 1 customers.
 Forecasting 15MT of lactoferrin sales at prices in excess of
US$500,000 per MT.
 Overall expect a small increase in total volumes sold.
 Focus on executing build of dryer 3 and new administration and laboratory building.
 Announcing small investment in New Hope Nutritionals (25%) – akaraTM brand.
 Benefit of increased infant formula and nutritional sales largely balanced by increased operating and funding

Slide 26 of this presentation

https://www.nzx.com/files/attachments/200846.pdf

MAC - assume that this is what the brooding and contemplation is about

Haven't followed Synlait much so haven't caught on to the what the words they use really mean yet, ie still cant read between the lines.

[winner69]

One other question -

Slide 10 says "Included a one off product mix benefit estimated to be $24.5m"

Without that they would have been in a loss situation?

But did offset numerous other adverse impacts

But what does 'one off' mean? Like is a one off that won't be there in F15 (ie an adverse impact) or is a one off step up in margin performance to a new level that will be sustained (neutral in F15)

Seems hard to assess what is 'normal' in their financials.

[winner69]

Still looking through presentations etc

ROIC of about 7% implies not covering cost of capital yet

But trading at nearly 3 times book value

Implies heaps of future growth built into the current shareprice.

Will keep looking for the good bits in the reports and analyst stuff I have - after all it is a ****ty day outside but looking out the window and seeing a 9 metre swell breaking in over the rocks is quite cool

[K1W1G0LD]

Still looking through presentations etc

ROIC of about 7% implies not covering cost of capital yet

But trading at nearly 3 times book value

Implies heaps of future growth built into the current shareprice.

Will keep looking for the good bits in the reports and analyst stuff I have - after all it is a ****ty day outside but looking out the window and seeing a 9 metre swell breaking in over the rocks is quite cool

I see you've taken over the mantle from snoopy in the TA analysis winner......................a bit more negative emphasis though , well done??

[winner69]

I see you've taken over the mantle from snoopy in the TA analysis winner......................a bit more negative emphasis though , well done??

No problems. Just trying to find the good bits to give me where they are tracking.

Can you tell me what the words on that Slide 26 really mean?

What does it point to as a NPAT figure for F15?

That's what I trying to get to

[K1W1G0LD]

Sorry mate, I know FA about TA (excusemoi francais) why don't you ask the man himself , snoopy!!

[winner69]

Sorry mate, I know FA about TA (excusemoi francais) why don't you ask the man himself , snoopy!!

Silly question then - where do you expect SML shareprice to be in a years time

Obviously wont be based on FA FA or FA TA but whatever rationale you use will do

Disc: I haven't decided one way or the other whether SML is a buy at today's price, but interested

[winner69]

KiwiGold I like the tag line they use on their website - MAKING MONEY OUT OF MILK

[winner69]

Sorry mate, I know FA about TA (excusemoi francais) why don't you ask the man himself , snoopy!!

With all due respect to my old mate Snoopy who is a decent guy I by far a much better analyst

You seem to have it in for people like me and Snoopy

[K1W1G0LD]

I think they're gonna be treading water for a while until the registration business is settled in their favour , but I'm sure that will happen, then full steam ahead and making slow but steady progress increasing manufacturing capacity with all building going on .I believe they're shaping up to be another solid, well run kiwi coy (a la HNZ) So I would hope shareprice be back to $4 at least by then.

[K1W1G0LD]

Under the circumstances recently I think they've done well with todays result , anyone who delves deeply enough into an annual report is always going to find unfavourable stats. I don't have patience to do that , so you're doing everyone like me a favour with your analysis .....................how about looking for some favourable stats next time.
keep up the good work, winner!!:)

[winner69]

Under the circumstances recently I think they've done well with todays result , anyone who delves deeply enough into an annual report is always going to find unfavourable stats. I don't have patience to do that , so you're doing everyone like me a favour with your analysis .....................how about looking for some favourable stats next time.
keep up the good work, winner!!:)


I asked about that $24m one off better mix gain and wanted to know whether that was good going forward into a new year

[K1W1G0LD]

looks like they're going to need that extra production .
Penno also states registration coming soon.
"It is in the hand of Chinese authorities, but we understand it is progressing well"

http://www.stuff.co.nz/business/farming/dairy/10530970/Synlait-widens-export-base-with-stake-in-New-Hope

[Master98]

synlait share escrow deed end today, 60% shares( issue price $2.20) possible to load on market, this selling pressure could last months.
https://nzx.com/files/attachments/200937.pdf

[K1W1G0LD]

GENERAL: SML: China approval to manufacture retail-ready infant formula

04:31p.m.




SML
30/09/2014 16:31
GENERAL
REL: 1631 HRS Synlait Milk Limited (NS)
GENERAL: SML: China approval to manufacture retail-ready infant formula
Synlait Milk is now a registered manufacturer of retail-ready infant formula
for export to China, following approval from the Certification and
Accreditation Administration of the People's Republic of China (CNCA).
Synlait Milk's registration is a major milestone for the business, and adds
to its existing registration as a manufacturer of general dairy products and
infant formula base powders for export to China, granted in May 2014.
Synlait Milk's application for registration was sent to the Chinese
regulatory authority following the approval of its Risk Management Programme
by the Ministry for Primary Industries for its dry blending and consumer
packaging plant.

[K1W1G0LD]

Well done Synlait.I see a stop has been put on SML shares, either that or the systems overloaded.
Hopefully ATM will benefit from this and all the navel gazers on that thread be a bit happier.

[jamiec26]

Wahoooo!!! Finally!

[Lease]

Surprisingly SP has no big jump today.

[K1W1G0LD]

Up Up and away.............................................. ....

[Citizen Erased]

Hopefully it gets back over $4.00 (where I bought). LOL.

[1leon]

Hopefully it gets back over $4.00 (where I bought). LOL.

The shares were issued at $2.20 a bare 15 months ago. At the time there was comment there was a lot of blue sky in the prospectus. It failed to meet projections. The Company has non standard governance which allows effective control to a 48% holder who was not prepare to subscribe at $2.20,effectively precludes any other party achieving a takeover, has no reason to increase its holding, and can also take its profit further down the distribution chain. Why did/do you think $4 was/is appropriate?

[K1W1G0LD]

The shares were issued at $2.20 a bare 15 months ago. At the time there was comment there was a lot of blue sky in the prospectus. It failed to meet projections. The Company has non standard governance which allows effective control to a 48% holder who was not prepare to subscribe at $2.20,effectively precludes any other party achieving a takeover, has no reason to increase its holding, and can also take its profit further down the distribution chain. Why did/do you think $4 was/is appropriate?

1 post and you already know more than anyone else................interesting.

[1leon]

1 post and you already know more than anyone else................interesting.
Meaning? And now I have posted twice as much!

[K1W1G0LD]

Meaning? And now I have posted twice as much!

You work it out sherlock..............................ooh and welcome to the forum??

[K1W1G0LD]

1leon has been around a long time. Why don't you respond to the substance of what he is saying, he is making fair points, just does not agree with you apparently. You undermine your credibility by resorting to abuse.

Abuse??!!..............................LOL
at the moment the shareprice is the bible not half assed theories!!

[Citizen Erased]

Why did/do you think $4 was/is appropriate?

Irrational exuberance.

[K1W1G0LD]

Well it looks like Mr Market is doing an admirable job of determining whats fair value for this stock.
Bin Doun so long it looks like up to me!!

[zigzag]

The shares were issued at $2.20 a bare 15 months ago. At the time there was comment there was a lot of blue sky in the prospectus. It failed to meet projections. The Company has non standard governance which allows effective control to a 48% holder who was not prepare to subscribe at $2.20,effectively precludes any other party achieving a takeover, has no reason to increase its holding, and can also take its profit further down the distribution chain. Why did/do you think $4 was/is appropriate?

I think your being a bit harsh saying that "it failed to meet projections". Prospectus forecast was for (from memory) 19.7million, and the final figure was 19.6million. Not a major fail in my book.

[1leon]

I think your being a bit harsh saying that "it failed to meet projections". Prospectus forecast was for (from memory) 19.7million, and the final figure was 19.6million. Not a major fail in my book.
Yes I think your about right on profit forecast although it did in the interim revise both up and down. There were however other projections like building costs of $8.7m which blew out to $m21.

[Fisherking]

Yes I think your about right on profit forecast although it did in the interim revise both up and down. There were however other projections like building costs of $8.7m which blew out to $m21.

I agree Leon, the forecasts have been poor both financial and also time estimates around plant build completion. I can't help but think though that dairy must be a growing industry given world population growth. I'll be toughing it out a bit longer to see what the new plant delivers.

[BlackPeter]

Spent this afternoon on the SML AGM and thought that I might put some notes down as long as the memories are still fresh ...

Venue: A West Melton Winery on a nice day. However catering limited to coffee (which I tested after learning how to operate the spender), tea and plenty of (tap-)water. No wine. After the AGM they provided some healthy looking (and tasting) salad rolls with traces of chicken. Looks like they are really concerned for the health of their (in the majority) elderly shareholders. Great stuff!

As well quite concerned to keep us all awake during the meeting ... the chairs have been some of the most inconvenient I ever came across (though good looking design), but hey - this was just the winery. They indicated that next years meeting might be on their own premises ... should be good.

Counted at the beginning of the AGM roughly 40 to 50 shareholders, some more arrived during the meeting. Lots of directors plus representatives of the cornerstone share holder.

Good and plenty of opportunity to talk already prior to the meeting with chairman and MD. Came across as open and honest - though slightly defensive when I questioned the companies shareholder communication. Graeme counted the NZX releases this year and felt it was plenty, but I think he took on board that its not just the number, but as well the content and the timing which matters. Learned as well that they are monitoring this (and other) forum(s) (Hi Michael, if you like you can PM me given that you didn’t got hold of me after the meeting!) and aware when shareholders feel they need more information, but sort of wondering why we wonder while they think they have nothing new to release. Wonderful!

Graeme instructed their comms guy (Michael) to approach me related to my concerns, but it looks like he was to busy with communicating - never managed to get hold of us - and we didn't find him when we looked for him.

Solid presentation (but by now as well published – and, as to be expected, nothing really new compared to annual report). Here are some bits and pieces I took on board:

A2 milk represents only 5% of their supply - and quite difficult to process (keep it separate). They feel however that this might be justified due to higher margin.

Milk price: they expect it to stay low for some time to come (lower demand: Russia / China, higher supply: Europe), which is however not a problem for them ("it is easier to get a premium if the milk price is lower"), though it makes life more complicated “you need to make sure not to sell too much while it is cheap”.

Big Capex this year (nearly 100M) and expect similar Capex next year (more than 100M for Dryer 3, which is on time and on budget). They consider themselves as a growth company ... and indicated (answering a question) that while they have currently enough money, there might be some projects on the backlog where they might need to go back to share holders and ask for more money. I.e. expect growth, but no divvies anytime soon.

Packing line: John wondered whether it was operating today. When asked he said utilisation is roughly 25%, but they planned a larger packing line than they need now (to allow for expansion).

Lactoferrin: Makes lots of $$$$ and they have a unique (and highly secret) process how to make it.

Bought into the Chinese company owning one of their milk powder brands “Akara”

Explained the reasons for previous cost overruns (all to build more capacity than originally planned)

Signed a funding agreement with Mitsumi (for working capital) … conditions are much better than with the bank.

Some discussion around resolution 3 (basically a 10% increase of directors fees). A mature gentleman (never met you, but was this you, Percy?) proposed to move to keep the rise down to 5%, but Graeme didn’t accepted moves … and the shareholder association (Max) said after lots of elaboration that they would support the proposed rise, though recommended to use next time no consultant to determine the fees (consultants have an inherent conflict of interest and make everything just more expensive).

I trust they are still counting the votes …

Overall – despite the basic catering, I found the experience quite worthwhile. Before going to the AGM I planned to sell my SML shares, but now I am likely to hold (and accumulate on dips). Don’t expect huge SP gains anytime soon, but think this is a quite worthwhile long-term game, managed by the right people.

[BlackPeter]

and The Press was there as well ...

http://www.stuff.co.nz/business/farming/dairy/63767245/Synlait-runs-over-budget-in-expanding-Dunsandel-plant?cid=edm:stuff:dailyheadlines

Not a particularly good article (and why all the focus on the well understood and old news cost overruns, they didn't take such a big part of the meeting)? But than, maybe thats the way the Press reporter deals with the somewhat meagre catering at the AGM, maybe (s)he is used to better stuff? Not sure,however whether this alone is a good excuse for cutting the price of Lactoferrin down by a factor of 100. A ton of that stuff brings $0.5M, not $5,000 as the article stated. Anyway - what do they say ... there is not such a thing than bad publicity ... just bad Press?

[percy]

No I was not at the agm,having sold some time ago when I thought [correctly] the sp had overrun itself.
The communications guy does not seem to be up to the job.Another person who seems to be unable to return phone calls.[part of the reason I sold].
I do note, everytime I drive past the factory, there is more expansion work going on,and also more of their tankers on the roads.

[The BOWMAN]

I am not too concerned about the milk price. What is more relevant to Synlait is the volume. While the price is down, it should help keep the volume up. And as mentioned above, their margin is likely to be better when milk price is low.

[BlackPeter]

looks like the Press wants to turn their turning up at the SML AGM into a sequel - here is the second installment ;):

http://www.stuff.co.nz/business/farming/dairy/63993929/Shareholders-concerns-about-pay-consultants?cid=edm:stuff:dailyheadlines

Not really earth shattering stuff, but sounds like a fair representation of what happened at the AGM. And yes - was it really necessary to pay consultants to recommend a 10% pay rise for directors?

[K1W1G0LD]

Onwards and upwards again. Once Dairy prices stabilize............and that may have started already.

[xafalcon]

To date, the philosophy of this company seems to be along the lines of "build it and they will come"

Well, there has been a huge amount of building over the past 4 years, but still no big fish appear to have been landed.

Where are the big infant formula players like Wyeth, Mead Jonhson, Abbott, Nutricia? One would expect a pretty good deal could be struck for a major chunk of plant capacity. So why are they not showing interest and jumping on board?

The cost of funding all that new capacity and processing equipment must put SML at a significant disadvantage to Fonterra and Westland Milk when it comes to matching farmer milk payment price. SML absolutely must do this to secure their milk supply since they are not a supplier owned co-operative. Catch 22

I wonder if their balance sheet was previously held up by extremely favourable commodity prices, which have now disappeared and don't sound like they will return in the short term. Is the perfect storm brewing here?

[ruaboy]

Taking a quick look at it, Fonterra last year made approx ten cents per milk solid processed, synlait made approx 40 cents a kilo milk solid processed.Since Synlait suppliers don't have to own shares in the company to supply, Synlait is in the prime position that it can get its milk at a small discount. It appears to me that Synlait has done very well in a short amount of time and should only improve, esp as Fonterra seems to be carrying a lot of excess fat

[Billy Boy]

I read somewhere that a big Chinese investor was being chased to the Chinese govt on fraud charges.
BB

[BlackPeter]

I read somewhere that a big Chinese investor was being chased to the Chinese govt on fraud charges.
BB

How is this relevant for SML?

[Billy Boy]

How is this relevant for SML?
Coz he is a big (if not the biggest) investor in SML. Also I think SML were looking to use him as a priority ticket to the Chinese Market.

[xafalcon]

Taking a quick look at it, Fonterra last year made approx ten cents per milk solid processed, synlait made approx 40 cents a kilo milk solid processed.Since Synlait suppliers don't have to own shares in the company to supply, Synlait is in the prime position that it can get its milk at a small discount. It appears to me that Synlait has done very well in a short amount of time and should only improve, esp as Fonterra seems to be carrying a lot of excess fat

Fonterra is a co-operative. If it "made" lots of money, it's supplying shareholder owners would be paid less and consequently be very unhappy. Ask any shareholder how much they appreciate "retentions"

Fonterra supplying shareholders also get an extra payment on top of the milk payment, like a dividend.

Due to hardware constraints last dairy season, Fonterra was unable to maximise returns to suppliers. This was widely understood to be equivalent to about $0.50/kgMS.

This probably makes the comparison seem better than it would otherwise be

But the seeming lack of a credible major infant formula customer after 3 years is the major worry in my opinion

[BlackPeter]

Coz he is a big (if not the biggest) investor in SML. Also I think SML were looking to use him as a priority ticket to the Chinese Market.

So whom are you talking about? Their (with a large distance) largest share holder is Bright Dairy (Chinese owned). I guess they have an office in one of the tax havens ... but lots of companies have.

Do you have a reference or link to support your statement - or is this just one of the urban myths and rumours which need the news vacuum of the summer season to spread around?

[Billy Boy]

So whom are you talking about?

Do you have a reference or link to support your statement - or is this just one of the urban myths and rumours which need the news vacuum of the summer season to spread around?
My friend next door remind''s me it was a Radio report, Jenny Ruth or Rod Orham or the likes, and it
went like " The Chinese Govt is cracking down on corruption and Mr. XXXXX who has strong connections with SML is one scone such person being investigated."
Now I am not going to listen to play backs of RNZ to try and find it. My original post was worded in such a way as to receive further verification and info from other posters, I hoped.
BB

[Citizen Erased]

http://www.dailymail.co.uk/wires/reuters/article-2872339/China-accuses-ex-Bright-Food-chair-embezzling-31-mln.html

[BlackPeter]

http://www.dailymail.co.uk/wires/reuters/article-2872339/China-accuses-ex-Bright-Food-chair-embezzling-31-mln.html

CE - cheers for the link.

"The allegations against Wang Zongnan relate to his time at state-owned companies Shanghai Friendship Group and Lianhua Supermarket Holdings Co Ltd.
Wang was general manager at Shanghai Friendship Group and then at Lianhua Supermarket before becoming chairman at Bright Food in 2006 until his resignation for health reasons in 2013."

So given that the allegations are related to the job he was holding before he worked for Bright Food, and given that he does not work for them anymore (resigned 2013) - unlikely, no matter what the verdict, to have any fallout for Synlait.

[K1W1G0LD]

So given that the allegations are related to the job he was holding before he worked for Bright Food, and given that he does not work for them anymore (resigned 2013) - unlikely, no matter what the verdict, to have any fallout for Synlait.

Amen to that.

[K1W1G0LD]

Dairy prices continue to regain lost ground.

http://www.stuff.co.nz/business/farming/dairy/64746565/dairy-prices-regain-ground

[couta1]

Thoughts on the current downtrend anyone? Im looking at taking up a position,cheers

[BlackPeter]

Thoughts on the current downtrend anyone? Im looking at taking up a position,cheers

I guess - lack of news (remember - SML is quite good in the discipline of under-communicating), over capacity (packing line employed to 25%), rather high PE for a company with quite moderate growth - it all takes its toll.

Suppose the current drought in Canterbury (despite the drizzle today) might not help either, given that it might reduce the throughput later this season (like farmers drying up cows earlier and / or reducing stock to avoid food shortages).

Holding a smaller parcel (and wondering why I didn't sell out around 3.40 ...) - and wouldn't call it a "buy" at current prices (but a weak "hold"). Would call them a buy around 2.50 ... 2.60 and likely to add if we get there, but not sure, whether we do.

Longtime IMHO however a good investment, if you get in at the right price.

[couta1]

Thanks BP, also thinking long term there's plenty of upside quite surprised to see it go under $3(Yes I know that wondering why feeling have been there many times)

[couta1]

Thanks 1Leon and Percy for your pm's re this stock much appreciated and nice that you took the time to share your thoughts, I'm trying not to lose money this year, cheers

[K1W1G0LD]

GENERAL: SML: Low impact of drought on Synlait's milk supply 10:55a.m.
SML
16/01/2015 10:55
GENERAL
NOT PRICE SENSITIVE
REL: 1055 HRS Synlait Milk Limited (NS)

GENERAL: SML: Low impact of drought on Synlait's milk supply

Current dry weather in Canterbury is expected to have little impact on
Synlait Milk's milk supply because almost all Synlait suppliers have reliable
irrigation water access.

Managing Director Dr John Penno said that Synlait is not seeing a drop in
milk production, which remains at budgeted levels.

Dr Penno points out that a benefit of the mid-Canterbury region Synlait
operates in is that nearly all Synlait suppliers are irrigated with reliable
water sources. Those who aren't are largely in high rainfall areas.

Synlait has also recently announced Autumn Premium payments to encourage
suppliers to produce more milk late in the season.

Synlait's Board will review its milk price at their next meeting in late
January and an announcement will be made following that.

Dr Penno said Synlait shareholders will likely want to understand how both
weather conditions and any milk price update impacts the business, therefore
a statement will be released to the NZX following that meeting.


Hopefully this announcement is a sign that Synlait are becoming cognizant of the fact that investors like to be kept informed .

[BlackPeter]

I guess - lack of news (remember - SML is quite good in the discipline of under-communicating), over capacity (packing line employed to 25%), rather high PE for a company with quite moderate growth - it all takes its toll.

Suppose the current drought in Canterbury (despite the drizzle today) might not help either, given that it might reduce the throughput later this season (like farmers drying up cows earlier and / or reducing stock to avoid food shortages).

Holding a smaller parcel (and wondering why I didn't sell out around 3.40 ...) - and wouldn't call it a "buy" at current prices (but a weak "hold"). Would call them a buy around 2.50 ... 2.60 and likely to add if we get there, but not sure, whether we do.

Longtime IMHO however a good investment, if you get in at the right price.

Looks like their Communications Department is reading this thread as well and made a New Years Resolution to better communicate :). SML just released a statement that the recent drought will have little impact on SML given that most of their milk suppliers have irrigation or farm in high rainfall areas (West Coast?):

https://www.anzsecurities.co.nz/directtrade/dynamic/announcement.aspx?id=3789715

Good stuff, Michael, keep the info coming.

[percy]

I notice the announcement was signed off, not by Michael,but Dan Walraven.
This may be the reason for the improvement?

[BlackPeter]

Used the latest spike to sell out with a small loss. Can't really see the SP go much higher given the current PE ... and analyst forecasts are continue to drop as well (12 month target is now $3.20 on ft.com - down from $4.18 in Feb 14 for Feb 15 - yeah right!). While I still think that this company might long term prosper (whatever this means in the case of SML) - I see currently lots of other opportunities with better growth prospects, a better communication strategy and better AGM catering ;). Looking at the trend ... while I might have sold out around the bottom (only time will tell) do I see currently more reasons for the SP to continue the fall than for the trend to change.

Might be back if the SP drops to IPO levels ... though only time will tell, whether it will.

This obviously means that you will need to find this year somebody else to take the AGM minutes ... or just have to rely on the communications manager (bye Michael, I will miss your exciting AGM reports and frequent announcements ...) and / or the Press.

[kanaka]

Used the latest spike to sell out with a small loss. Can't really see the SP go much higher given the current PE ... and analyst forecasts are continue to drop as well (12 month target is now $3.20 on ft.com - down from $4.18 in Feb 14 for Feb 15 - yeah right!). While I still think that this company might long term prosper (whatever this means in the case of SML) - I see currently lots of other opportunities with better growth prospects, a better communication strategy and better AGM catering ;). Looking at the trend ... while I might have sold out around the bottom (only time will tell) do I see currently more reasons for the SP to continue the fall than for the trend to change.

Might be back if the SP drops to IPO levels ... though only time will tell, whether it will.

This obviously means that you will need to find this year somebody else to take the AGM minutes ... or just have to rely on the communications manager (bye Michael, I will miss your exciting AGM reports and frequent announcements ...) and / or the Press.

Up 15c so far today - I'm glad to see someone else has my timing, sold a parcel of XRO last year in the low $20's just before their jump to $40+. That & other sad stories too numerous to mention

[The BOWMAN]

Yes, good price jump and bit of increase in volume too. Nice reversal.

[K1W1G0LD]

I did'nt realize the Financial times had the lowdwn on kiwi shares................................or do they??
seems like a bad time to sell out .

[BlackPeter]

Up 15c so far today - I'm glad to see someone else has my timing, sold a parcel of XRO last year in the low $20's just before their jump to $40+. That & other sad stories too numerous to mention

More than 700k shares in mainly big chunks (100k+) changing hands ... up for a SSH notice? I guess whoever the big buyer was, they could have had the courtesy to inform me about their intentions in advance - couldn't they?

Still not sure, where the urge to buy is coming from, but who knows, might be some strategic buyer or maybe a looming announcement (like last year January?). At this stage it still looks like a downtrend to me ...

[K1W1G0LD]

Big leap in Dairy prices in latest Auction. Be interesting to see if it flows to shareprice.


https://nz.news.yahoo.com/a/-/top-stories/26190139/huge-leap-in-dairy-auction-prices/

[BFG]

Big leap in Dairy prices in latest Auction. Be interesting to see if it flows to shareprice.


https://nz.news.yahoo.com/a/-/top-stories/26190139/huge-leap-in-dairy-auction-prices/

NB - still well below maintaining the last Fonterra payout. Powders up a solid 19% though.

[xafalcon]

Powders up a solid 19% though.

On GDT yes, but not necessarily the same improvement for Synlait's whole milk powder. Remember that Synlait doesn't sell on GDT........

And product mix is also important. Not all milk is turned into whole milk powder. Previous returns favoured production of skim milk powder and anhydrous milk fat over whole milk powder

Synlait also dropped their milk purchase price to $4.40 2 days ago, well below Fonterra's $4.70 + $0.25-0.35. Supplier retention becomes problematic with differentials this large. Although it is expected that Fonterra will revise their milk price downwards in the next few weeks, but by how much is unknown

[Nasi Goreng]

My first post here and I'm pretty dissapointed with SML's result. You could say buying opportunity but these guys continue to get things wrong. Who's making the forex decisions to make a loss of $6.8M? Their lactoferrin project is behind schedule and communication and guidance is lacking. Clear sell signals to me and the market seems to agree.

You could say over the long term, this sector should deliver and so should SML but right now, I'm wondering if management have got what it takes. I'm holding SML and ATM as my only exposure to dairy sector and they are both the dogs of my portfolio.

[dingoNZ]

Take a look at BAL.ASX is my suggestion, they are making a profit and have a lot more growth potential IMO.

Awful result for SML, glad I sold out a few months back. Best of luck to all holders going forward.

[winner69]

I don't know too much about the workings of SML

it seems rather strange that when a lot of the words they say are around 'growth'and 'increasing capability' that the report a 31% drop in revenues

Suppose this is because of the much lower global dairy prices?

Dairy doesn't seem to be very profitable at the moment, Fonterra result was a shocker but SML seems an even worse one. And ATM remains a dog

[BlackPeter]

The company choose an interesting title for a report announcing a nearly $7M half year loss. Even if we discount for the foreign currency losses (US$ loan secured against US$ commitments - i.e. should cancel each other out when paid back) - hardly no underlying profit this half-year and predicting (based on some optimistic assumptions) a smaller NPAT for the full year than in 2014.

They call themselves a "growth" company - and I guess this is where the problem might lie. They invested a huge amount of money in building overcapacity (be it canning or drying). If their gamble works out at the end and they manage to fill up their capacity, than they are probably fine, but what if it doesn't?

At this stage I am not quite sure, where the additional supply is supposed to come from: The Canterbury plains are already suffering from the effects of too much dairy industry: Irrigation water overcommitted and nitrate leaking into the aquifers - i.e. any realistic supply growth would likely come from pinching suppliers from Fonterra (who just built a new factory near Darfield - i.e. they have lots of spare capacity as well and might not be an easy target) vs increasing dairy supply.

The other thing they need is increased consumption. I guess the theory is that Chinese appetite for milk powder is insatiable, but is this true? The Chinese have been happy before to throw spanners into their milk powder import ... so maybe, their consumption is increasing, but maybe not.

I do see this company currently as a high risk proposition - and not enough reward potential to compensate for those risks.

Discl: Sold out some months ago, and glad that I did ...

[GTM 3442]

The supply, capacity, and demand issue invites some troubling comparisons with the meat industry. It seems that New Zealand is very good at "growing stuff", but less good at developing sensible, sustainable industry structures to take full advantage of the stuff that it grows.

The meat industry may well be too far gone to save.

Perhaps the answer is to rip out a lot of that new dairy grass, and replace it with kiwifruit and grape vines.

[percy]

I drove past SML's factory this morning.
As always more building going on.
Appears they are duplicating the existing factory with another one.

[Citizen Erased]

New milk powder product in production to 'leverage melatonin in its natural form'. But not available to New Zealand consumers. (http://www.interest.co.nz/rural-news/75214/new-milk-powder-product-production-leverage-melatonin-its-natural-form-not)

[macduffy]

The name "Synlait" puzzles me. The "lait" is obviously "milk" but the "Syn" conjures up "Synthetic" - to me, at least. So what is the "Syn" meant to mean?

:confused:

[MAC]

Hello all,

Perhaps an experienced SML researcher can assist us with this one;

At the ATM half year they announced that sales of a2 Platinum in NZ and Australia were $16.07M, representing an enormously dramatic rise in sales.

Noting that it was a result during a period when sales to China were still disrupted due to regulatory issues. China is now open for business again and ATM have also improved their distribution arrangements over there.

Facebook interest in a2 Platinum is up, there are punters on Alibaba and other internet sites exporting a2 Platinum, ex Australian supermarket sales, to China with minimum shipping container order sizes, and the "a2-platimum-o-meter" is looking a bit exponential also.

http://www.google.com/trends/explore#q=%22a2%20platinum%22&date=4%2F2013%2026m&cmpt=date&tz=

These sort of anecdotal comments also need to be treated with NaCl, but there may be something to them;

"I am a pharmacy owner and I can report that my pharmacies can't get enough stock of the baby formula ! Demand is insane , we move several thousand a week ! However they need to increase production asap. We have massive back orders pending stock"

My question is, can anyone point us to Synlait production data which is product specific, I suspect they may be ramping a2 production really quite heavily at present ?

kind regards, Mac

[Ginger_steps_]

Hello all,

Perhaps an experienced SML researcher can assist us with this one;

At the ATM half year they announced that sales of a2 Platinum in NZ and Australia were $16.07M, representing an enormously dramatic rise in sales.

Noting that it was a result during a period when sales to China were still disrupted due to regulatory issues. China is now open for business again and ATM have also improved their distribution arrangements over there.

Facebook interest in a2 Platinum is up, there are punters on Alibaba and other internet sites exporting a2 Platinum, ex Australian supermarket sales, to China with minimum shipping container order sizes, and the "a2-platimum-o-meter" is looking a bit exponential also.

http://www.google.com/trends/explore#q=%22a2%20platinum%22&date=4%2F2013%2026m&cmpt=date&tz=

These sort of anecdotal comments also need to be treated with NaCl, but there may be something to them;

"I am a pharmacy owner and I can report that my pharmacies can't get enough stock of the baby formula ! Demand is insane , we move several thousand a week ! However they need to increase production asap. We have massive back orders pending stock"

My question is, can anyone point us to Synlait production data which is product specific, I suspect they may be ramping a2 production really quite heavily at present ?

kind regards, Mac

Perhaps the wrong thread for my reply, but for the sake of continuity...

Interesting MAC. If you change the search phrase to "a2 formula" it levels the graph out a fair bit (maybe a more likely search phrase?), however still a big spike in April this year. Also, it shows the regional interest as 100% australia - do you think the April spike could be as a result of the "The Checkout" segment on it? - ( Ihaven't checked what date the checkout ran that segment).
Assuming that was the catalyst, it may have caused lots of people to go do the research themselves to form an opinion, or adversely, it may have got the loyal consumers feathers in a ruffle and caused them to do further research..... Im hoping for the former! Hopefully the saying rings true in this case - "any publicity is good publicity".

[MAC]

Think so Ginger, the debate and resulting new awareness that comes from it is worth everything when you have 10% market share so far, but yet 90% more to gain from.

The power of the message for a2 infant formula, being the closest possible thing that one can buy to 100% a2 human milk, is pretty damn powerful marketing and psychology to mums who must select one manufactured product from many, every other one of which is a1/a2, esp so in China with the one child policy focus on providing the best.

Wouldn't be surprised to hear that the Synlait plant is sucking every possible skerrick of a2 milk out of Canterbury at present.

On a global basis I would not be surprised also, looking back in a few years, to see a2 infant formula revenues having overtaken a2 fresh milk rev actually.

[BlackPeter]

interesting: nearly 530.000 shares just changed owners - for $2.60 each. Could be the start of the sales season - or could be an indication for the bottom. Time will tell.

[tzbang]

Synlait has announced a new partnership with US baby products manufacturer, Munchkin Inc, that could offer its 161 farmer suppliers a chance to earn well above the normal payout.
Munchkin, a privately-held Californian company known for designing, manufacturing, and distributing innovative infant and toddler products, is planning to launch a new Grass Fed branded retail-ready infant formula into the United States and China that will be manufactured exclusively by Synlait. Synlait managing director John Penno said the partnership would help the dairy processor reduce its exposure to China.
https://nz.finance.yahoo.com/news/synlait-milk-offers-suppliers-chance-212200619.html

[Nasi Goreng]

SML at all time low. Got to be a bargain at this price but not willing to buy any more until we get some news... will they deliver on 10-15m NPAT in this half?

Come on SML, wouldn't hurt to confirm guidance.

Disc: Shareholder.

[xafalcon]

Don't hold your breath

Synlait have spent countless millions expanding their infant formula business, but still don't have any major clients. China is failing to fire. Lactoferrin doesn't seem to be delivering either. This all equals much higher debt servicing costs, but not much additional revenue.

Meanwhile commodity prices have crashed, which previously contributed significantly to their bottom line.

Expect this to be reflected in a lower milk payout price announcement soon.

[Nasi Goreng]

I hear ya. There are plenty of reasons not to like Synlait, big cap-ex, delays, poor communication with shareholders, dissapointing results etc. I've given them a chance this half to get things right.

I understand how commodity price would effect top line revenue but why should that significantly effect bottom line? It should favour them right?

[xafalcon]

They continue to build the infrastructure for a value-add business - in the last 2 years they have built new blending, canning, additional spray drying capacity, laboratory, administration block, lactoferrin plant etc

But their main revenue appears to come from commodities

High commodity prices mask a lot of sins. But current sell prices are well below cost of production, so there is nowhere to hide the growing debt servicing costs

On the other side of the ledger, the price they pay farmers for milk must be competitive with Fonterra, Westland and Yili, maybe even Open Country Dairy or the farmers will simply supply another dairy company

They are in a real tough place - geographically the most contested milk in NZ, infant formula into China is a constant uphill battle against changing regulations, and commodities at decade lows. At least they have some protection against El Nino by way of irrigation......

[Hectorplains]

Annual result not until 22 Sept... any chance of some guidance before then?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11496681

[Nasi Goreng]

[QUOTE=Hectorplains;586216]Annual result not until 22 Sept... any chance of some guidance before then?

Well they did provide guidance at the end of March of $10-15M for the full year. Given that they were flat for the first half, all of that profit would come from H2.

[Hectorplains]

[QUOTE=Hectorplains;586216]Annual result not until 22 Sept... any chance of some guidance before then?

Well they did provide guidance at the end of March of $10-15M for the full year. Given that they were flat for the first half, all of that profit would come from H2.

True, that was four long months ago. A lot has happened since then. In Synlait's silence, the market seems to have made its own mind up.

[Nasi Goreng]

If you look on the optimistic side, when they gave that outlook they were 9 months into the year and all the way through Q3. They should have had a good handle at that stage on end of year results which is quite a wide guidance.

Low dairy prices may help Synlait as they do value add.

I personally think it's oversold and the current trade is based on fear / media / Fonterra woes. I bought more this week.

I might be very wrong and Synlait may post terrible result in a few weeks time which would be very bad given guidance at end of q3. On the other hand if they hit upper range of guidance and can continue to make similar profits at each half, current price is way oversold.

[Hectorplains]

If you look on the optimistic side, when they gave that outlook they were 9 months into the year and all the way through Q3. They should have had a good handle at that stage on end of year results which is quite a wide guidance.

Low dairy prices may help Synlait as they do value add.

I personally think it's oversold and the current trade is based on fear / media / Fonterra woes. I bought more this week.

I might be very wrong and Synlait may post terrible result in a few weeks time which would be very bad given guidance at end of q3. On the other hand if they hit upper range of guidance and can continue to make similar profits at each half, current price is way oversold.

The March announcement also referenced an unrealized fx loss of $6.8m. I presume that was held in USD? With the fall in the dollar that can only have improved. If they meet the $10 -15m guidance would that be about eps of 6 - 10 cents?

[tzbang]

Low dairy prices may help Synlait as they do value add.

Does it really help though if they are selling at international market prices which have fallen through the floor?

[Nasi Goreng]

Does it really help though if they are selling at international market prices which have fallen through the floor?

I still imagine there are healthy margins in cans of infant formula even if prices have fallen. I've seen stuff advertised at $13 USD per can on Alibaba. If the milk powder is worth $2, then Synlait have got $11 to play with to break even.

Now I know wholesale rates may be completely different but Synlait own a share of their distribution partner so should benefit there also.

With all of the bureaucracy at Fonterra, you would have to think that Synlait can run rings around them and if FSF can afford to up dividend, it means they are making some money and so should Synlait.

[tzbang]

hmm it is becoming very tempting to average down on this.. looks cheap @ 2.04

But it just seems to me that there are serious concerns when I look around each corner with their market. Global oversupply, soft demand, stockpiles in China (how long will that last?). The Netherlands seems to have managed to outdo NZ in milk solid exports to China even without a FTA (do they sell at the same international market rates?), Russia building massive dairy infrastructure in China to offset the EU sanctions and banning dairy imports, China considering a ban on infant formula advertising to curb a lack of breast feeding. It all goes to show how fickle our main trading partners can be. Some even suggest it is all intentional.. our dairy collapses and China buys up more cheap NZ farms.. still though.. 2.04 is a compelling price. :-)


I think it was definitely a good move by Synlait to join up with US baby product manufacturer Munchkin, hopefully that really comes to fruition and reduces the risk to a flakey Chinese market.

[brockdun]

I still imagine there are healthy margins in cans of infant formula even if prices have fallen. I've seen stuff advertised at $13 USD per can on Alibaba. If the milk powder is worth $2, then Synlait have got $11 to play with to break even.

Now I know wholesale rates may be completely different but Synlait own a share of their distribution partner so should benefit there also.

With all of the bureaucracy at Fonterra, you would have to think that Synlait can run rings around them and if FSF can afford to up dividend, it means they are making some money and so should Synlait.

They've got a share in one distribution partner who they produce an exclusive product for.

It's been a tough year for Synlait, Lactoferrin isn't delivering the returns that were expected and all the growth projects are proving to a whole lot more expensive than first imagined.

That's a lot of infant formula required to negate the issues and the interim report showed volumes and profitability were struggling in that area.

"Long time listener - first time caller"

[Hectorplains]

They've got a share in one distribution partner who they produce an exclusive product for.

It's been a tough year for Synlait, Lactoferrin isn't delivering the returns that were expected



My understanding was the issue with lactoferrin was in the production. They announced in March that they had contracts for 7.5m tonnes but could deliver only 1m tonnes during the August-to-January half. This was put down to ""technical issues" which
they have fixed; however, with the slow start their previous sales target of 15m tonnes for the full financial year might not be met.

[xafalcon]

My understanding was the issue with lactoferrin was in the production. They announced in March that they had contracts for 7.5m tonnes but could deliver only 1m tonnes during the August-to-January half. This was put down to ""technical issues" which
they have fixed; however, with the slow start their previous sales target of 15m tonnes for the full financial year might not be met.

Total global production of lactoferrin doesn't come close to the figures you attribute to Synlait......

Synlait are not a large scale manufacturer in the lactoferrin business

AFAIK the "technical issue" is that they are trying to spray-dry lactoferrin, which is almost universally produced by freeze drying due to it's inherent thermal instability

[Hectorplains]

Total global production of lactoferrin doesn't come close to the figures you attribute to Synlait......

Synlait are not a large scale manufacturer in the lactoferrin business

AFAIK the "technical issue" is that they are trying to spray-dry lactoferrin, which is almost universally produced by freeze drying due to it's inherent thermal instability

Note: m = metric, not million. I'm not attributing figures to Synlait, it was the guidance they gave in March.

[brockdun]

Total global production of lactoferrin doesn't come close to the figures you attribute to Synlait......

Synlait are not a large scale manufacturer in the lactoferrin business

AFAIK the "technical issue" is that they are trying to spray-dry lactoferrin, which is almost universally produced by freeze drying due to it's inherent thermal instability

Correct, it's very hard to spray dry lactoferrin and they've now been trying for a while to get it right.

They will be doing well to produce and sell 3 or 4 mt, never mind 15.

[Nasi Goreng]

Share price has risen nearly 20% from recent lows, bit of volume coming back into the bids area. Results out in a couple of weeks.

[kiwidollabill]

http://www.synlait.com/site/uploads/2015/03/Synlait-Milk-Limited-Interim-Report-2015.pdf
(http://www.synlait.com/site/uploads/2015/03/Synlait-Milk-Limited-Interim-Report-2015.pdf)

[BlackPeter]

http://www.synlait.com/site/uploads/2015/03/Synlait-Milk-Limited-Interim-Report-2015.pdf
(http://www.synlait.com/site/uploads/2015/03/Synlait-Milk-Limited-Interim-Report-2015.pdf)

yesterdays milk ... for the latest results we still need to wait until September 22. 14 nights to go :mellow:

[Nasi Goreng]

All aboard the dairy express. The train is about to leave the station :t_up:

[xafalcon]

https://www.nzx.com/companies/SML/announcements/270509

Not good, but I like the spin "prioritising payments to suppliers........."

[Nasi Goreng]

I think it looks good, there is massive potential in 2016 which should kick in quite quickly. I think overall, they have laid out the plan for 2016 quite well and communicated a lot better than previous reports. Its clear, 2016 will be a massive year and I like the guidance that profitability will be higher than anything thus far. Profitability plus increase in volume is a very good combination.

They have quite a lot of debt compared to earnings but GP and EBIT looks good. I see significantly higher profits and stronger cashflows in 2016. I'm considering buying more SML today and consider it the best dairy investment in NZ right now.

[xafalcon]

Good luck

All I see is Synlait continuing to sell their dream rather than reality, as they have for 3 years. Sales have always fallen short and this trend continues. Now they have more debt, China is a much tougher market, commodities are at 10 year lows, Europe is expanding export formula manufacture.

[horus1]

Wouldn't touch them. PE of 28???. All show no do

[Nasi Goreng]

Good luck

All I see is Synlait continuing to sell their dream rather than reality, as they have for 3 years. Sales have always fallen short and this trend continues. Now they have more debt, China is a much tougher market, commodities are at 10 year lows, Europe is expanding export formula manufacture.

It's clear you are bearish on SML and have been for a while so its not a surprise today to see your view.

[tzbang]

Better than I was expecting considering this years dairy economy.

[ratkin]

It's clear you are bearish on SML and have been for a while so its not a surprise today to see your view.

Maybe he is just being more realistic

[BlackPeter]

Wouldn't touch them. PE of 28???. All show no do

OK - lets see.

forward PE is 17.2 with a 13% CAGR. Does not look that bad, does it?

Revenue was actually $10 million above analyst consensus, admittedly EPS about 1 cent below forecast (after a terrible year for milk price). They managed to better utilise their last year still quite under employed factory (now working in 2 shifts and hiring the third shift) and managed to focus on longterm better paying niche products (vs. Fonterra's commodity strategy).

Given that large investments came only recently online, should we expect a nice payback starting this year ... and together with a stabilised (and likely growing) milk price would I (and do the analysts) expect a quite significant growth for 2016 and 2017.

Lower NZD and significantly increased market diversity should help as well - Actually, it was quite pleasing to see how they managed to compensate for the loss of the Chinese market (down from 30% to 10%).

Sure - there still might be SP volatility, but overall wouldn't I write off this solid looking company.

Discl: holding some (admittedly as well in support of the local industry in the district) which I bought below todays SP and consider as "accumulate on dips"; DYOR;

[BlackPeter]

AGM yesterday - and I couldn't resist the chance to visit their premises. AGM felt quite positive and relaxed. As well interesting to have an opportunity to look at their factory. While all the fizz has been already released to the NZX (i.e. no need to repeat) - here are some of my impressions and observations (in no particular order):

Good attendance (certainly better than last year where it was still off site). Maybe around one hundred share holders?

All board members attending, but not all of them at all times focussed on the meeting. kept their smart phones busy during the presentations.

Very young new director - Albert Lu (33yrs) appointed by Bright Dairies. Good to see a younger face around the board table - and hey, he appeared to be even focussed on the AGM proceedings (in contrast to some of his older peers).

Amazing company growth over the last year - staff increased from 200 to 360 (and by now nearly 400); Must be an interesting challenge to integrate all these new people into the workplace. Good processes?

I learned that the milk price is linked to the oil price. This is how it goes: cheap oil means less need for ethanol (to mix into the oil), less need for grain (to produce the ethanol), which means grain is cheaper and can be used to feed cows (well, in other parts of the world), which means that these grain feeding farmers can sell cheaper milk. Interesting. So its the Saudis, which cause all the trouble in the world milk markets. Did you know that?

On the other hand - Synlait's margins are not really correlated to the milk price (more to the volume processed) - i.e. it does not really matter that much for Synlait where the milk price is.

They managed to produce this year about half of the lactoferrin they planned for and sold it for roughly half the price they intended to. Ouch ... Expect however production (but not the price) to double this year. Maybe SML pushed too much lactoferrin too fast into the market (they are one of the big producers)?

Expect most growth from A2 milk and "grass fed milk" for Munchkin ...

Very high debt to EBIT ratio (6.4) ... as well addressed in a question from the share holder association. Seems they feel comfortable with it, and some of the debt are only timing issues (they paid their suppliers early during the bad times) and indicated that they are within the (not disclosed) banking covenants. Expect to have passed peak debt and to reduce over the next years. Renegotiated banking facility and pushed average loan duration from something like 1.3 years to something like 3.5 years (form memory, but should be in the presentation).

One shareholder question referred to the recent animal cruelty publicity. Answer: while they obviously can't control everything their suppliers are doing, they do have a policy on animal welfare;

Factory tour: indications for lean working environment everywhere (open office space - even the CEO works in the open plan area), plenty of white boards and corridor walls are full with stickers and improvement ideas; important production data are in real time visible to all on big screens;

Canning line (sorry, no photo's allowed) looks cool - amazing what robots can do ... though they still seem to work on achieving the designed for throughput.

Huge towers, parts of the plant look like a refinery (well, they do refine mik, don't they?) and lots of milk powder (canned and bagged) everywhere. Latter might be an opportunity to improve (lean manufacturing and storage), but might be difficult, though. I guess they can't just open and close the milk tap on the farm ...?)

Overall impression: not everything is perfect yet, but good overall impression - and it felt that the team is capable doing its job and loving to do it. Looking forward to next years AGM ... and a somewhat appreciated share price.

[percy]

Great post BP.
I would never have thought that a lower oil price would lower the milk price.!!

[Nasi Goreng]

Thanks for the summary BP. Shame on those directors who couldn't leave their phones alone, not very professional hey.

[RTM]

Thanks for the feedback from the AGM BP. Really appreciate you taking the time to write it up.
Cheers
RTM.

[Nasi Goreng]

I'm quite happy with the price action over the last few days. SML has definitely had a trend reversal and I'm glad I picked some up at $2.13 when it all looked pretty grim, overall I've added to my position a few times and I'm now in the black which is nice. I have big hopes for this company and the situation today looks way better than it did when they reported in January. I'm looking forward to a great 6 months, better looking cashflow situation and the set up for a really strong 2016.

[golden city]

any one has a price target for sml this year

[BlackPeter]

any one has a price target for sml this year

Difficult. Analyst consensus was $2.71 last time I checked, but I would expect they update that number sooner rather than later. If you put their forecast EBIT and CAGR into the Graham formula, than it comes up with $5.87.

Personally I would think that the real number is somewhere in between ... if things keep ticking on nicely, than IMHO a "4" in front of the SP towards end of next year might be achievable.

Anyway - just guessing. Don't spend the money before you earned it, DYOR and all these things ...

[Nasi Goreng]

I think it depends a lot on what NPAT they deliver this year and that they don't disappoint shareholders (2014/15 was a shocker). If they can deliver a profit of around $25M, then I think that the valuation could easily go up to $4. If the outlook beyond looks good, then we could be looking at $5+. I'm not in it for a trade, I'm looking at it long term so I'm not too concerned at the moment with price or where it goes in 2016, things will take care of themselves if SML deliver.

[BlackPeter]

Anybody noticed the Golden Cross we passed on Christmas day;)? Analysts seem to have trouble to update their consensus forecasts fast enough, but they move into the right direction (consensus forecast is now $2.92, up from $2.71).

They are probably not the only ones wondering how much the indicated margin improvement (more tin's, less bags) will really bring to the bottom line. The rain over the last couple of days must have been good (more grass for the summer / autumn season - i.e. less risk to run out of milk).

Anyway - holding and enjoying the ride ...

[kiwidollabill]

This is good news(ish) for SML but bad for farmers https://nzx.com/companies/SML/announcements/277035, they only need to pay around the Fonterra farm gate price. If they can execute their proposed changes in product mix then should deliver improved GP.

[BlackPeter]

This is good news(ish) for SML but bad for farmers https://nzx.com/companies/SML/announcements/277035, they only need to pay around the Fonterra farm gate price. If they can execute their proposed changes in product mix then should deliver improved GP.

Actually - I don't think that the price of milk really matters to SML - they make their money with the volume they process and the margins they get for their value-add.

However - I do see this as a chance for them to get more Farmers into their "lead with pride" program:

http://www.synlait.com/about/milk-supply/lead-with-pride/

This program pays farmers a premium for behaving environmentally responsible, for raising their standards of animal welfare and for ultimately producing better quality milk, and milk responsible consumers want to buy.

Great opportunity for them to differentiate themselves from the ugly and mass producing Fonterra, who does not seem to care about animal welfare or environmental issues.

[Nasi Goreng]

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

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

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

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

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

[Hectorplains]

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

vs

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

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

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

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

[Sideshow Bob]

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

http://www.scoop.co.nz/stories/BU1603/S00496/growth-attracts-28-new-canterbury-milk-suppliers.htm

[Absolute144]

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

Is it possible its been flying under the radar?

[tzbang]

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

[ratkin]

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

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

[Absolute144]

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

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

Really keen to know who's buying large.

[lambton]

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

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

Really keen to know who's buying large.

Chinese? - Holding and enjoying the ride.

[BlackPeter]

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

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

Really keen to know who's buying large.

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

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

[Sideshow Bob]

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

Farmers Weekly Article re Synlait

[tzbang]

Lots of heavy downward pressure on Synlait recently. Has slid from $3.66 to $3.26 in just over a week. Previous it seemed to track where A2 goes.. but now A2 is on the way up, SML on the way down.. any ideas?

[Hectorplains]

Lots of heavy downward pressure on Synlait recently. Has slid from $3.66 to $3.26 in just over a week. Previous it seemed to track where A2 goes.. but now A2 is on the way up, SML on the way down.. any ideas?
More bads news around dairy? Article in Stuff today about impact on provinces and the Fonterra Australian farmgate price cuts. Neither have a negative on Synlait's bottom line (lower milk prices actually benefit Syn.) but add to the current sentiment.

[sb9]

Lots of heavy downward pressure on Synlait recently. Has slid from $3.66 to $3.26 in just over a week. Previous it seemed to track where A2 goes.. but now A2 is on the way up, SML on the way down.. any ideas?

Make that 318, I'm sure I read in the media about the talk of a possible capital raise. Could that be the reason?

[tzbang]

could be .. there has been some murmurs that Synlait might need investment to expand canning facilities next year due to the boom in A2 infant formula sales

[Hectorplains]

Lots of heavy downward pressure on Synlait recently. Has slid from $3.66 to $3.26 in just over a week. Previous it seemed to track where A2 goes.. but now A2 is on the way up, SML on the way down.. any ideas?

ATM's caught the cold and is now slip sliding too...

[sb9]

ATM's caught the cold and is now slip sliding too...

ATM is HOT right now and hopefully this should help Synlait....

[sb9]

1
1
9:03:37 am
322
228,948
$737,213
Put Through Special Crossing




Something's up, may be due for an announcement from them soon....

[tzbang]

http://www.nbr.co.nz/subscribe/191386 Chinese demand for infant formula surges.
Formula exports to China up almost 50% compared with the same period last year with NZ market share rising to 12% from 8% in 2015.

Fake domestic product scares have put a surging demand on authentic brands from NZ, Ireland and Netherlands, specifically A2 Milk to
help feed the five million babies born in China last year.

[Ginger_steps_]

http://www.nbr.co.nz/subscribe/191386 Chinese demand for infant formula surges.
Formula exports to China up almost 50% compared with the same period last year with NZ market share rising to 12% from 8% in 2015.

Fake domestic product scares have put a surging demand on authentic brands from NZ, Ireland and Netherlands, specifically A2 Milk to
help feed the five million babies born in China last year.

5 million babies? The figure is closer to 20 Million babies born annually in PRC as far as I can see.... I think it was predicted that an additional 5 million babies would be born as a result of the 2 child policy. Im getting a bit nervous that a2 wont be able to keep up with demand again shortly - I hope they have another processor lined up (on top of Synlaits impending expansion), as well as a waiting list of farmers to supply said processors. I cant even think how additional a2 products / territories will affect this tight rope!

[Nasi Goreng]

The 2 year SML chart is looking very good at the moment. The 1st year being a very well defined down trend with lots of lower lows each time finding resistance at the 100 day moving avg, the trend now is up and finding support at the 100 day MA. It looks like it will make new highs soon.