That’s a really good idea Couta. We should celebrate it. I’ll let you know how it goes !
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Just to be fair, I have posted the following on anohter forum
While people have been focusing on the MSCI index inclusion today I have been asking questions of Synlait.
Their response in my view is a total crock of sh1te, totally unhelpful as an investor and totally inadequate.
I have asked a series of questions about M Bovis on farms that supply Synlait. They will not respond to my questions siting (with no reference) an agreement with MPI not to publish information that might breach the privacy of the farmer.
So lets be very clear. I did not ask for personal information that would identify a private individual. Further more MPI has already named one farmer – the one in the Waikato. MPI are also encouraging farmers to talk to their neighbours and fellow farmers. Personal information is either private or its not. If it is you don’t go talking to your neighbours. Additionally, I could go to any mid Canterbury pub and find out the information. And if that failed all I need to do is drive down the roads and look for the signs stuck on fences and gates.
Anyone who hides behind the Privacy Act has, in my view something to hide. So what is Synlait hiding. The only thing I can think of is that they have at least one farm (out of the seven so far identified in Mid Canterbury) which is infected. For me it is now not a matter of if, its how many.
I have no confidence that the governments plan to eradicate will work. I have not heard any information for Synlait giving me confidence their suppliers are not affected. Given Synlaits South Island 200 or so suppliers are within 80km of their plant and within an infection zone I am concerned. Given they arel ooking for suppliers in the Waikato where there is also an outbreak I am concerned. Given apparent known stock movements in these areas I am concerned.
I’d point out that Synlait were very quick to quell market concerns about ATM;s agreement with Fonterra. Their silence on this matter concerns me.
Disc. I hold both ATM and SML. Both sets of capital are now under preservation review with an immediate tightening of stop losses.
Hi MM
They also don't drink & invest :)
Re " Further more MPI has already namedone farmer – the one in the Waikato"
Henk Smit actually stood up himself at a farmer meeting & said his farm was affected
M.Bovis is sure a vexed topic for many.
However, I'm not sure your fears for SYM (and ATM) are justified;
1.) If M.Bovis is already established in most other countries, then it is more than likely ATM suppliers of Fresh Milk in UK, USA and Australia are already 'contaminated'. I'm not aware that this has been an issue for them in those countries.
2.) I liken M.Bovis to a 'weakness' that means infected cows are more likely to get (say) arthritis. This may mean less 'healthy' cows, but it doesn't effect the milk or the meat.
3.) In the end, ensuring their cows are more 'healthy' by selective breading and culling will impose costs on farmers, but again this does not effect milk quality.
4.) Famers seeking to mitigate their costs as they move to more 'healthy' herds are more likely to use this culling as an opportunity to move to A2 cows (because of the improved returns this offers.) Hence increasing supply opportunities for ATM and SYM.
Just my Left Field thoughts....DYOR.
M Bovis is a risk I am not so much concerned about. What concerns me is the failure by Synlait to inform the market of risk or management of their supply line during a time of a national cow crisis. As owners of the company give us the information and let us make decision based on that information. Don't leave us uninformed.
Its easy to be swept along on a wave of market euphoria. It takes your eye off the ball. We should not be investing on euphoria - it should be on the basis if a fully informed market.
There also a saying "Let your winners a run and cut your losses short". I'm not about to cut off my nose to spite my face.
It is not a matter of exiting. I never base a buy / sell investment decision on one factor. Its about information and risk. The more information the better able I am able to measure risk. And vice versa. Traders are much better suited to trading euphoria and an information vacuum. But that's not me. Stop losses have been tightened.
Hi minimoke,
Thanks for airing your concerns. I am not concerned as I think the loss in milk production won't be material and I think Synlait will continue to gain market share from Fonterra.
That is not my concern. My concern is a company that I don't think is updating the market on related information. We don't know if 1/200 of their suppliers are infected or 7/200 are. Mid Canterbury (and Waikato ) is absolutely riddled with farms identified as at risk through the tracing of animal movement. We dont know what the risk is because they aren't telling us. You may be happy in an information vacuum. I am measuring my risk with that vacuum. ( I also have an eye on MPI who I have pretty much zero faith in - take didymo for example Or wine for another)
Never happy in an information vacuum but I've already taken steps to manage my exposure to risk, see latest comment in TNR thread.
I don't see it as a "material" risk. Materiality is defined in accounting standards to mean greater than or equal to 5% of net profit.
Even 7 / 200 is 3.5% and even if it is that high its not like all that 3.5% milk supply is going to stop overnight is it and farms after treatment only have to stay fallow for 60 days ! Plenty of new calves born every year for restocking mate. I think the media are whipping this up into something bigger than it really is...that's my 2 cents anyway but I do acknowledge you're closer to the problem so probably have a better handle on it.
I guess there's a huge amount of sensitivity about who is and who isn't affected which is why they can't possibly make more information public ?
Farmers down your way probably have other things on their mind today https://www.msn.com/en-nz/news/natio...cid=spartandhp
We are at peak cow according to labour. Shareprice has peaked and cows have peaked
You should not be "thinking". You should know.
I'm back to being a happy camper again as I have heard from Synlait again this morning. They say some suppliers are located in areas affected by M bovis and currently there is no material impact on Synlait milk supply. Also M Bovis does not affect their ability to meet demand.
So I am no longer operating in an information vacuum - I feel this has now been de risked to some extent.
Good on Synlait for keeping me updated.
Did you ask the question as a shareholder or just a general public enquiry? I thought they can fully ignore you if they want/like either way.
Could be interesting times if they can squeeze numbers. More stainless being added in Southland with Mataura Valley and in the North with Happy Valley, so if numbers start to level off/drift down, then pressure could start to come on supply, a la the Meat Industry.
However having said that, performance per cow could increase, or more emphasis on added value than added quantity.
I guess the optics of this thing is right in your face down there so I understand your need for more clarity and colour around this issue and its good that Synlait are responsive to shareholder enquiries.
I think "peak cow" is a figment of some greenie politicians imagination.
Milk supply will be sourced from the Waikato region from 1 June 2019 and
Synlait will grow their a2 Milk(TM) and Lead With Pride(TM) programmes
through new suppliers.
Love this bit in their announcement
https://www.nzx.com/announcements/319620
Increased capacity of Pokeno facility to meet demand also caught my attention. Excellent growth prospects over the years ahead, from among other things, more and more disenfranchised Fonterra suppliers jumping ship. Don't you just love love the call center contact number for interested farmers looking to supply Synlait
0800 ADD VALUE...I got a huge smile from that, really made my morning so far :)
This is the bit "The functionality of Synlait's first nutritional spray dryer at Pokeno has also been expanded as a result of forecast customer demand………and the capacity has increased to 45,000 metric tonnes (MT) from an initial 40,000 MT"
Wow - That 0800 ADD VALUE is priceless.
The front cover and back cover of the last results report caught the eye and was clever also ie. In big Bold print.. TO: DATE (front page) and TO:BE CONTINUED (back page). Indicates, they are on a strategic path and are confident of the future..
That phone number is gold - it is shoving it under the competitors nose, especially as Fonterra are under the gun from NZ First and also a little from farmers. Been a bit of scrutiny of late in the Farmers Weekly:
https://issuu.com/farmersweeklynz/do...68707/62169149 (Pages 4 & 5)
https://issuu.com/farmersweeklynz/do...68707/61932637 (Pages 18-20)
However having said that, a lot easier to be nimble when much much smaller than Fonterra, not a coop, not under the gun for anything wrong with the dairy industry, not having to give new entrants/competitors milk etc. Can easily get small amounts into niche markets - Fonterra might be doing well but when probably 10-20x bigger than any NZ competitors, hard to match and always going to be more reliant on commodity trade. Compare them to Tatua - ouch, but completely other end of the spectrum.
I would suggest 0800 ADD VALUE is rubbing their nose right in it lol
A bit surprised to see zero interest from the market at the moment. no trades since 10:00am
Market comes to life at 12:00 when the Australians wake up - perhaps they haven't read the news yet.
Well news just in courtesy of HC.
Bell Potter revised their tp up to A$ 11.70 from previous A$ 10.80 with buy rating.
That’s about NZ$ 12.60 based current fx cross rate.
Their revision was prompted from SML’s announcement re their Pokeno plant production details.
Synlait names ex-Fonterra executive Leon Clement as CEO...
https://www.nbr.co.nz/article/synlai...-ceo-jr-216538
ex Fonterra does not full me with confidence.
Working at Fonterra since 2002, Fonterra wasn't always an underperformer and has come a long way since... then this fella jumps ship to the next 5bn+ dairy giant.
The appointment might appear like that on the face of it but I'm sure he's got more calibre and know the local dairy industry thoroughly.
I wouldn't draw any foregone conclusions with his earlier association with Fonterra being a negative one, on the other hand see it positive as he would've learnt a lesson or two on how not to screw up things like his ex employer did.
Fair to say he wasn't the guy at the top so could be extremely frustrated with how things have been going at Fonterra like a lot of others are.
0800-ADD VALUE - I think he must like the national call center number too :)
I suspect a lot of people at Fonterra know what they would like to do. ie, add value, rather than just be the world low-cost swing producer of milk powders, but a number of features of Fonterra constrain their ability to do this in practice. eg. its massive size where even large-ish value-add successes don't move the dial; the co-op structure with low profit retention for reinvestment; farmers risk appetite (many are massively personally indebted so would prefer cash in the hand, to two birds in the bush); Fonterra's difficulty in building businesses which would compete with key customers (Nestle etc); Fonterra's confused strategy (eg, given how much milk they already collect in NZ, why develop milk pools in more markets when they struggle to add value to all the existing NZ milk collected).
So maybe this guy knows exactly what he wants to do, wanted to do it at Fonterra but was frustrated by some of the above factors, and now he is a Synlait he can do what he's always wanted to do. And at Synlait he'll find and be supported by a company, board and mgmt. already a way down the road to adding value to milk.
seems this new CEO is boosting the SP up.:eek2:
I’ve been really impressed with the way SML have delivered strong results over the last couple of years, there has been a noticable shift in professionalism from the company in line with growing results which is good to see.
With strong cashflow generation I can see the business growing significantly every five years as they reinvest in new plant plus new products/markets.
Happy to be a long term holder here.
From today's NBR:
Why Synlait chose Fonterra executive for top job....
Could someone summarise key points pls.....
Some big crossings going on at 11.50, more than 2mln shares crossed so far.
can anyone see this 2m transaction? can not find it from snm.
Big transaction and who knows? Again I think is A2 buying more of Synlait?
Long term it would be great to own the manufacturer of your many products to come and own a large chunk of them. I think these two shares are very similar, except Synlait have lower margins and higher sales.
Last year Synlait sales grew >50% I believe and with many more increases happening in the future with their new plant opening. I am happy to own both and would rather have no dividends from either for a while and maintain their dominance in growth. Apparently in 5 years China will only accept A2 products...... let’s use those 5 years to focus only on growth and watch the sp skyrocket!!!
The key point was .... he knows how to deal with a crisis. He headed Fonterra Sri Lanka when a food safety scare erupted there a few years back.
And managed some flap in Vietnam when he was there, too.
The article didn't really match the headline for mine - I hope they didn't pick him just because he could manage a crisis: it would seem preferable if he could manage the business in such a way so as to ensure there was no crisis to manage.
To me the (slightly) better story was that he had had previous substantial experience in doing business in asia, and given that is where I think much of Synlait's business is and was, that seems useful broad experience. I think I read too that his sole experience at Fonterra was running branded goods operations, not commodities - again, that seems a good (albeit obvious) signal of how Synlait differs from Fonterra
Appreciate your summary jq8512, thanks for that.
It was not all in one transaction, if I remember correctly there were tranches of 200k, 400k, 50k and in those multiples. SNM wipes out old transactions with latest ones and you cannot see previous trades once they're populated with latest trades.
They're nailing their green credentials to the mast.
https://www.asx.com.au/asxpdf/201806...y7x3xlmhnb.pdf
It's a comprehensive approach. Good stuff!
https://hotcopper.com.au/documentdow...oIke92GA%3D%3D
I don’t know if these stats are still correct, but how much of Synlait is owned by the Chinese shareholders?
Here's why rejecting PKE matters: https://news.mongabay.com/2018/04/in...report-alleges
Bad politics, ecological disaster.
Well done Synlait, industry lesders.
Another step in right direction in process of building a great company...
https://www.ruralnewsgroup.co.nz/dai...e-in-ruminants
Damn Ebert Construction gone into receivership. They are finishing the Dunsandel PLant (by December) and about to start the Pokeno plant due for commissioning Sept 2019. This is likely to but a brake on things. Looking forward to a company announcement.
(as an aside - another major construction company in the ****. What on earth is happening to this industry. In the best of times they cant do a decent job - what are they going to be like in harder times. Does not bode well for NZ!)
My understanding mm is their is a really critical shortage of qualified staff right across all aspects of the building industry. If you can't get good staff some companies end up hiring poor quality staff and that's when the problems really start.
I dont disagree - but there is no excuse. After the CHCH earthquakes it was plane as day that we (NZ) would have to re-ignite an apprenticeship programme and put current workers on professional development to upskill them. Its been over 6 years. Apprentices and degree qualified people should be pouring out of tertiary institutes. In the absence of that - there is no shortage of offshore people looking for work. ChCh has gone flat - what has been done to soak that resource up?
Likely future production is built into current price. I cant see SML now meeting those targets.
I know I am a worry wart so if there is no announcement from SML on this issue today I will be sending them a "Please Update" tonight.
In the meantime happy to hold my gains and content with long term picture. Not panicking to sell just yet.
http://www.scoop.co.nz/stories/BU180...nstruction.htm
Another view. I couldn't agree more mm. You'd be forgiven for thinking most building companies can't think further ahead than their current or at best, next contract. The woeful lack of apprenticeships and training is coming back to haunt the industry and N.Z. Inc in a major way.
For what its worth I am not panicking about this either. Yes it will cause a delay but I am focused on the long term.
Hard to see how this won’t affect the growth plans at least in the short term.
Will be a good challenge for management and something to monitor their performance with
See latest announcement to the NZX that's just come out. http://nzx-prod-s7fsd7f98s.s3-websit...577/283697.pdf
Tetra Pak is a major multi national company, see here https://www.tetrapak.com/
There could be some modest delay to these two projects while another construction contractor is sorted out. I am happy to hold for long term growth.
Actually - this is very good news. This way it is not Synlait which needs to manage the contractor change (and carry any penalty), but Tetra Pak. They are big enough to weather these minor contractor issues in some small island in the South Pacific ;) without problems;
Pretty much how I see it too BP. Actually thinking about it a bit more as you quite rightly allude too, its likely there would be penalty clauses in terms of late delivery written into the contract with Tetra Pak so at least some of the pain of any delay probably rests with them.
Yeah that problem isn't going to be fully resolved anytime soon either. Always plenty of challenges in business, but I tell myself (glass half full) that good companies work around challenges and mitigate the effect of them and still make good results whereas bad companies just make excuses. Hopefully this and AIR are in the former category !
Agre. Also good news that SML management ought not be distracted in tryng to find a new contractor. They can keep on focussing on core business.
(ALso top marks for market update - saves me an email tonight. Much better response than the M Bovis one. Good on them)
Happy Holder
One thing is that the new Pokeno plant will probably cost heaps more than planned.
I dream of tetrapak being a listed company and that i bought early, :sleep::drool::closed eyes::drool::closed eyes::closed eyes:
https://www.tetrapak.com/
Anyone care to point to a construction project that finished on time and on budget? (dontr get me started on the Christchurch Town Hall and our other local construction projects - metro centre didnt even get off the ground due to costing heaps more than planned)
In the likely case that Tetra Pak need to find a new Contractor to undertake the design & build of the Pokeno site, you would expect that costs increase due to 'escalation' that is present in the market at the moment. Any costs associated with bringing in a new Contractor should sit with Tetra Pak and basedc on yesterdays SML announcement I believe that to be the case.
Minimoke I believe that RYM, retirement villages are normally constructed with minimal delays or budget blowouts.
OCA been building in Auckland on time and on budget. It can be done but it is a truly remarkable feat especially at the moment !
So - you mean it was one of these "the sun will rise tomorrow morning" statements?
While the statement about the sunrise is (highly likely) correct - the assumption about construction projects is not.
The majority of construction projects is completed within time and budget.
Here is a randomly selected performance report for construction projects in Florida:
http://www.fdot.gov/planning/perform...OnTimeCore.pdf
more than 80% in time and more than 90% under budget does not sound bad, does it?
Obviously - it always depends against what you are measuring.
Against the untested and unchallenged wishes of a politician? Sure, these guys are unqualified, incompetent and have a conflict of interest.
But measure against a thoroughly reviewed list of requirements and detailed design and its not that hard to deliver in time and under budget.
TetraPak is a highly successful and experienced company developing packaging solutions not just for Synlait. That's not a one off, but the solutions come basically "off the shelf". What makes you think they don't know what they are doing?
Your post might have more value if you referenced NZ.
Somewhere there is a KPMG report that will show in 2010 just over half construction projects came in on time, within budget and in scope. By 2013 this had dropped to 31% and by 2017 had dropped to 29%.
I'll try to source reference but consider since then Fletchers have nearly gone tits up, Hawkins have gone, Ebert obviously (along with Maven Interiors in Christchurch yesterday)
Never worry about the value of my post as long as you haven't looked into yours :p;
You didn't asked for NZ projects ... but apparently - if even according to your reference still 29% of them come in on time and below budget, than your original question was obviously just baiting.
But as you say - little old NZ seems to be bad in constructing things on time and budget. So glad we have a European company responsible for the Synlait projects.
Maybe one can't fix everything with No 8-wire and she'll be right mentality, but this is clearly a discussion for a different threat.
Kaboom - finally some goods news. SML up 4.6% to 1119
The a2 Milk Company ("a2MC") is pleased to announce it will increase its shareholding in Synlait Milk Limited. a2MC will acquire, through a subsidiary, an additional ~8.2% of the fully paid ordinary shares in Synlait from Mitsui & Co. at a price of NZ$10.90 per share for total consideration of ~NZ$161.8m. This represents a modest discount to the NZX one month volume weighted average price of NZ$11.16.
They wouldn't be paying that much if they didn't see significant value even at that price, so yes its great news.
I think this goes both ways and solidifies the partnership. There could be a risk of A2 choosing another dairy factory to produce infant formula. Similarly, an equal risk of SML taking all that a2 milk and producing a2 milk formula for a competitor down the track.
Will there be a merger of sorts or buy out from a2 in a few years? I would say right now that a2 can't afford to splash out $1B+ for a dairy company without hurting their cash position so it makes sense that they have no further plans at this stage to acquire any more.
http://nzx-prod-s7fsd7f98s.s3-websit...685/283836.pdf
Contract contains interesting price escalation clause. I think we can take ATM's last sentence, that they're not interested in acquiring more, with a grain of salt.
Next purchase be smallish or a full takeover eh
Yes. I think it suits ATM to bide their time for a while and play the long game. Some formula around 9% and the floor price of $10.90 in that escalation clause. I didn't have it in me to try and nut the fine detail out today. One good thing, obviously ATM is not concerned that Ebert's receivership poses a serious threat to Synlait's developments. That tells me all I need to know for now.
Page 14. Take a swig of A2 milk and relax about construction.....
https://issuu.com/farmersweeklynz/do...68707/63572666
Have we reached bottom yet? I've no idea but decided I may as well have a few more. Sorry to holders - looks like i've taken another 0.4% off the value. Never mind. I'm still 36% up overall. I'm looking forward to next year and it will be worth even more.
finally, SML is taking its turn. I thought SML could escape from shorters.....
https://www.nzx.com/announcements/322037
It could be Mitsui & Co, selling the remaining of their shareholding (179,223) on market. No way of knowing that though with certainty, just a guess.
Remind me again, how much did ATM pay recently...
Disc: Topped up with some more today.