Originally Posted by
silverblizzard888
They've performed exceedingly well in a declining Chinese market to get an EBITDA of $254.1 million while every other part of the company drags that down to $219.3 EBITDA. This year is the opposite, China looking a little shaky, while the other parts of business get close to breakeven, leading the company to expect a similar EBITDA figure for FY24. The key contribution in maintaining their performance comes from the declining NZ milk price, which is helping maintain their margins.
Its actually next financial year (FY25) that is the worrying year where stage 3 & stage 4 will see a drop off in demand since there will be a lot less babies to serve in that category than prior years, while the NZ milk price may recover at the same time which will reduce their margins and lower their EBITDA. The one thing that could save a decline in EBITDA is how they decide to invest their cash. Large possibility it will be to takeover Synlait in some way since they have hinted it will be about supply chain transformation, though it would be hard to see Bright Dairy sell up for anything below $3, so either a joint offer or a merger that would see Birght Dairy own a part of ATM.
In the event Bright Dairy would entertain a $3 per share takeover of Synlait, that would cost ATM about $525m to acquire the 80% they don't own. Bright may entertain that deal given the declining Chinese Market and if there was a good supply agreement in place.