SML - Synlait

[Minimoke]

I have been a long term critic of Synlait.

But today's news may see them turn a corner.

I am very pleased to see they have conducted a structural review and they say "Grant Watson and his executive leadership team have refreshed Synlait's strategy with the Board in recent months. The refreshed strategy will deliver greater focus against Synlait's core business opportunities being Advanced Nutrition, Ingredients, Consumer (including Dairyworks) and Foodservice."

Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.

Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)

[Minimoke]

Now to the criticism.

I am a firm believer that the Board is full of "Directors" and their job is strategy and governance.

From the CEO down they are operational folk and not Directors. So don't call them "directors". "General Manager" is fine.

I hope this isn't just window dressing.

o Chief Financial Officer (Robert Stowell)
o CEO Dairyworks and Director of Consumer (Tim Carter)
o Director of Operations (Nigel Macdonald)
o Director of Quality, Regulatory and Laboratory (Suzan Horst)
o Director of People and Culture (Boyd Williams)
o Director of Ingredients (to be confirmed)
o Director of Advanced Nutrition (to be confirmed)
o President China and Director of Foodservice (to be confirmed)
o Director of On-Farm Excellence and Business Sustainability (to be
confirmed)
o Director of Strategy, Innovation and Corporate Affairs (to be confirmed)

[Basil]

Very difficult for anyone to change the embedded culture of a company.  Takes years even when it is possible.
Their bonds trade at over 8% last time I looked which gives a good indication of the risks here in my opinion.  For mine, the responsibility with hiring the right CEO with the right approach and setting the right culture starts with the board and they have shown truly abysmal leadership over the years.
I would not put money on this pink, poorly performing leopard changing its spots anytime soon.

[mcdongle]

Advanced nutrition ingredients.
Wonder what international company makes milk based nutritional products?

[lorraina]

Could that be the position formally known as "The Tea Lady".?

[arekaywhy]

...
Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.

Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)

would you mind passing this on to literally every company?

[Basil]

I have been a long term critic of Synlait.

But today's news may see them turn a corner.

I am very pleased to see they have conducted a structural review and they say "Grant Watson and his executive leadership team have refreshed Synlait's strategy with the Board in recent months. The refreshed strategy will deliver greater focus against Synlait's core business opportunities being Advanced Nutrition, Ingredients, Consumer (including Dairyworks) and Foodservice."

Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.

Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)

Just goes to show the previous CEO was a really strange person with goals that we very poorly aligned with shareholders interests.  I guess if you have no idea how to show real leadership you just make it up as you go along LOL  Problem is it will takes years of good leadership just to undo the damage already done.

[Minimoke]

Just goes to show the previous CEO was a really strange person with goals that we very poorly aligned with shareholders interests.  I guess if you have no idea how to show real leadership you just make it up as you go along LOL  Problem is it will takes years of good leadership just to undo the damage already done.

There was trouble at mill the moment Leon got up to speak at his very first annual meeting. Jabbered away in te maori. And no maori in the audience. But there were a few Chinese - total silence on that front. Which must have been an insult of some SML's owners. It was all down hill from there

[Hectorplains]

I have been a long term critic of Synlait.

But today's news may see them turn a corner.

I am very pleased to see they have conducted a structural review and they say "Grant Watson and his executive leadership team have refreshed Synlait's strategy with the Board in recent months. The refreshed strategy will deliver greater focus against Synlait's core business opportunities being Advanced Nutrition, Ingredients, Consumer (including Dairyworks) and Foodservice."

Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.

Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)

The social constructs...hei aha.  They have been a silly distraction at worst.  The real kicker though has been some appalling decision making that has resulted in A grade capital destruction.  The Talbot purchase aces this sorry arse list, closely followed by legal and other unnecessary expenses around the Pokeno factory and the whole Munchkin / USA muck around.  Also yet to prove their worth are the top dollar Dairyworks purchase (for example where are they at with the long promised liquid milk exports to China?) and the $18m expansion to to the Dunsandel lactoferrin facility. So yes, hopefully this strategic review will allow them to clearly articulate how the various parts of the business are going to work as a whole to drive the company forward.  That's what I'm waiting to hear.

[Minimoke]

The social constructs...hei aha.  They have been a silly distraction at worst.  The real kicker though has been some appalling decision making that has resulted in A grade capital destruction.  The Talbot purchase aces this sorry arse list, closely followed by legal and other unnecessary expenses around the Pokeno factory and the whole Munchkin / USA muck around.  Also yet to prove their worth are the top dollar Dairyworks purchase (for example where are they at with the long promised liquid milk exports to China?) and the $18m expansion to to the Dunsandel lactoferrin facility. So yes, hopefully this strategic review will allow them to clearly articulate how the various parts of the business are going to work as a whole to drive the company forward.  That's what I'm waiting to hear.

Remember back in Nov 2020 there was announcement of a new (Asian) international customer. Commercial production was to start mid 2022. And they were going to spend $70m of the capital raise money to fund the plant expansion.

Fast forward to this years half year results and we get "Ensure readiness to successfully commence commercial production for Synlait Pokeno's new multinational customer." as a key priority for H2 2022.

SP today is $3.31. I reckon there is a fair bit of anticipation built in.

1 1/2 months to year end announcement. Its going to be an interesting one - especially with falling milk commodity prices.

[Basil]

How many years now without a dividend ?...sorry I have lost count.
Why anyone would bother with slow motion train (wreck ?) on a journey to nowhere is beyond me.

[BlackPeter]

How many years now without a dividend ?...sorry I have lost count.
Why anyone would bother with slow motion train (wreck ?) on a journey to nowhere is beyond me.

Neither dividend nor any material capital appreciation compared to listing price (somewhere around $2.70 I think) nearly a decade ago.

However - there was quite an exciting roller coaster ride in between (great for traders) ... and don't discount the power of the colour scheme ...  :p ;

On a more serious note ... they invested not just into Te Reo translators, but as well into a lot of good looking stainless steel. If they find a business case to match, this company might be at some stage a steal ... they just need to look out a bit harder.

Synlait is clearly a solution ... they just didn't found the problem yet ;

[Basil]

Maybe if they had of painted all their processing facilities in shocking pink with contrasting jade green Te Reo signage that would have solved all their problems     For the record I always said once you promote all things ESG to the point where such things are of equal importance to the company as earnings are, you have lost the plot on the very reason the company exists.  The warning signs of extremist socialist policies were there for all to see.  Without doubt this company took ESG things further than any other listed company on the NZX and the results are plain for all to see.  Massive destruction of shareholder wealth relative to the NZX50 over the same timeframe.  The whole board should resign in disgrace.

I could not ever invest in a company where the same directors today are the ones that let such extremist socialist and ESG policies wreck such destruction upon shareholders so for me this will always remain uninvestable.  I'm not bitter and twisted, I made a few bucks but I think this makes for a brilliant case study for investment analysis classes at University of what not to do and how not to govern.  As for their "disclosure" around the Pokeno fiasco...oh my goodness, more stuff for University students to ponder over for decades to come....

[Hectorplains]

Remember back in Nov 2020 there was announcement of a new (Asian) international customer. Commercial production was to start mid 2022. And they were going to spend $70m of the capital raise money to fund the plant expansion.

Fast forward to this years half year results and we get "Ensure readiness to successfully commence commercial production for Synlait Pokeno's new multinational customer." as a key priority for H2 2022.

SP today is $3.31. I reckon there is a fair bit of anticipation built in.

1 1/2 months to year end announcement. Its going to be an interesting one - especially with falling milk commodity prices.

Agreed on all points bar falling milk commodity prices.  There are competing factors that make it difficult to have any certainty around prices.  Synlait recently increased its base milk price forecast to $9.50/kgMS, saying that this reflects an improved outlook for 2022-23 dairy commodity prices.  Further supports are probable in a weaker NZ dollar and the reduced global milk supply. 

[Minimoke]

Agreed on all points bar falling milk commodity prices.  There are competing factors that make it difficult to have any certainty around prices.  Synlait recently increased its base milk price forecast to $9.50/kgMS, saying that this reflects an improved outlook for 2022-23 dairy commodity prices.  Further supports are probable in a weaker NZ dollar and the reduced global milk supply. 

I have to learn how to post pictures.

In the meantime I have to use words.

At the moment the average whole milk powder commodity price is the lowest its been since Aug 2021. And its about the same average price as Feb 2021. The concern is the trend. Been trending consistently down since a high n march 2022.

Synlait has its forecast price but farmers may be disappointed. Which is perhaps why Canterburys Choice has set out on their own selling A2 milk (see A2 thread)

I used to be in prime "sell" mode with SML. But am currently giving them the benefit of the doubt with a very cautious "hold". I'm looking forward to the next announcement. In particular debt levels, inventory computer implementation costs and name of new international asian customer.

I am so disinterested I havent even been to the local supermarket to see their fancy recyclable bottle.

But their upcoming court case against Talbot should be interesting. I'm not even even sure if they are back in manufacture mode again.

And on a side note Environment Canterbury are getting two unelected Maori Councillors who are apparently excellent caretakers of the land. They will make up 2 out of 16 seats. And I know the current other 14 councillors are totally smitten with all things Maori. Lets see what they do about the totally unnatural use of the canterbury plains and its aquifers.