SML - Synlait

[Left Field]

Crikey guidence withdrawn......how low can SML go!

https://www.nzx.com/announcements/434597

Synlait Milk Limited (Synlait) is withdrawing its full year 2024 (FY24) guidance.
 
The previously announced guidance stated that Synlait's earnings before interest, taxes, depreciation, and amortisation (EBITDA) performance was to be at the lower end of the $45 million to $60 million range, excluding a non-cash adjustment for the product costing method change of approximately $17 million.
 
 The company's immediate FY24 performance has been impacted by unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan due to the extended timeframes to execute. Because of this, Synlait advises that its final EBITDA result will be below the current FY24 guidance, but continuing uncertainty means that it is not able to provide an updated outlook.

GLH's

[Minimoke]

Last post from Doomsday Minimoke regarding share price.

Interesting how very quiet he has been after being so vocal and being negative about anything Synlait.

Perhaps he will surface soon now that he can get really negative about the loan proposal going through?

It isnt very interesting at all.

I am back online. As I posted earlier I flagged I was going to be away. Dont be making something out of nothing!

Now that I'm back I'm catching up on things. So while I was away what has happened.

For a start Synlait have swapped one $130m debt at 7% for a $130m debt at 8%

They have swapped a debt due now to a debt due in a years' time. So essentially zero change to the balance sheet on this front.

A debt of $180m due in December remains due.

It appears there remains an acrimonious relationship between Synlait and its largest most valuable customer A2 - I'm referring to the A2 Bright loan announcement which said "a2MC continues to have concerns and will engage in discussions with Synlait in the coming weeks."

There is confirmation that Dairyworks is essentially no longer for sale. So don't expect any equity from there. (Probably just as well since it appears Dairyworks remains profitable - which is likely the only profitable leg Synliat has.

There appears to be no apparent interest from anyone in Pokeno. So This "asset" remains a significant drain on Synlait.

Given there is no change to balance sheet or cashflow I suspect farmer suppliers will remains particularly nervous about the future. So no change there. I doubt the new $130m will give them any confidence.

An equity raise is clearly now on the cards that Synlait have survived the 15 July liquidation threat. Lets assume a $200m raise at a discounted $0.30 cents. Current shareholders will own 25% of Synlait. Those taking up the new equity will own 75% of Synlait. As I have posited earlier, the Synlait we know today will not be the Synlait of the future.

What will the equity raise do for the eventual Shareprice. That I cant predict. But to retain current value of $0.30 it would need to rise to $1.30 post equity raise.

Post equity raise it appears Bondholders money will be safe. This does not get shareholders out of the poo.

I retain the view that Synlait remains totally uninvsestable. I dont congratulate people who bought at the low and now hold with 50% gains - these people are simply gamblers - not investors.

And what do we see today. A withdrawal of the 4 July guidance. For petes sake - that was only 10 days ago. It is patently obvious (if we didnt know already) Synlait management and board have absolutely zero idea what is happening within their business. I'll go as far as saying I think the 4 July announcement needs to be investigated as it was clearly misleading the market in the run up to a critical shareholder vote. And its for this reason I dont think bond holders should think they are out of the woods yet.

[Breezy]

Fast forward a couple of years and this thing will emerge from the ashes looking a lot prettier.

[BlackPeter]

Fast forward a couple of years and this thing will emerge from the ashes looking a lot prettier.

Possible. One important question though is: Who will benefit from the rebirth you are predicting? I would be concerned retail shareholders capital might go the way of the phoenix ... ending up as ashes.

Whatever is going to emerge out of the ashes will belong to the dragons

[Breezy]

Possible. One important question though is: Who will benefit from the rebirth you are predicting? I would be concerned retail shareholders capital might go the way of the phoenix ... ending up as ashes.

Whatever is going to emerge out of the ashes will belong to the dragons

I think most retail shareholders capital has already been burnt to ashes over the last few years, Bright just blew upon the embers with their loan.

[BlackPeter]

I think most retail shareholders capital has already been burnt to ashes over the last few years, Bright just blew upon the embers with their loan.

Wait for the next CR. Can't really see their current downgrade trend increasing the success rate and certainly not reducing the dilution ;

[SemiStrongForm]

I am back online. As I posted earlier I flagged I was going to be away. Dont be making something out of nothing!

Reports of my death have been greatly exaggerated!

Good to have you back, Minimoke.

IMO - it's pretty unprecedented to withdraw guidance only ten days after its been issued. To me, this reads like an announcement that has been issued because it is in a far worse financial position than the note suggests at face value.

Synlait can't even meet EBITDA guidance of $45 million without removing one-off costs!

[Teitei]

Good to see you, Minimoke,  back - this thread is not the same without your incessant negativity about anything Synlait & its imminent demise (many times over).

All the issues you have raised (again) have been discussed since 1 July - nothing new.

The CR will happen and bond holders will get their money back.

Agree with you that traders currently are the ones making hay (up to 100% gain for those who bought at 20c). As I have posted before, I am not so brave and it's best to wait for details of the CR before deciding whether to play the turnaround story.

Interesting of course that you went off air after one comment on the day that Bright's Chairman came out in full support of SML (positive)and reversed the sp fall. And you now reappear on the same day that SML withdrew its earnings' guidance (negative). Just coincidence of course! And thank goodness for that!

[Breezy]

Good to see you, Minimoke,  back - this thread is not the same without your incessant negativity about anything Synlait & its imminent demise (many times over).

All the issues you have raised (again) have been discussed since 1 July - nothing new.

The CR will happen and bond holders will get their money back.

Agree with you that traders currently are the ones making hay (up to 100% gain for those who bought at 20c). As I have posted before, I am not so brave and it's best to wait for details of the CR before deciding whether to play the turnaround story.

Interesting of course that you went off air after one comment on the day that Bright's Chairman came out in full support of SML (positive)and reversed the sp fall. And you now reappear on the same day that SML withdrew its earnings' guidance (negative). Just coincidence of course! And thank goodness for that!

This ones all coming out in the wash now that I'm holding some. Lol

[Minimoke]

Good to see you, Minimoke,  back - this thread is not the same without your incessant negativity about anything Synlait

Still not seeing anything positive to report.

& its imminent demise (many times over). 

Its plain as day to see the Synlait as we knew it now no more. Totally reliant on the Chinese to buy it out / take it over. It appears A2 may not have an appetite to participate in the equity raise  - leaving Bright the new owners

All the issues you have raised (again) have been discussed since 1 July - nothing new.

The CR will happen and bond holders will get their money back.

Agree with you that traders currently are the ones making hay (up to 100% gain for those who bought at 20c). As I have posted before, I am not so brave and it's best to wait for details of the CR before deciding whether to play the turnaround story.

Interesting of course that you went off air after one comment on the day that Bright's Chairman came out in full support of SML (positive)and reversed the sp fall. And you now reappear on the same day that SML withdrew its earnings' guidance (negative). Just coincidence of course! And thank goodness for that!

What total drivel! A couple of days before that I quite clearly said I was going to be out of the country. You and I of course already knew by then Bright were supporting the loan - this is what Synlait had already been saying. Brights Chair added nothing new to the story.

Edit. I've now had a chance to catch up on SP's. You are factually wrong. SP closed 27 June at $0.225. Closed 1 July (after Brights announcement) at $0.225 So there was no reversal in SP. 2 July closed still at $0.225 - still no reversal. 3 July closed at $0.23. (wow - up $0.005!!!!) From then a gradual daily increase until 10 July, day before Vote and A2 announcement at $0.26. Really not a stellar rebound. Closed to a new high on 12 July at $0.335. And its been back downhill since.

[Teitei]

This ones all coming out in the wash now that I'm holding some. Lol

Turnaround stories are hard and tough to play.

Rewards however when done right are worth the effort.

One just have to look at ATM in its early days, Diligent & Serko to name 3 I have participated in to realise that it's not a matter of aiming to double one's monies investing in them but to aim for 10 baggers+.

Can SML be one? Too early to assess until CR details come out.

[Minimoke]

Turnaround stories are hard and tough to play.

Rewards however when done right are worth the effort.

One just have to look at ATM in its early days, Diligent & Serko to name 3 I have participated in to realise that it's not a matter of aiming to double one's monies investing in them but to aim for 10 baggers+.

Can SML be one? Too early to assess until CR details come out.

No!

Why?

Because they have a totally inept Board and management team who today admit they are clueless running their company when they say "unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan"

"Unforeseen". Just beggars belief they are totally incapable of seeing 1 month out. Totally ill-equipped to be running a company even as far out as December when bonds are due.

They quite clearly have zero idea of what is running through their plant at the moment and have lost total sight of shipping bookings. They have given their advisors an open cheque book and loose timeframes - and that never ends well.

Must be due a positive ESG announcement any day now.

[Teitei]

Cathy Gamlen, head of People is off after lasting less than a year.

In the meantime this is interesting "Huang said Bright and a2 Milk — which derives all its infant milk formula from Synlait — "exchange views on critical matters, from time to time, and in a friendly and co-operative way".

Deafening silence about Bright Chairman's comments from Minimoke but he has time to put in the above post on the same day.

[Minimoke]

Deafening silence about Bright Chairman's comments from Minimoke but he has time to put in the above post on the same day.

Poor form having a go at a poster rather than the posts. I have already explained where I was. I'm not posting my travel in intimate detail just to satisfy some vague conspiracy you have rattling around in your head.

[Teitei]

No!

Why?

Because they have a totally inept Board and management team who today admit they are clueless running their company when they say "unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan"

"Unforeseen". Just beggars belief they are totally incapable of seeing 1 month out. Totally ill-equipped to be running a company even as far out as December when bonds are due.

They quite clearly have zero idea of what is running through their plant at the moment and have lost total sight of shipping bookings. They have given their advisors an open cheque book and loose timeframes - and that never ends well.

Must be due a positive ESG announcement any day now.

Chill, Minimoke.

You sound almost panicky at the prospect of SML doing a turnaround and delivering a ten bagger. Why so?

Wait for the CR details.