SML - Synlait

[winner (n)]

Lowest since it hit $2.60 sometime in March 2016 (even though it closed at $3.05 in March 2016)

Lowest ever $1.98 in August 2015

Think it floated at about $2.20 but was quickly traded up to over $2.50

Disaster at the moment though isn't it

Yahoo data

[winner (n)]

Share price still sinking ...maybe will reach 2 bucks after all.

Half year result next Monday

They didn't give guidance for half year but seeing full year could be $20m profit  I wouldn't be surprised that half year was break even or maybe a loss.

Be hard to put a pretty story around that in the presos

[Basil]

Owe you a beer or two with this one mate after you talked some realism into me several years back and I got out at an average price of ~ $11.  Been looking for a reentry point ever since but none have presented as compelling although I did get very close to pulling the trigger a while back when they were talking about getting back to $75m profit and the share price was ~ $3.50.  I remember at the last minute pulling back and thinking "we'll see" because their track record is so chequered now.  Very pleased I did.

Must admit I'm totally lost as to what it might be worth now?
Profit was going to be $75m, then a lot less, now $15-25m, all within the space of 6 months or so.
Have management got any forward visibility at all ?
Can you trust any forward guidance they say anymore ?
Suppose they do make $20m, (although I'd be more inclined towards the bottom of the range) that's only 9 cents per share.
Just as well its all going to come right in the future, or is it ?

What about the significant remaining debt and servicing that, debt servicing covenants possible breech? $342m in debt at last balance date and market cap now only $542m, hmmm. I guess if it gets to around half NTA (showing as $2.69 on direct broking website) so about $1.30 it could be a takeover target?

The other thing is IF it goes under $2 and stays there for a while, (not saying it will because we have to be a bit precious with price targets now, or so I am told), my calculations suggest that it will probably exit the NZX50.  Got a good boost of nearly 20% when it entered the index, remember that fondly, so another significant leg down upon potential exit of same seems quite plausible.

It seems to be there's an awful lot of execution risk around their rebuilding plans.
Gosh you'd have to be very "brave" to take a punt of this at the current price at about 28 times FY23 earnings.
Just as well this is the bottom or the earnings cycle, or can we be sure of that any more?

[Basil]

Lowest since it hit $2.60 sometime in March 2016 (even though it closed at $3.05 in March 2016)

Lowest ever $1.98 in August 2015

Think it floated at about $2.20 but was quickly traded up to over $2.50

Disaster at the moment though isn't it

Yahoo data

Yes, floated at $2.20 in July 2013 and never paid a dividend since.
Another stock headed back under the float price ?

[Minimoke]

Director of Operations Resigns. Rats deserting sinking ship?

[Hectorplains]

Director of Operations Resigns. Rats deserting sinking ship?

There's been a fair bit of exec staff churn in the last couple of years.  That said some of those roles show SML as world class in inflated job titles

[Minimoke]

There's been a fair bit of exec staff churn in the last couple of years.  That said some of those roles show SML as world class in inflated job titles

Being Bcorp certified probably means you have to have lots of fancy ESG sounding titles.

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391412.pdf

Very UGLY numbers.
Huge increase in debt to $518.6 million.  Market cap now down to $520m   Hmmm

Red is the new pink, right ?

[Left Field]

Not impressed....... management and board asleep at the wheel??

https://www.nzx.com/announcements/408954

 Revenue down 3% to $769.8 million.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) down 25% to $51.5 million.
• Adjusted EBITDA down 5% to $55.0 million.
• Net profit after tax (NPAT) down 83% to $4.8 million.
• Adjusted NPAT down 43% to $8.9 million.
• Net debt up 32% to $518.6 million.
• Gross profit up 18% to $81.7 million.
• Forecast base milk price for 2022 / 2023 season remains at $8.50/kgMS.

[Auto Rower]

Not impressed....... management and board asleep at the wheel??

https://www.nzx.com/announcements/408954

 Revenue down 3% to $769.8 million.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) down 25% to $51.5 million.
• Adjusted EBITDA down 5% to $55.0 million.
• Net profit after tax (NPAT) down 83% to $4.8 million.
• Adjusted NPAT down 43% to $8.9 million.
• Net debt up 32% to $518.6 million.
• Gross profit up 18% to $81.7 million.
• Forecast base milk price for 2022 / 2023 season remains at $8.50/kgMS.

All as expected /forecasted, poor show the last two years resting on their Pink Laurels procrastinating about the pink Idealistic politically correct  gravy train .
Will they ever get back to making moolah is there any Incentive for management to Improve & enter the real world.
Reminds me of Ozz but change the glasses from green to pink

[Basil]

They desperately need to spend another $50 million making sure they recertify themselves to the very latest and best "B Corp" certification standards...that'll fix everything 

[Left Field]

Another theory is that the SP is being driven down to allow ATM to do a full take over.

Interesting times.

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391414.pdf
People might like to focus on the debt situation which looks very serious.
See note 11.
Firstly in terms of cash flow from operations this was negative $124.6m.
There's a lot of bank debt facilities maturing in October 2023.
Key Covenants include:-
Interest cover ratio of no less than 3.0 times at all times.
I note finance costs for the half year were $14.47m and net profit was only $4.8m   Hmmm
It's clear to me they are in breach of their banking covenants.
In addition, they have $180m of corporate bonds maturing in late 2024.

Sometimes old sayings like "I wouldn't touch this with a 40ft barge pole" don't quite cut the mustard...

[winner (n)]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391412.pdf

Very UGLY numbers.
Huge increase in debt to $518.6 million.  Market cap now down to $520m  Hmmm

Red is the new pink, right ?

Obviously having trouble driving their new ERP system

As such you'd have to have doubts over the 'robustness' of the numbers ...bound to be some big 'adjustments' in the future to make things balance

[Basil]

I see there's another market update coming on 8 May with their investor day with insto's visiting the Pokeno site.  Just as well downgrades never come in 3's or 4's eh      Break-even the next updated forecast down from $15-$25m ?

Looks like a really good horse race developing between this and WHS as to who gets to $1.50 first and who gets booted out of the NZX50 first.