SML - Synlait

[Minimoke]

Unfortunately, it's almost always the case with CCP controlled companies the dice is heavily loaded which means that even if the financials were not a train wreck, you'd be a VERY "brave" investor to be expecting to get fair and equitable treatment going forward.

The major shareholder(s) has shown they have absolutely zero interest in minor retail shareholders.

I dont see a prospect of a dividend from this company within my lifetime.

So its really just going to be a good share for the traders.

[Minimoke]

Whats up with Synlait. SP back down to $0.56

[Hectorplains]

Whats up with Synlait. SP back down to $0.56

Dairy auction prices are down, and the outlook for them is not flash either.  A2 Milk was down 4% yesterday on good volumes.  NZ Herald yesterday, "China-based infant-formula maker Feihe Milk issued a profit warning earlier in the week, which he said had "spilled over" into a2 Milk."

[Left Field]

SML update..... slowly reducing its losses......but not without risks going forward.

https://www.nzx.com/announcements/455851

[Minimoke]

SML update..... slowly reducing its losses......but not without risks going forward.

https://www.nzx.com/announcements/455851

Still with $300m net debt!

[Hectorplains]

Still with $300m net debt!

...and, yet more problems!  Now the much vaunted Dunsandel facility had unspecified problems generating unrevealed costs.   

 

[Minimoke]

...and, yet more problems!  Now the much vaunted Dunsandel facility had unspecified problems generating unrevealed costs.   

 

" manufacturing challenges at its Dunsandel facility across a range of product segments" Thats pretty vague. Is it lack of raw material, lack of people, machinery malfunction, supply chain issues. Oh well - at least they are resolved.

Silence on Pokeno and Dairyworks

[Minimoke]

Probably useful back referencing their March forecast which said "Synlait is targeting a closing net debt balance of $250 million to $300 million and a net senior debt to EBITDA ratio of below 2.5x in FY25, positioning the company well for its bank refinancing process in the second half."

So they are at the worst end of their for 24 March 2025 forecast. So in four months they have undershot by $50m

At half year net profit was was $4.8 million. They are now saying net loss of -$27 to -$40m. So definitely a profit downgrade.

Half year EBITDA was $63.1m. Now expected to be $100 - $110m. So have definitely lost traction second half of year.

[Basil]

Gosh it never ends....but no worries, another capital raise of a few hundred million will fix things for a few more years lol

[anotherday]

The ship is sinking again.

[Minimoke]

The ship is sinking again.

Certainly time to look at those banking covenants again.

[Basil]

Good call by Bell Potter recently.

Reuters • BUZZ • 31 Jul, 2025
●
Shares in New Zealand's Synlait Milk rise 3.3% to NZ$0.62 after 7.7% drop in previous session
●
Dairy producer on Wednesday said it expects FY25 underlying EBITDA of NZ$100 million ($59.04 million) - NZ$110 mln, around Bell Potter's estimate of NZ$108.5 mln
●
Bell Potter stick to "hold" call on stock, but lowers PT to A$0.585 from A$0.92
●
Lowers estimate for volumes in co's nutritional business and cuts EBITDA FY25 forecast by 4%
●
Brokerage says potential for larger rival A2Milk to vertically integrate into supply chain assets throughout 2025
●
Stock up ~42.5% YTD ($1 = 1.6938 New Zealand dollars)

Gosh, I don't see how any of the announcements today by ATM are good for Synlait, in fact quite the opposite.  Buying a milk processing factory with Chinese licenses right next to Synlait's Pokeno facility really is getting right up in their face with competition.  Nothing subtle whatsoever about that move !  I think its fair to say relations between ATM and Synlait are at an all time low.  What percentage of Synlait do ATM now own ?  Happy to burn that investment in the pursuit of their own goals ?  (Disc: Don't hold and don't follow closely anymore...just have a morbid fascination with train wrecks)

[Minimoke]

Good call by Bell Potter recently.Gosh, I don't see how any of the announcements today by ATM are good for Synlait, in fact quite the opposite.  Buying a milk processing factory with Chinese licenses right next to Synlait's Pokeno facility really is getting right up in their face with competition.  Nothing subtle whatsoever about that move !  I think its fair to say relations between ATM and Synlait are at an all time low.  What percentage of Synlait do ATM now own ?  Happy to burn that investment in the pursuit of their own goals ?  (Disc: Don't hold and don't follow closely anymore...just have a morbid fascination with train wrecks)

Todays news is terrible for synliat.

A2 now producing directly out of China. So thats a door closed for Synliat
A2 alluding many times to supply issues from Synlait, and to airfreight. I bet A2 isnt carrying those costs
A2 know there is a spanking new processing plant up in Auckland, but they aren't interested in buying off Synlait even at what must be bargain basement valuations
A2 purchasing processing facilities with 2 Chinese Label licences already attached so there ifs no opportunity here


Seems to me A2 is rapidly distancing itself from Synlait. I have to admit to not following synlait so much lately - but I recall A2 is pretty much their only customer. Synlaits debt levels still astronomically high.

A2 have shown they dont mind loosing $130m on Mataura. So probably wont shed any tears if they loose out on Synlait.

[Basil]

Seems to me A2 is rapidly distancing itself from Synlait. I have to admit to not following synlait so much lately - but I recall A2 is pretty much their only customer. Synlaits debt levels still astronomically high.

Thanks mate.  If I recall correctly ATM did not participate in the most recent passing of the hat around begging for donations, (AKA Synlait capital raise) so their shareholding is diluted and they obviously don;t care anymore about Synlait.  Its clear they have had enough of their excuses and poor performance over the years.

[winner (n)]

A2 did pump more inro Synlait.. As per AR

Shareholding in Synlait Milk Limited

 The listed investment is a 19.8% holding in shares in Synlait Milk Limited (Synlait). Synlait is a dairy processing company

 
No dividends were received from this investment during the year (2024: $nil).

 In October 2024, the Group participated in Synlait's recapitalisation via an equity raise, acquiring a further 76,283,104 shares for
$32,802,000. For the purposes of ASX quotation requirements in respect of the new shares issued to the Group, it entered into a
voluntary escrow deed poll under which it undertook not to sell, assign, or otherwise dispose of, or transfer the effective control
of, the 76,283,104 shares acquired under the placement for a period of 12 months from the date of allotment. This restriction is
subject to certain exceptions.

 There was no change to the Group's total percentage holding in Synlait, which remains at 19.8% (2024: 19.8%).

 A fair value gain of $31,618,000 (2024: $62,211,000 loss) was recognised in other comprehensive income for the year