SML - Synlait

[Minimoke]

Hasnt Pokeno been set up to supply Abbott??

No.
Pokeno was built in 2018 to manufacture - and this was done before the 5 November 2020 announcement of a new "new multinational customer" who was "an established, global category leader".

In that announcement they said they needed to spend another $70m over two years on processing and packaging customisation.

They also said "Commercial production is currently projected to start mid-2022"

[Basil]

From the other side.

Posted early December ...not that many months ago. Such was the enthusiastic response share price shot up to $3.82

Maybe current problems just a hiccup along that path to those F27 targets.

They've had this to say about F23 profit

1 - reported $38m npat in F22 in September
2 - guidance given then was F23 profits will be returning to levels seen pre 2021 (about $75m).
3 - this guidance confirmed at ASM in early December
4 - at ASM pretty enthusiastic promotion of the F27 targets
5 - on December 22 full year guidance maintained but said first half profits will be less than pcp ...but no worries we'll catch up in second half
6 - March 17 and the the 'two your recovery now three years' bombshell with guidance cut to $15m - $25m
7 - March 26 H123 profit of $9m (adjusted) and the $15m-$25m full year guidance confirmed
8 - then month later break even will be an outstanding result.

That's some story they have told ....maybe not intentional but jeez one would have to say almost bordering on the irresponsible (and some might describe it in even worse terms)

I've asked NZRegco for their views of events

hope nobody on here got caught out after that spike up to $3.82 ......I feel guilty in being sucked in by their bull **** and saying things like 'a lot to like about Synlait' but don't worry about me cause I made a few bucks at the time

Don't feel bad mate, they spun some VERY creative B.S.
I really appreciate you helping me see the light and get out when the shares were trading over $11.
You got sucked in by their B.S..  Nobody gets every call right, not me, not you and not anyone else.

[winner (n)]

Those Synlait bonds now shopping at 11% plus

[Basil]

Those Synlait bonds now shopping at 11% plus

That's still 90 cents on the dollar though for deeply subordinated unsecured debt that ranks behind more than $500m of bank debt..  I wouldn't pay anything like that. considering the shocking state of their balance sheet.   

[Minimoke]

I see A2M have just appointed a new non executive director based in Christchurch. She will take over the Risk Management and Audit committees. Is it just coincidental she is just half an hour drive from Dunsandel?

[Basil]

Synlait bonds on offer with wholesale level's of selling at 11.20%.
I reckon if you bid large at even 15% you'd get your boots well and truly filled.
My old boss a lifetime ago used to say, "The return OF one's investment is more important than the return ON it".  Very good saying for anyone considering Synlait bonds.

[Minimoke]

Synlait bonds on offer with wholesale level's of selling at 11.20%.
I reckon if you bid large at even 15% you'd get your boots well and truly filled.
My old boss a lifetime ago used to say, "The return OF one's investment is more important than the return ON it".  Very good saying for anyone considering Synlait bonds.

Next Monday 8 May next Investor Update day. Will be interesting to see what they say this time around. And impact on SP and bonds.

[Basil]

Next Monday 8 May next Investor Update day. Will be interesting to see what they say this time around. And impact on SP and bonds.

Down to another all time low of $1.44  I think institutions and other shareholders are running out of patience with Synlait and losing confidence in the board and management.  Can't help wondering if there will be many who will even bother making the time to attend the investor day at Pokeno on Monday?  I know if I had the email invite it would have gone straight into the junk file, why waste a day listening to their latest spin and endless ESG propaganda?  One good look at the balance sheet and notes is all that's required...

[Minimoke]

Down to another all time low of $1.44  I think institutions and other shareholders are running out of patience with Synlait and losing confidence in the board and management.  Can't help wondering if there will be many who will even bother making the time to attend the investor day at Pokeno on Monday?  I know if I had the email invite it would have gone straight into the junk file, why waste a day listening to their latest spin and endless ESG propaganda?  One good look at the balance sheet and notes is all that's required...

Just checked and closed at $1.43
Agree its not worth the time or the cost of the petrol to go to Pokene. What would the say. "We are in the poo. We are going to sell something because we have to. What do you reckon - how about this site here? But don't worry our b Corp certification is about to start paying dividends from lots of like minded customers. Oh and SAMR is trucking on just fine. Any questions - as long as its not about bankers or covenants.

[Buzz]

Any questions - as long as its not about bankers or covenants.[/i]

Didn't they just announce the revisions to their banking covenants? Are they no good or something?

[Basil]

Bankers have them on a very tight leash with a chocker chain around their neck.  Less restrictive covenants only apply for a few months and then revert back to what they were. They will want to see results, not pink fantasy fairy tales, when it comes to getting their chronic debt down.
For all intents and purposes, I would say Synlait are forced sellers of a major asset unless one of their large shareholders throws them a huge bone in terms of a large share placement.

[Minimoke]

Bankers have them on a very tight leash with a chocker chain around their neck.  Less restrictive covenants only apply for a few months and then revert back to what they were. They will want to see results, not pink fantasy fairy tales, when it comes to getting their chronic debt down.
For all intents and purposes, I would say Synlait are forced sellers of a major asset unless one of their large shareholders throws them a huge bone in terms of a large share placement.

pokeno or dunsandel. I reckon it has to be one or the other

[Buzz]

Bankers have them on a very tight leash with a chocker chain around their neck.  Less restrictive covenants only apply for a few months and then revert back to what they were. They will want to see results, not pink fantasy fairy tales, when it comes to getting their chronic debt down.
For all intents and purposes, I would say Synlait are forced sellers of a major asset unless one of their large shareholders throws them a huge bone in terms of a large share placement.

So you seem to be saying that the revised covenants are just buying time for SML to sell something, or raise capital? Are you convinced that they can't trade through this, if so why?

[Basil]

In a nutshell, their very high debt level and current interest rates is killing profitability.
The shares were more than $3.50 as recently as mid February 2023 !..before their bombshell disaster half year report and then the bombshells just keep on coming...  Pretty rare you ever get to see an NZX50 constituent company lose ~ 60% of its value in less than 3 months.
If you want to catch a falling knife buzz, be my guest and fill your boots, and good luck to ya  (I prefer all my fingers to remain intact and not be sliced to bits).

[BlackPeter]

pokeno or dunsandel. I reckon it has to be one or the other

I would be surprised if they sell Dunsandel.

Dunsandel is their HQ, but still more important: Chinese import licence for A2 Platinum Milk Formula linked to the physical factory in Dunsandel as well as to the owner of the factory (being Synlait). On top of that: Synlait owns the IP for the A2 Platinum Milk Formula.

This means, if Synlait sells Dunsandel neither them nor ATM would be allowed to continue selling A2 Platinum (given that A2 owns the brand). How do you call the opposite of win-win?