SML - Synlait

[BlackPeter]

I disagree that they have debt head room. Heres my numbers - please feel free to correct me

With whom do you disagree? Sounds like we are all in vehement agreement ;

[Minimoke]

With whom do you disagree? Sounds like we are all in vehement agreement ;

Post #294.

(I don't know how to reply to a post and insert a picture at the same time!)

[BlackPeter]

Post #294.

(I don't know how to reply to a post and insert a picture at the same time!)

Fair enough ... shows just my short attention span ;

However - if you want to learn how to reply to a post and insert a picture at the same time, try the following:

Press "quote" under the post you want to quote.
Highlight the complete post (including all this html stuff)
Copy it.
Leave the post you just started (like press the arrow left top on the screen) and go back to the post you want to reply to (and quote)
Press this time "reply" instead
Use your mouse - right click and paste the html you copied before.
You have now the quote you wanted in your post and still have the insert functionality.

Well, something like that (all from memory, but try - I am sure you will get it, its just software ...)

I know, some software does have a funny approach of enriching the users life ...

Anyway - have fun.

If anybody (admin?) has an easier method, I would be interested as well ...

[KW]

Fair enough ... shows just my short attention span ;

However - if you want to learn how to reply to a post and insert a picture at the same time, try the following:

Press "quote" under the post you want to quote.
Highlight the complete post (including all this html stuff)
Copy it.
Leave the post you just started (like press the arrow left top on the screen) and go back to the post you want to reply to (and quote)
Press this time "reply" instead
Use your mouse - right click and paste the html you copied before.
You have now the quote you wanted in your post and still have the insert functionality.

Well, something like that (all from memory, but try - I am sure you will get it, its just software ...)

I know, some software does have a funny approach of enriching the users life ...

Anyway - have fun.

If anybody (admin?) has an easier method, I would be interested as well ...

Testing ....

Reply to post using Quote.  Write text.  Click on Preview. Then click on Attachments and other options.  Add picture, upload and/or insert .  Then Post.   

You cannot view this attachment.

[KW]

But they have debt headroom as well. I'm not defending Synlait, just saying that it's not in bright's or a2 interest to see them fail. Quite the contrary.

That depends on how big a financial basket case SML is.  If you were an A2 shareholder, would you prefer to own a smaller but more profitable company, or a larger but unprofitable one?  If SML is a financial drain on A2's cash resources, it will eventually suck it dry.  Some hard decisions might have to be made.

[Basil]

A wide range of possible future scenario's here. I follow this train wreck out of morbid fascination for how things play out for the poster child of all things B Corp, ESG and LGTBQ.  When you start making these other things more important than earnings, trouble comes as sure as night follows day, in my opinion.
What's not in dispute is their balance sheet is now in a truly appalling state and they are struggling to break even in the current year against a series of promises and forecasts that make management look like they have no forward visibility in the business whatsoever.
It's also clear the banks have them on a very tight leash with a very limited timeframe wherein banking covenants have been relaxed a little before reverting back to where they were.  Tick Tock, the clock is ticking and Synlait need to deliver answers, (not more excuses, more ESG crap and or plans and stories) to the banks.

I won't buy a share in business that the directors and management have allowed to get into such an appalling state on the presumption that some White Knight is going to come riding to my rescue if / when the custard hits the fan.    Un-investable at this point is how I see it.  Clearly, I am not alone in holding that view as I think it's clear the investment community shunned their investor day. 

[Minimoke]

A wide range of possible future scenario's here. I follow this train wreck out of morbid fascination for how things play out for the poster child of all things B Corp, ESG and LGTBQ.  When you start making these other things more important than earnings, trouble comes as sure as night follows day, in my opinion.
What's not in dispute is their balance sheet is now in a truly appalling state and they are struggling to break even in the current year against a series of promises and forecasts that make management look like they have no forward visibility in the business whatsoever.
It's also clear the banks have them on a very tight leash with a very limited timeframe wherein banking covenants have been relaxed a little before reverting back to where they were.  Tick Tock, the clock is ticking and Synlait need to deliver answers, (not more excuses, more ESG crap and or plans and stories) to the banks.

I won't buy a share in business that the directors and management have allowed to get into such an appalling state on the presumption that some White Knight is going to come riding to my rescue if / when the custard hits the fan.    Un-investable at this point is how I see it.  Clearly, I am not alone in holding that view as I think it's clear the investment community shunned their investor day. 

One day a text book is going to be written. And Synlait will be the prime case study.

It will start with how to set up and grow a successful "family run" business and then to have it destroyed by ESG principles.

It will prove the old saying a fish rots from the head.

And it will give real life examples of investor red flags.

So far I don't see the book having a happy ending for the "family"

[Minimoke]

Acting Director of Operations showing some real confidence. Just picked up 341 shares for a cool $491.00

[Basil]

Selling off some parts of the business but what are the earnings from these divisions, if any, and what are they realistically worth.  Thoughts ?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/412456/395786.pdf

[Gerald]

Talbot forest is realistically worth next to nothing given issues and what one would assume are losses, might be able to get a few mil for the $9m suit they are bringing against the sellers though

Dairyworks seems to be an ok business but naturally there is a tradeoff, more earnings = higher price = less earnings for Synlait or bigger losses in the future.

The announcement seems a little desperate, saying you intend to sell assets before even getting offers or expressions of interest would indicate you are a forced seller and happy to take any price you can get.

[winner (n)]

Dairyworks was an exciting growth opportunity in 2020 when they forked out $112 million for it. They said it was 7.5 x EBITDA back then

Invested more into the business since

[Basil]

Pretty cool website https://www.dairyworks.co.nz/
Didn't realise the brand included Rolling Meadown and Alpine.
Often see their products at the supermarket at not completely unreasonable sort of prices.
Should get a decent price for that but will it be enough to assuage concerns over their level of indebtedness? 

[Teitei]

Pretty cool website https://www.dairyworks.co.nz/
Didn't realise the brand included Rolling Meadown and Alpine.
Often see their products at the supermarket at not completely unreasonable sort of prices.
Should get a decent price for that but will it be enough to assuage concerns over their level of indebtedness? 

If they can sell for anywhere above $100m, their level of indebtness should be okay as inventories were built up to tide ATM over the SAMR approval period.

[Minimoke]

Dairyworks EBITDA was $18m. Synlait bought it back in 2019 for 7.5 x EBITDA. So lets start there as a valuation = $135m. Less a discount for being a distressed seller.

Shall we say they could get $80 - $100m for it.

That would be an "earnings decretive" transaction and could knock off around 30% of total EBITDA.

Net debt is $518m So I don't think $100m will be enough.

Which means Dunsandel has to be put on the block. Haven't figured out a value for that yet But with B Corp certification I reckon that will sell at a significant premium.

Heres my comment back in April. Can't see much reason to change it.

[KW]

The announcement seems a little desperate, saying you intend to sell assets before even getting offers or expressions of interest would indicate you are a forced seller and happy to take any price you can get.

They are a forced seller.  That's what you become when you run out of money lol.