SML - Synlait

[KW]

I learned from the 1987 stock market crash never to trust Chinese controlled companies.  Minorities are almost always the loser.  Back when Penno was CEO and their debt was a lot lower this had a chance...now they trade at the behest of their bankers and major shareholders.  This has all the makings of a complete train wreck for minority shareholders.

If you havent watched the China Hustle (its on Youtube) you should.  Quite enlightening.  As a result I no longer invest in 
- anything with Chinese substantial shareholders
- anything with Chinese Directors or Managers
- anything that has a substantial business in China.  

Without having to go back too far, there are numerous companies that have been buggered by the Chinese.  BUBs with its distributor, RFT by its Directors, PET by its customers ....

Bright Dairy will do what is in its own interests, shafting everyone else, that you can be sure of.

[BlackPeter]

If you havent watched the China Hustle (its on Youtube) you should.  Quite enlightening.  As a result I no longer invest in
- anything with Chinese substantial shareholders
- anything with Chinese Directors or Managers
- anything that has a substantial business in China. 

Without having to go back too far, there are numerous companies that have been buggered by the Chinese.  BUBs with its distributor, RFT by its Directors, PET by its customers ....

Bright Dairy will do what is in its own interests, shafting everyone else, that you can be sure of.

I don't disagree with the examples, but think we should be careful to not turn that into a racist beat up.

I don't think the problem is if board members or share holders are Chinese (or any other specific race ro nationality) - they are not more or less competent or honest than e.g. Kiwis or Ossies.

The problem is if whoever is on the board or controlling the board (like majority share holders) has an agenda unaligned to the interest of the organisation they control. Whether these conflicted shareholders or boardmembers are Chinese, American, Australian or Kiwi does not matter at all.

I am sure we can all remember plenty of examples, where shareholders have been shafted by Western majority shareholders as well as Kiwi or Australian directors.

Just look into the GFC - plenty of malice and incompetence in the US and in NZ. Look at companies like e.g. CBL, CRP, GEN, Feltex, Pumpkin Patch, Mainzeal, Hanover Finance, ... (and this is just from the top of my head)

I am sure I can find more examples of Kiwi Investors being shafted by fellow Kiwis and Ossies, rather than by Chinese.

The only sensible lesson from that is to be always alert when investing money, and particularly never trust anybody with a conflict of interest with the interests of the company they are controlling.

Admittedly - this is the case for anybody under the influence of Beijings long arm, but there are plenty of other people with undisclosed conflict of interests or just plain incompetent and stupid as well.

[Basil]

- anything that has a substantial business in China. 

That's one of the reasons I won't buy ATM again, probably should never have done so in the first place but hey, there was serious coin to make at one stage when Babbage was steering the ship and if I recall correctly I think you got well and truly stuck into the action when the going was good too

Bright Dairy will do what is in its own interests, shafting everyone else, that you can be sure of.

I couldn't agree more.   BP also makes a good point.  Plenty of other nationalities have "managed" companies with nefarious intent or reckless ineptitude.

[KW]

I don't disagree with the examples, but think we should be careful to not turn that into a racist beat up.

I don't think the problem is if board members or share holders are Chinese (or any other specific race ro nationality) - they are not more or less competent or honest than e.g. Kiwis or Ossies.

The problem is if whoever is on the board or controlling the board (like majority share holders) has an agenda unaligned to the interest of the organisation they control. Whether these conflicted shareholders or boardmembers are Chinese, American, Australian or Kiwi does not matter at all.

I am sure we can all remember plenty of examples, where shareholders have been shafted by Western majority shareholders as well as Kiwi or Australian directors.

Just look into the GFC - plenty of malice and incompetence in the US and in NZ. Look at companies like e.g. CBL, CRP, GEN, Feltex, Pumpkin Patch, Mainzeal, Hanover Finance, ... (and this is just from the top of my head)

I am sure I can find more examples of Kiwi Investors being shafted by fellow Kiwis and Ossies, rather than by Chinese.

The only sensible lesson from that is to be always alert when investing money, and particularly never trust anybody with a conflict of interest with the interests of the company they are controlling.

Admittedly - this is the case for anybody under the influence of Beijings long arm, but there are plenty of other people with undisclosed conflict of interests or just plain incompetent and stupid as well.

Its not a racist beat up.  Its about the lack of financial visibility of Chinese companies, the fact that financial accounts can't be audited, the securities laws in China that allow Chinese companies to defraud overseas investors as its not a crime, the accepted corruption that is standard business practice in China, the cultural attitudes to foreign investors, etc etc etc.   As I said, watch the China Hustle and you may begin to understand the problem. 

At least with Western companies and Directors, you know they are at least subject to srtong Western laws and short of fleeing to a country with no extradition treaty, there is no ability to take the money and simply disappear.

Secondly, its not about race, its about nationality - Chinese-Americans or Chinese-Australians are not included.  Its mainland Chinese people who operate according to Chinese laws and business practices that are of concern.   And if you don't understand those laws and practices, and still invest in companies being run according to them, then more fool you. 

[BlackPeter]

Its not a racist beat up.  Its about the lack of financial visibility of Chinese companies, the fact that financial accounts can't be audited, the securities laws in China that allow Chinese companies to defraud overseas investors as its not a crime, the accepted corruption that is standard business practice in China, the cultural attitudes to foreign investors, etc etc etc.   As I said, watch the China Hustle and you may begin to understand the problem. 

At least with Western companies and Directors, you know they are at least subject to srtong Western laws and short of fleeing to a country with no extradition treaty, there is no ability to take the money and simply disappear.

Secondly, its not about race, its about nationality - Chinese-Americans or Chinese-Australians are not included.  Its mainland Chinese people who operate according to Chinese laws and business practices that are of concern.   And if you don't understand those laws and practices, and still invest in companies being run according to them, then more fool you. 

Fair enough. Still feel uncomfortable though, to out one particular nation in that way.

If you look around - more than half of all societies have very questionable and shady legal systems, and most of them would not allow NZ to extradict their citicens and hold court over them.

So - as a minimum, you should warn as well to avoid companies with Russian interests, with Saudi Arabian Interests, with interests from any of the tax havens, with interests from any high corruption country and with interests from any country accepting international law only when it suits whoever is currently in power (like the US).

[KW]

Fair enough. Still feel uncomfortable though, to out one particular nation in that way.

If you look around - more than half of all societies have very questionable and shady legal systems, and most of them would not allow NZ to extradict their citicens and hold court over them.

So - as a minimum, you should warn as well to avoid companies with Russian interests, with Saudi Arabian Interests, with interests from any of the tax havens, with interests from any high corruption country and with interests from any country accepting international law only when it suits whoever is currently in power (like the US).

As they say, "be woke, go broke".  Never a more apt saying in this case.  I'll discriminate against any group that I feel presents a threat of me losing my money. 

[Breezy]

As they say, "be woke, go broke".  Never a more apt saying in this case.  I'll discriminate against any group that I feel presents a threat of me losing my money. 

For the Love of money is the root of all kinds of evil.

[Basil]

As they say, "be woke, go broke".  Never a more apt saying in this case.  I'll discriminate against any group that I feel presents a threat of me losing my money. 

Hits the nail on the head.  Synlait is the most extreme woke company on the NZX by a country mile and where's that got them ?  Onto their knees financially is where.  Share price is a tiny fraction of the $12 it was several years ago and that's after raising $200m more capital at $5 a while back.
Destroyed vast amounts of capital over their history and never paid a dividend.  The company and its directors are a bloody disgrace.

[Basil]

For what it's worth and I don't want this thread to get any more unpleasant than it already is, but I think it's more than fair to question the motives of the Chinese controlled entity Bright Dairy.  Ever since the days of the Pokeno development and all the drama's that involved, Sylait have been far less than completely transparent, and it really does bring into question the ultimate motivation of a board that's ostensibly dominated by Bright Dairy directors.

More pointedly, it seems even ATM themselves as a 20% shareholder in recent times now have major issues with Synlait so if they lack confidence, it begs the question why anyone else would have any?

I think suggestion that Bright Dairy and ATM will collude together to disadvantage minority shareholders is drawing a long bow but Chinese controlled companies buying resources or manufacturing companies at rock bottom distressed prices because they've been very poorly managed is hardly a new thing.  Being involved themselves in the mismanagement of a company as well really does beg the question whether they have been been acting in the best interests of the company overall at all times.  Well, certainly in my mind it does.

Some of us have been debating legitimate on topic concerns about Synlait, its management and board.  On the other hand...oh dear...

[winner (n)]

SML share price down to 96 after hitting 100 this morning

[KW]

More pointedly, it seems even ATM themselves as a 20% shareholder in recent times now have major issues with Synlait so if they lack confidence, it begs the question why anyone else would have any?

I think suggestion that Bright Dairy and ATM will collude together to disadvantage minority shareholders is drawing a long bow but Chinese controlled companies buying resources or manufacturing companies at rock bottom distressed prices because they've been very poorly managed is hardly a new thing.  Being involved themselves in the mismanagement of a company as well really does beg the question whether they have been been acting in the best interests of the company overall at all times.  Well, certainly in my mind it does.

I think there is a high chance not only of minority shareholders being shafted, but also A2 as well.  Perhaps they have seen the writing on the wall and that is why they are trying to extricate themselves from their exclusive contract?  

[Basil]

It would seem there has been a major change in the relationship for sure.  I'm sure many of us recall the highly unusual spat that played out in the media last year when Synlait downgraded their outlook and ATM more or less in a nutshell through the media said WTF ?   99.9% of the time that's the sort of conversation you have at board level between the companies so to see that sort of thing played out in the media was highly unusual to say the least.  That's suggests to me there has been a complete breakdown in the relationship at board level. 

Ever since then it would appear ATM's level of confidence in Synlait's board and management has seriously changed and its readily apparent now their attitude is far more hardnosed, even adversarial in nature.

I've always been fascinated in commercial trainwrecks, so many lessons to be gleaned from them and I agree that this one has all the makings of a complete derailment with huge consequences for minority shareholders.   

[Sideshow Bob]

I've always been highly surprised that Bright have 3 directors on the board, whereas A2 has none, when they have 19.8% to Brights 39.0%. If nothing else you'd think beneficial for A2 to have someone at the table reporting back. Is it because they are a major customer? But wouldn't Bright be a customer as well? Otherwise are A2 privy to any further information that minorities aren't? (in theory they shouldn't be).

Love a good trainwreck me - providing I am not a shareholder of said trainwreck.....

[Minimoke]

It would seem there has been a major change in the relationship for sure.  I'm sure many of us recall the highly unusual spat that played out in the media last year when Synlait downgraded their outlook and ATM more or less in a nutshell through the media said WTF ?  99.9% of the time that's the sort of conversation you have at board level between the companies so to see that sort of thing played out in the media was highly unusual to say the least.  That's suggests to me there has been a complete breakdown in the relationship at board level. 

Ever since then it would appear ATM's level of confidence in Synlait's board and management has seriously changed and its readily apparent now their attitude is far more hardnosed, even adversarial in nature.

I've always been fascinated in commercial trainwrecks, so many lessons to be gleaned from them and I agree that this one has all the makings of a complete derailment with huge consequences for minority shareholders. 

I had lost total confidence in SML around the time Leon got up at the AGM and did an intro in te reo - completely disregarding the chinese board members and lack of maori in the audience. So what took A2M so long? Why have they held their silence for so long. Why is it in only the past year they seem to have pricked their ears up about SML's abysmal performance? A2M have up until the past year seem "happy" enough to keep SML afloat with its various cap raises.

(And the past few posts have reminded me of dear Ronny at QEX - and good old connor English as well)

If something looks like a lame duck, walks like a lame duck and sounds like a lame duck there's a fairly good chance it isn't a stallion.

[Basil]

Quack quack lol..   No question whatsoever Synlait is the poster child on the NZX for all things woke and has been for many years.