SML - Synlait

[winner (n)]

A price sensitive announcement that there won't be much change in FY23 (revenue same as probably, but NPAT possibly down a smidgen.)

https://www.nzx.com/announcements/404539

Still no details relating to the much mentioned new BIG international customer.

So not a DOWNGRADE .....that's good

[winner (n)]

They say "Synlait intends to exit FY23 and enter FY24 with a similar level of profitability experienced before FY21."

Suppose that means FY23 profit will be around $75m/$80m .......and they making less than $28m this H123

No worries all bright and rosy for F24 and beyond and on track for that $5 share price

[snapiti]

So not a DOWNGRADE .....that's good

how does the saying go....if it walks like a duck, looks like a duck, sounds like a duck'     that's a shocka of an announcement with lots of warning caveats why guidance may not be meet

[Minimoke]

Announcement of new international customer way, way over due.

SAP implementation costing a fortune.

Still not much happening for me to want to delve any deeper into them

I got something right this year.
In today's announcment
"Delayed shipments of Ingredient products, resulting in lower sales volumes (down approximately 45%) due to Synlait's SAP implementation"......
" Increased costs due to SAP stabilisation activities"

Just been to my back shed and pulled out my bargepole.

[BlackPeter]

I got something right this year.
In today's announcment
"Delayed shipments of Ingredient products, resulting in lower sales volumes (down approximately 45%) due to Synlait's SAP implementation"......
" Increased costs due to SAP stabilisation activities"

Just been to my back shed and pulled out my bargepole.

You sure your bargepole is long enough for this stock ?

[Minimoke]

You sure your bargepole is long enough for this stock ?

I copped a lot of flack on that Australian forum for my views on Synlait. So I just put the barge pole away and just stayed clear of this dog. Havent looked at it in an detail since that abject failure Clements left. Since its local I keep thinking I should come back and  have a look again. But after today's announcement will have me with my pole at full stretch.

Initial market reaction down 4.5% to $3.41

[Minimoke]

I posted this  elsewhere in April 2021. Essentially the new CEO has achieved zip for shareholders.

[Hectorplains]

Yeah, that's not a great announcement.  A bit of a bugger really, I'd hoped they might've pushed forward from the mess of the last 2 years.  Instead they have uncovered new issues...hmmm.   If 2024 is now to be their year, then there's little point getting on board until much closer to then and only with the confirmation of much more positive guidance. Disappointing with a big D.

[mcdongle]

Messaged someone who works in Synlait IT Dept about this, They replied.


Haha $50M system and they can't ship product overseas 🤣 😂

[Minimoke]

Messaged someone who works in Synlait IT Dept about this, They replied.


Haha $50M system and they can't ship product overseas 🤣 😂

Just a thought.

Couldn't they run the two systems in parallel until they were confident SAP worked (who in their right mind would turn off one IT system while another is being developed)

Could use pen and paper.

[mcdongle]

At some point you have to turn one system off and another on. Thats when the fun started so i am told

[winner (n)]

WOW - Synlait one of Bell Potters picks for 2023

Synlait Milk (SM1)

SM1 is NZ's fourth largest milk processor and a B2B supplier of dairy ingredients (SMP, WMP & AMF), infant
formula (IMF) products and Lactoferrin. SM1 counts global FMCG companies among its client base, including the
a2Milk Co (A2M) for which SM1 is the exclusive supplier of infant formula in China, Australia and NZ.

FY22 was a year of transition for SM1, with FY23e set to benefit from new customers in nutritionals
and stabilising demand from A2M. The optimisation of capacity from ingredients towards nutritionals and
valued added products results in a favourable margin gain for SM1, while also accelerating deleveraging (pre-
payments and utilisation of assigned receivable facilities for IMF).

This combination of operating leverage and balance sheet deleverage is likely to emerge as a key driver of future share price direction. We view the positive outcome on the USFDA process for A2M as an incremental positive for SM1.

Buy, Price Target $3.60

[Hectorplains]

WOW - Synlait one of Bell Potters picks for 2023

Synlait Milk (SM1)

SM1 is NZ's fourth largest milk processor and a B2B supplier of dairy ingredients (SMP, WMP & AMF), infant
formula (IMF) products and Lactoferrin. SM1 counts global FMCG companies among its client base, including the
a2Milk Co (A2M) for which SM1 is the exclusive supplier of infant formula in China, Australia and NZ.

FY22 was a year of transition for SM1, with FY23e set to benefit from new customers in nutritionals
and stabilising demand from A2M. The optimisation of capacity from ingredients towards nutritionals and
valued added products results in a favourable margin gain for SM1, while also accelerating deleveraging (pre-
payments and utilisation of assigned receivable facilities for IMF).

This combination of operating leverage and balance sheet deleverage is likely to emerge as a key driver of future share price direction. We view the positive outcome on the USFDA process for A2M as an incremental positive for SM1.

Buy, Price Target $3.60

I presume the target price is ASX?  They're currently around $3.25 - that's not a great deal of upside they're picking, less than 10 percent. 

[Sideshow Bob]

Just a thought.

Couldn't they run the two systems in parallel until they were confident SAP worked (who in their right mind would turn off one IT system while another is being developed)

Could use pen and paper.

Another large exporter recently rolled out a SAP system - well about August 2021 and still employing heaps of people to get it right. Been a disaster.....

[BlackPeter]

Another large exporter recently rolled out a SAP system - well about August 2021 and still employing heaps of people to get it right. Been a disaster.....

To be fair, its not likely to be SAP's fault. Any ERP system is just automating the processes which the company used to run manually (or on a patchwork of manual and software). If the previous process was a mess, you get with an ERP system just an automated mess.

However - ERP systems force companies to think about standardisation of process components they did run so far ad hoc (you can't automate ad hoc) ... and unless this is properly resourced and planned and done by people who know the ERP system in consultation with the people who run the processes you just make everything worse, no matter whether the system is supplied by SAP, Oracle, BAAN or whoever.

Discl: know a bit about ERP systems and hold SAP shares ;