SML - Synlait

[Minimoke]

Seriously? A2 would be destroyed if Synlait folded. Despite not being mentioned in the announcements, I think it's safe to say A2 will be doing everything they can to "look after Synlait", in whatever form that takes.

synlait is just a name on a certificate and on some ownership papers.

If they wanted to look after synlait they wouldnt be pursuing them through arbitration.

[winner (n)]

NZ Herald shows Synlait CEO pay only 45th highest out of 54

Pay way belowc average ...expected company performance way below average lol

[Teitei]

Good summary by Keith Woodford.

Listened in on the Conference Call yesterday and must admit I am surprised that the sp is not 35c. Because That's where I would want it to be if I were Bright Foods.

https://www.interest.co.nz/rural-news/127103/keith-woodford-says-synlait-cannot-survive-without-major-asset-sales-plus-major

[Minimoke]

NZ Herald shows Synlait CEO pay only 45th highest out of 54

Pay way belowc average ...expected company performance way below average lol

In context though. If you spend your time working on B Corp Accreditation like the local natures Own Manuka honey face balm or Mung Bean grocer perhaps your pay should be similar

[Minimoke]

Good summary by Keith Woodford.

Listened in on the Conference Call yesterday and must admit I am surprised that the sp is not 35c. Because That's where I would want it to be if I were Bright Foods.

https://www.interest.co.nz/rural-news/127103/keith-woodford-says-synlait-cannot-survive-without-major-asset-sales-plus-major

Surprised me as well. This is quite obviously a company as we know it today in its final death throes.

There is zero chance of a dividend, in I'd say just about forever.

And any capital injection is bound to involve some kind of equity deal which will see substantial share dilution.

We'd really need to see a clearing of the books once Dairyworks, Talbot and Pokeno are all sold (and not leased back). Get rid of the underperformance and debt. Start with fresh view at Dunsandel.

Trouble is we know Dunsandle produces for A2 at presumably low margins in what can only be called an extremely toxic customer / owner relationship.

Even at $0.35 that might be generous.

Probably time to totally clean slate it. The stainless steel at Dunsandel needs new owners. With a clear vison of business imperatives. Which includes looking after customers and suppliers. The planet (in context of what Dunsandel can do) will look after itself.

[BlackPeter]

NZ Herald shows Synlait CEO pay only 45th highest out of 54

Pay way belowc average ...expected company performance way below average lol

Not sure, though there is a correlation between company performance and CEO salary. Wasn't the FBU CEO on the Top ten list of earners ... and to be honest, not sure about the underwear salesman cahing in big dollars for running now A2 (and washing dirty underwear with Synlait) either.

Sadly  I think the ability to pull the wool over the heads of a mediocre company board (and negotiate an outrageous salary) is not correlated with the skills we would like to see from a good CEO.

Some well paid CEO's run well run companies, some well paid CEO's even improve their companies (like David Mair - SKL) and other well paid CEO's just run their companies down, while some less outrageous paid CEO's do outstanding jobs. Just shows that most boards are quite bad in recruiting good people.

[BlackPeter]

Surprised me as well. This is quite obviously a company as we know it today in its final death throes.

There is zero chance of a dividend, in I'd say just about forever.

And any capital injection is bound to involve some kind of equity deal which will see substantial share dilution.

We'd really need to see a clearing of the books once Dairyworks, Talbot and Pokeno are all sold (and not leased back). Get rid of the underperformance and debt. Start with fresh view at Dunsandel.

Trouble is we know Dunsandle produces for A2 at presumably low margins in what can only be called an extremely toxic customer / owner relationship.

Even at $0.35 that might be generous.

Probably time to totally clean slate it. The stainless steel at Dunsandel needs new owners. With a clear vison of business imperatives. Which includes looking after customers and suppliers. The planet (in context of what Dunsandel can do) will look after itself.

Actually - the problem might be larger. While Synlait is an outstanding example for a badly run company, there are indications that the whole industry might move towards a death spiral:

https://learn.rethinkx.com/precision-fermentation/dairy

Synlait might just be one of the frontrunners ....

[winner (n)]

Actually - the problem might be larger. While Synlait is an outstanding example for a badly run company, there are indications that the whole industry might move towards a death spiral:

https://learn.rethinkx.com/precision-fermentation/dairy

Synlait might just be one of the frontrunners ....

Good point

If ice cream consumption in US isca lead indicator demand for animal milk production might be falling as well

Bugger ...can't post chart ...file too big

You cannot view this attachment.

[Breezy]

Good point

If ice cream consumption in US isca lead indicator demand for animal milk production might be falling as well

I noticed the sky hadn't fallen while out walking early this morning.

[Buzz]

synlait is just a name on a certificate and on some ownership papers.

If they wanted to look after synlait they wouldnt be pursuing them through arbitration.

What do you think A2 might do, or be doing, to ensure they do not lose the all important SAMR that Synlait holds, and manufacturing of their IF?

[Minimoke]

What do you think A2 might do, or be doing, to ensure they do not lose the all important SAMR that Synlait holds, and manufacturing of their IF?

Someone here might know the process of changing  the name of the owner of the production facilities that makes infant formula under SAMR. I don't.

However I think we can safely assume Bright Dairy and China State Farms primary interest is in securing the ongoing supply of safe infant formula to the chinese. Therefore I would expec tthem to have the internal knowledge on how to transition the name of the owner of production facilities (that don't change manufacturing processes that put standards at risk) from one owner to another.

It is afterall not so much that "synlait" is registered" it is the manufacturing processes that allows them to be registered.

And take this to the next logical step. Say Synlait go bust. And someone buys the Dunsandle plant and processes. Do we think China will allow the new owner to produce and export somewhere else. I don't think so. I think it is in chinas best interests to make sure China Label can still be produced no matter the owner. Providing manufacturing and food safety standards continue to be met.

[Minimoke]

Actually - the problem might be larger. While Synlait is an outstanding example for a badly run company, there are indications that the whole industry might move towards a death spiral:

https://learn.rethinkx.com/precision-fermentation/dairy

Synlait might just be one of the frontrunners ....

Didnt they say the same about vegetable "meat" (or whatever that test tube stuff is made from)

[Basil]

I share the view it's surprising the share price hasn't taken another precipitous fall. Fact is aside from all the other issues that have been well discussed above, at an operational level their gross profit margin has been smashed and the announced FY24 outlook was seriously downgraded.

[Minimoke]

Agree 100% with Minimoke, totally uninvestable.

In the midst of all this turmoil, operating margins have ~ halved  "Gross profit down 47% to $43.6m"

Unfortunately for bondholders the key words to describe those bonds are "unsecured" and "subordinated" to all other debt.

Bonds today crossed at 42%

[Basil]

No buyers for those bonds now. Good luck to holders. I wouldn't pay 10 cents on the dollar for them now.  This is. now all about the odds you will get your money back, not the return on your money through to Dec 2024. Even 150% yield is 42 cents on the dollar which would be "incredibly brave" It will be interesting if anyone is prepared to speculate at about that level. That,s nearly $2.50 back for each dollar gambled... note the choice of word, gambled, not invested.