SML - Synlait

[Left Field]

........ A2M is but a eunuch who is 100% dependent upon the Chinese to get access into the China market. A2M has no real card to play - that is really my point.

Mmmm not so sure...

Very silly to piss off your largest customer and second biggest shareholder....not to mention ATM's Chinese interests as detailed by Mini, ATM's strong cash position, and ownership of alternative milk processing plants both in NZ and Aus.

[Teitei]

A2's relationship with china is via state owned enterprise China State Farm, A subsidiary of China National Agriculture Development Group. A2 has shown it is interested in providing security to Chinas food supply by buying 75% of Mataua off China Animal Husbandry Group. A subsidiary of China National Agriculture Development Group.

Where as Synlait is via Bright, a Shanghai Municipal company owned by local government

They all report ultimately to the Ministry of Agriculture and Rural Affairs. Nothing happens without the nod from there.

[Minimoke]

They all report ultimately to the Ministry of Agriculture and Rural Affairs. Nothing happens without the nod from there.

I though State Farms was ultimately to State-owned Assets Supervision and Administration Commission. Though no doubt these organisations talk. But how much talk there would be on a piddly $130m loan to some hick company sitting on a wee island at the bottom of the south pacific who knows.

[Teitei]

I though State Farms was ultimately to State-owned Assets Supervision and Administration Commission. Though no doubt these organisations talk. But how much talk there would be on a piddly $130m loan to some hick company sitting on a wee island at the bottom of the south pacific who knows.

The $130m + $80m invested in SML shares will (imo) soon grow to ultimately control SML. Call it $450m in total.

Now, the $80m was piddly indeed - rounding difference for Bright and they could have easily wrote it off against the US$500m+ they made selling Wheetabix.  Why did they not do so? Obvious answer imo.

[Minimoke]

The $130m + $80m invested in SML shares will (imo) soon grow to ultimately control SML. Call it $450m in total.

Now, the $80m was piddly indeed - rounding difference for Bright and they could have easily wrote it off against the US$500m+ they made selling Wheetabix. 

Bright originally spent $82m in 2010 for an 51% holding in Synlait. But had this holding diluted to 39% on IPO listing.

They then popped in another $78m in the 2020 capital raise. So, so far $160m for a 39% stake in a company today worth $85.2m

So they have managed to turn $160m into $33m. I bet their bosses aren't too happy. And I bet they won't be keen on a $130m debt for equity arrangement.

[Basil]

John Penno to get a knighthood for services to business next year ?
I mean if it good enough for Joan Withers with all the "wonderful' value she's created for WHS shareholders...

[Teitei]

Bright originally spent $82m in 2010 for an 51% holding in Synlait. But had this holding diluted to 39% on IPO listing.

They then popped in another $78m in the 2020 capital raise. So, so far $160m for a 39% stake in a company today worth $85.2m

So they have managed to turn $160m into $33m. I bet their bosses aren't too happy. And I bet they won't be keen on a $130m debt for equity arrangement.

You are assuming that the investment is permanently impaired while as they have a different perspective and investment horizon.

Bit like saying Yili managed to lose 60% of their money in Westland after paying the huge 100%+ premium to the then sp and independent valuation to take control of the company.

[Minimoke]

John Penno to get a knighthood for services to business next year ?
I mean if it good enough for Joan Withers with all the "wonderful' value she's created for WHS shareholders...

Didn't Gatting get one as well ( I don't follow that kind of thing).

But to her credit. Withers did manage to flog Torpedo 7 off for a $1. Probably a bit more value than Synlait will have when the dust settles.

[Teitei]

Didn't Gatting get one as well ( I don't follow that kind of thing).

But to her credit. Withers did manage to flog Torpedo 7 off for a $1. Probably a bit more value than Synlait will have when the dust settles.

And China will give you a medal if that happens for your fine services to the greater glory of China's ever expanding global dairy industry! 

[Minimoke]

You are assuming that the investment is permanently impaired while as they have a different perspective and investment horizon.

Bit like saying Yili managed to lose 60% of their money in Westland after paying the huge 100%+ premium to the then sp and independent valuation to take control of the company.

Absolutely I agree the Chinese have a far different investment horizon.

Westland was a different proposition. Run by a co-op. In much the same way that saw Fonterra have problems. But Synlait is Private ownership at its best.

Yili bought the whole thing lock stock and barrel. There hasn't been a suggestion (yet) that Bright will do that. And if they propose it A2 might not be so keen.

[Buzz]

Reading these posts, I get the impression some of you think Synlait is doomed. On the contrary I am almost certain that it will survive, and eventually prosper again. Only question on my mind is who will eventually own Synalit, and whether there's an opportunity to get in on some massively discounted CR.

Anyone read the new Chair's comments in the Herald today? Seems pretty confident the business can be turned around, with the current deleveraging in play just the beginning. Couldn't imagine someone with his experience, at this stage in his career, taking on the Chair of something that is doomed.

[Teitei]

Reading these posts, I get the impression some of you think Synlait is doomed. On the contrary I am almost certain that it will survive, and eventually prosper again. Only question on my mind is who will eventually own Synalit, and whether there's an opportunity to get in on some massively discounted CR.

Anyone read the new Chair's comments in the Herald today? Seems pretty confident the business can be turned around, with the current deleveraging in play just the beginning. Couldn't imagine someone with his experience, at this stage in his career, taking on the Chair of something that is doomed.

Not only that, Buzz but this too :

And there are highly intelligent and individuals with reputations to lose who are willing to become directors to screw 'all others' when that means personal liabilities (refer Mainzeal)?

Wow!

Deafening silence from the doom merchants to my post above. I wonder why!

[Buzz]

Not only that, Buzz but this too :

Deafening silence from the doom merchants to my post above. I wonder why!

I get the strong impression that there is a lot more interest in the spectacle of a distressed company, than the opportunity that it may present.

By the time the opportunity emerges, their mindset is so entrenched "uninvestable" that they miss the opportunity completely and wonder WTF happened! Not only did it not die an ignominious death, they've missed the turnaround and easy capital gains. If it does die, so what, we're not invested.

Not worth spending untold hours every day, month after month commentating on the spectacle. Just let the spectacle run it's course, hopefully with enough open mindedness when it does, to recognise whether an opportunity has emerged.

You mentioned SKT as an example, I agree. Like who would have thought it was a 2-3 bagger unless they were looking for the opportunity and not getting too entertained and so emotionally involved in the unfolding saga that they missed the turnaround and the deeply discounted value on offer, that has since paid off very nicely, and still does.

[Teitei]

I get the strong impression that there is a lot more interest in the spectacle of a distressed company, than the opportunity that it may present.

By the time the opportunity emerges, their mindset is so entrenched "uninvestable" that they miss the opportunity completely and wonder WTF happened! Not only did it not die an ignominious death, they've missed the turnaround and easy capital gains. If it does die, so what, we're not invested.

Not worth spending untold hours every day, month after month commentating on the spectacle. Just let the spectacle run it's course, hopefully with enough open mindedness when it does, to recognise whether an opportunity has emerged.

You mentioned SKT as an example, I agree. Like who would have thought it was a 2-3 bagger unless they were looking for the opportunity and not getting too entertained and so emotionally involved in the unfolding saga that they missed the turnaround and the deeply discounted value on offer, that has since paid off very nicely, and still does.

SKT is an excellent example indeed as the doomsday merchants went on and on, pages after pages, commenting on its imminent demise.

One on the other site (bull ...) even tried to change his story yesterday but was caught out with his BS when confronted with his posts at the time.

Even when the Chairman bought shares, the doomsday merchants laughed at his (perceived) stupidity instead of taking his buying as a vote of confidence!

SKT has rewarded and delivered in excess of 50%+ return for those who bought, especially during the CR.

We now have the doomsday merchants here completely ignoring the commitment of Bright (deeds rather than words) and the willingness of new directors to direct the turnaround of the company.  The new directors must be the dumbest individuals in the world to risk reputations and personal liabilities to 'screw everyone else'!!!!

But yes, I would not touch SML sp with a 10 ft pole until a CR is underway.

[Minimoke]

Reading these posts, I get the impression some of you think Synlait is doomed. On the contrary I am almost certain that it will survive, and eventually prosper again. Only question on my mind is who will eventually own Synalit, and whether there's an opportunity to get in on some massively discounted CR.

Anyone read the new Chair's comments in the Herald today? Seems pretty confident the business can be turned around, with the current deleveraging in play just the beginning. Couldn't imagine someone with his experience, at this stage in his career, taking on the Chair of something that is doomed.

I'm wondering what makes you think it is investable.

The earlier capital raise didn't get Synait where it wanted to be.

The bond issue didn't get where synlait where it wanted to be

Building Pokeno didn't get where synlait where it wanted to be

Buying Talabot cheese didn't get where synlait where it wanted to be

Introducing recyclable milk bottles didn't get where synlait where it wanted to be

Staying tight with key customer didn't get where synlait where it wanted to be.

Staying tight with Farmers didn't get where synlait where it wanted to be

Lactoferin didn't get where synlait where it wanted to be

Munchkin didn't get where synlait where it wanted to be

Selling dairyworks didn't get where synlait where it wanted to be

Losses are increasing.

Zero sign of it ever paying a dividend

Mired in debt.

Just what is the bright light at the end of the tunnel I am missing?