Synlait Milk Limited (ASX: SM1) is a consumer supplies sector company. The company is engaged in dairy product manufacturing and focused on supplying higher value dairy products to leading milk-based health and nutrition companies. The company was officially listed on ASX on 25th Nov 2016.
Synlait updated investors and market regarding Pokeno land, which was subject to the long-pending decision in the Court of Appeal.
Synlait, in February 2018, made an announcement to establish its second nutritional powder manufacturing site. SM1 was optimistic that the land covenant was irrelevant, as the Pokeno land being rezoned as industrial land from grazing land and the development in the Pokeno area, including the development of another dairy plant.
Post announcement for the elimination of land covenant from High court last year, the company took the legal title. However, yesterday the High Court decision was reversed. Synlait Management stated that it will take some time to analyse the decision and discuss with various consultants. The company believes that the land covenant issue must be resolved by the parties involved. SM1 intends to continue with its strategic plan at Pokeno.
In another update, the company stated that it applauds the Government’s zero carbon bill announcement. SM1 is projected to achieve the target of 35% reduction in greenhouse gas emissions (GHG) by 2028, which also includes methane reduction by 30%.
The company released its presentation of the Macquarie Australia Conference on 2nd May 2019, reporting its business model and financial performance. Revenue for FY18 stood at NZ$879.0 million, reflecting CAGR growth of 26% since FY09, and net profit after tax of NZ$74.6 million, representing a growth of 89% on FY17. SM1 have a significant opportunity with category size and growth including:
- The total size of global IN market worth US$54.3 billion.
- 16% CAGR growth in China.
- A tripling of New Zealand exports.
The company also stated that it is a leading exporter of high-value infant nutrition in New Zealand, contributing 45% share of exports.
Synlait is investing in the unique, differentiated and integrated value chain (circa NZ$400Mn new capacity and capability under development in 2019).
The company also pointed that it has grown from a start-up to a 140,000 MT of annual production volume company in 11 years, with revenue growth of 26% CAGR since FY09, as shown in the picture.
The company communicated that after a period of consolidation, the company has a strong balance sheet, which has facilitated a strong major growth phase and is currently investing over NZ$400 million in their major growth projects. SM1 also achieved a 22.7% net return on capital employed (pre-tax) in FY18.
At market close on 10th May 2019, the stock of SM1 was trading at $9.460, with a market capitalisation of $1.77 billion. Its 52 weeks high price stands at $12.280 and 52 weeks low price stands at $7.400, with an average volume of 147,223. Its absolute returns for the past one year, six months and three months are 3.68%, 20.24% and 6.14%, respectively.
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