3 Dairy Stocks - SM1, A2M And KTD

  • Mar 20, 2019 AEDT
  • Team Kalkine
3 Dairy Stocks - SM1, A2M And KTD

Synlait Milk Limited

The Rakaia, New Zealand-based Synlait Milk Limited (ASX: SM1), manufactures and sells dairy products in the Middle East & Africa, China, Asia, New Zealand, Australia, and other countries worldwide. To date, the company has a market cap of AUD 2 billion with ~ 179.22 million outstanding shares. At the end of the market trading on March 20th, 2019, the SM1 stock price dived 13.95% to AUD 9.620, by AUD 1.560.

Meanwhile, on the same day, Synlait announced its financial results for the half-year ended January 31st, 2019, posting revenue from ordinary activities at $ 470.95 million, up 7% on the previous comparable period (PCP). The net profit from ordinary activities after tax attributable to security holders reduced by approximately 10% to $ 37.32 million from $ 41.3 million in PCP. The manufacturing efficiencies supported improved production and higher sales volumes off the same asset base, especially for the fully finished infant formula. Nearly $200 million of capital expenditure was invested, and the net cash and Cash equivalents amounted to $ 13.49 million.

The A2 Milk Company Limited

The Auckland, New Zealand-based The A2 Milk Company Limited (ASX: A2M) produces, markets and sells A1 protein free dairy nutritional products in the targeted global markets. The current market cap of the company stands at AUD 9.64 billion with ~ 733.4 million outstanding shares. At the end of the trading session on March 20th, 2019, the A2M stock price last closed at AUD 13.11, down 0.304%, by AUD 0.040.

The company released its latest investor presentation for the six months ended December 31st, 2018, posting Group revenue at NZD 613.1 million, up on NZD 434.7 million recorded in the PCP. Besides, the total EBITDA rose to NZD 218.4 million from NZD 143 million in PCP.  The net profit after tax improved by a substantial 55.1% to NZD 152.7 million. Region wise, the infant formula consumption market share in China stood at 5.7% with China label revenue growing by 82.6%. The sales in the US rose by 114.1% with over 10k store distributions. The company is investing in building both depth and breadth of organizational capability and infrastructure.

Keytone Dairy Corporation Limited

Keytone Dairy Corporation Limited (ASX: KTD), headquartered in Christchurch, New Zealand, is engaged in manufacturing, packaging and selling dairy products to supermarkets, retail chains and manufacturers globally. To date, the company’s market cap stands at AUD 57 million with ~ 150 million outstanding shares. The KTD stock price closed the market trading at AUD 0.380 on March 20th, 2019, with ~ 939.03k shares traded.

Recently, the New Zealand Ministry of Primary Industries sanctioned the Organic Exporter Certification for Keytone. At the backdrop of the organic dairy market growing at an 8% CAGR since 2010, and estimated to reach USD 27 billion by 2023, with a projected CAGR of 7% during 2018-2023, the company can now begin production of organic product runs, secure long-term contracts and third-party private labels. This will enable Keytone to expand its proprietary product range to meet domestic and offshore demand.

For the quarter ended December 31st, 2018, Keytone reported a sales revenue growth of 18%. The company had a combined cash balance of $ 10,353,892 as of December 31st, 2018.


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