Analysts have raised Synlait Milk's fair value estimate to $0.67 from $0.51, citing a reassessment of underlying business fundamentals. This comes despite tempered near-term growth and profitability outlooks.
What's in the News
- Auditor PricewaterhouseCoopers LLP expressed doubt over Synlait Milk Limited's ability to continue as a going concern in its Annual Report for the period ending July 31, 2025 (Annual Report, Sep 28, 2025).
- Abbott Laboratories is reportedly in talks to acquire Synlait's Pokeno manufacturing facility in New Zealand. The plant is currently subject to strategic review due to operational and financial challenges.
- The Pokeno plant's mixed processing of dairy and non-dairy products has negatively affected operational efficiency and increased costs. As a result, Synlait is considering a possible sale if compelling offers are received.
- Following a challenging period of near collapse linked to high debt levels, Synlait previously received support through a capital injection from its major shareholder, Bright Dairy.
Valuation Changes
- Fair Value Estimate has increased from NZ$0.51 to NZ$0.67, marking a substantial uplift in analysts' assessment.
- Discount Rate remains unchanged at 6.90%.
- Revenue Growth projections have shifted from a forecasted increase of 4.80% to a decline of 3.25%. This indicates a significant adjustment downward.
- Net Profit Margin estimate has decreased from 2.19% to 1.68%.
- Future Price-to-Earnings (P/E) ratio has risen considerably, moving from 10.39x to 17.82x.
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