ASX:SM1

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

Synlait Milk Limited, together with its subsidiaries, manufactures and sells dairy products in China, rest of Asia, the Middle East, Africa, New Zealand, Australia, and internationally. More Details


Snowflake Analysis

Good value with mediocre balance sheet.


Similar Companies

Share Price & News

How has Synlait Milk's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SM1 is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: SM1's weekly volatility (6%) has been stable over the past year.


Market Performance


7 Day Return

1.5%

SM1

-1.2%

AU Food

1.7%

AU Market


1 Year Return

-38.3%

SM1

9.6%

AU Food

-1.6%

AU Market

Return vs Industry: SM1 underperformed the Australian Food industry which returned 8.8% over the past year.

Return vs Market: SM1 underperformed the Australian Market which returned -0.6% over the past year.


Shareholder returns

SM1IndustryMarket
7 Day1.5%-1.2%1.7%
30 Day4.7%4.3%9.5%
90 Day-6.0%4.7%9.2%
1 Year-38.3%-38.3%12.3%9.6%1.8%-1.6%
3 Year-21.2%-21.2%-14.6%-21.3%24.8%9.2%
5 Yearn/a10.4%-4.0%56.1%25.0%

Long-Term Price Volatility Vs. Market

How volatile is Synlait Milk's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Synlait Milk undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SM1 (A$5.34) is trading below our estimate of fair value (A$24.3)

Significantly Below Fair Value: SM1 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SM1 is good value based on its PE Ratio (13.3x) compared to the AU Food industry average (25.4x).

PE vs Market: SM1 is good value based on its PE Ratio (13.3x) compared to the Australian market (22.8x).


Price to Earnings Growth Ratio

PEG Ratio: SM1 is poor value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: SM1 is overvalued based on its PB Ratio (1.6x) compared to the AU Food industry average (1.5x).


Next Steps

Future Growth

How is Synlait Milk forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

12.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SM1's forecast earnings growth (12.7% per year) is above the savings rate (2.3%).

Earnings vs Market: SM1's earnings (12.7% per year) are forecast to grow slower than the Australian market (17.8% per year).

High Growth Earnings: SM1's earnings are forecast to grow, but not significantly.

Revenue vs Market: SM1's revenue (8.4% per year) is forecast to grow faster than the Australian market (5.1% per year).

High Growth Revenue: SM1's revenue (8.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SM1's Return on Equity is forecast to be low in 3 years time (11.2%).


Next Steps

Past Performance

How has Synlait Milk performed over the past 5 years?

25.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SM1 has high quality earnings.

Growing Profit Margin: SM1's current net profit margins (5.8%) are lower than last year (8%).


Past Earnings Growth Analysis

Earnings Trend: SM1's earnings have grown significantly by 25.4% per year over the past 5 years.

Accelerating Growth: SM1's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SM1 had negative earnings growth (-8.5%) over the past year, making it difficult to compare to the Food industry average (-13.2%).


Return on Equity

High ROE: SM1's Return on Equity (12.4%) is considered low.


Next Steps

Financial Health

How is Synlait Milk's financial position?


Financial Position Analysis

Short Term Liabilities: SM1's short term assets (NZ$386.4M) exceed its short term liabilities (NZ$384.7M).

Long Term Liabilities: SM1's short term assets (NZ$386.4M) do not cover its long term liabilities (NZ$501.0M).


Debt to Equity History and Analysis

Debt Level: SM1's debt to equity ratio (87.3%) is considered high.

Reducing Debt: SM1's debt to equity ratio has reduced from 153.3% to 87.3% over the past 5 years.

Debt Coverage: SM1's debt is not well covered by operating cash flow (19.9%).

Interest Coverage: SM1's interest payments on its debt are well covered by EBIT (6.3x coverage).


Balance Sheet


Next Steps

Dividend

What is Synlait Milk current dividend yield, its reliability and sustainability?

1.05%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate SM1's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate SM1's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SM1's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SM1's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SM1's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure


CEO

Leon Clement

2.25yrs

Tenure

Mr. Leon Clement has been the Managing Director for Sri Lanka at Fonterra Brands (Thailand) since December 1, 2012. He is Chief Executive Officer at Synlait Milk Ltd. since August 13, 2018. He joined Synl...


Leadership Team

NamePositionTenureCompensationOwnership
John Penno
Co-Founder & Director2yrsNZ$86.30k2.4%
NZ$ 27.0m
Leon Clement
Chief Executive Officer2.25yrsno datano data
Angela Dixon
Chief Financial Officer0.42yrno datano data
Mark Toomey
Director of Operations0.92yrno datano data
Roger Schwarzenbach
General Manager of Innovation & Technical Services3.25yrsno data0.0069%
NZ$ 76.9k
Deborah Marris
Director of Legalno datano datano data
Martijn Jager
Director of Sales & Business Development3.75yrsno data0.013%
NZ$ 143.6k
Boyd Williams
Director of People3.75yrsno data0.0091%
NZ$ 102.3k
Tania Pearson
Company Secretaryno datano datano data

3.3yrs

Average Tenure

Experienced Management: SM1's management team is considered experienced (3.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
John Penno
Co-Founder & Director2yrsNZ$86.30k2.4%
NZ$ 27.0m
Ruth Richardson
Non-Executive Director16.83yrsNZ$86.30k0.026%
NZ$ 297.6k
Graeme Milne
Independent Chairman14.67yrsNZ$172.00k0.034%
NZ$ 385.1k
Willem Roest
Independent Non-Executive Director7.5yrsNZ$99.38k0.013%
NZ$ 146.9k
Ian Knowles
Independent Non-Executive Director7.33yrsNZ$98.30k0.026%
NZ$ 291.1k
Sihang Yang
Director10.25yrsNZ$86.30kno data
Qikai Lu
Director 4.92yrsNZ$86.30kno data
Min Ben
Director4yrsNZ$86.30kno data

7.4yrs

Average Tenure

68yo

Average Age

Experienced Board: SM1's board of directors are considered experienced (7.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SM1 insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 18.3%.


Top Shareholders

Company Information

Synlait Milk Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Synlait Milk Limited
  • Ticker: SM1
  • Exchange: ASX
  • Founded: 2005
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: NZ$1.180b
  • Listing Market Cap: NZ$1.123b
  • Shares outstanding: 212.15m
  • Website: https://www.synlait.com

Number of Employees


Location

  • Synlait Milk Limited
  • 1028 Heslerton Road
  • RD13
  • Rakaia
  • 7783
  • New Zealand

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SMLNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDJul 2013
SM1ASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJul 2013
SM1CHIA (Chi-X Australia)YesOrdinary SharesAUAUDJul 2013

Biography

Synlait Milk Limited, together with its subsidiaries, manufactures and sells dairy products in China, rest of Asia, the Middle East, Africa, New Zealand, Australia, and internationally. The company is also...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/11/26 07:04
End of Day Share Price2020/11/26 00:00
Earnings2020/07/31
Annual Earnings2020/07/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.