synlait milk

Synlait Milk's shares surged by 16 percent after renewing their license to produce infant formula for the world's most populous nation.

Investors regained confidence in the brand after they successfully secured the right to produce A2 Milk's infant formula for the Chinese market.

HighGround Dairy global dairy consultant Stuart Davison says this unexpected jump was a result of the market not pricing the registration in.

"A 16 percent gain in one day tells you that there was a fair bit of uncertainty behind that, so I think the investors weren't as confident. But also on the back of that, you've got to look at the debt that's plaguing Synlait at the moment." 

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Synlait Milk's shares surged by 16 percent after renewing their license to produce infant formula for the world's most populous nation.

Investors regained confidence in the brand after they successfully secured the right to produce A2 Milk's infant formula for the Chinese market.

HighGround Dairy global dairy consultant Stuart Davison says this unexpected jump was a result of the market not pricing the registration in.

"A 16 percent gain in one day tells you that there was a fair bit of uncertainty behind that, so I think the investors weren't as confident. But also on the back of that, you've got to look at the debt that's plaguing Synlait at the moment." 

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The Aussie share market declined this week, falling 0.5% (Mon-Thu), as the materials sector weighed down on the market the most, dropping 2.2%. Financials, consumer discretionary and utilities are also lower, while communication services and industrials advanced. 
 
 In this week's wrap, Sophia covers:

• (0:16) The demand outlook from the leading iron ore importing country
• (1:08) China's crippling property market
• (1:49) Bell Potter's forecast for Mineral Resources (ASX:MIN)
• (2:48) The best performing stocks in the ASX200
• (3:57) The most traded stocks & ETFs by Bell Direct clients
• (5:00) Four economic news items to watch out for

Synlait Milk shares have taken a dive on the share market today.

The company's shares have fallen by 27 percent, taking losses for Synlait to over 50 percent for the first third of 2023.

Milford Asset Management Equities Analyst Jeremy Hutton says the 'ominous' trading halt on Friday indicated that bad news was coming for the company.

Jeremy Hutton says Synlait Milk's profit decline was caused by A2 Milk showcasing that lower volumes of infant formula would be required going forward.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Synlait Milk shares have taken a dive on the share market today.

The company's shares have fallen by 27 percent, taking losses for Synlait to over 50 percent for the first third of 2023.

Milford Asset Management Equities Analyst Jeremy Hutton says the 'ominous' trading halt on Friday indicated that bad news was coming for the company.

Jeremy Hutton says Synlait Milk's profit decline was caused by A2 Milk showcasing that lower volumes of infant formula would be required going forward.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Wall Street extended gains into a third straight session on Friday and the US market posted a second straight quarter of gains despite turbulence during the three-month period around the unfolding of a potential global banking crisis. On Friday the Nasdaq rose 1.7%, the Dow Jones added over 400 points and the S&P500 rose 1.4%. Sentiment in the US was boosted last week by US core personal consumption expenditures price index, the Fed’s preferred measure of inflation, coming in below expectations at 4.6% in yet another sign inflation has peaked in the US. For the quarter the tech-heavy Nasdaq soared 17.6% as investors regain appetite for growth stocks, while the Dow Jones rose 0.4% and the S&P500 added 7.4%.

Over in Europe markets closed higher again buoyed by headline inflation cooling to 6.9% in March from 8.5% in February, a preliminary report showed. Germany’s DAX added 0.7%, the French CAC added 0.81% and, in the UK, the FTSE100 rose 0.15%. For the quarter, the STOXX600 added 7.05% despite a few weeks of banking turmoil.

The ASX ended Friday’s session up 0.78% driven by a 1.88% rise in materials stocks, while healthcare stocks added 1.09% in the last trading session of the week. For the week, the key local index rose 3.20% as global fears of a banking crisis continued to ease.

What to watch today:

• The strength overseas for the last quarter drives the SPI futures to anticipate the ASX to open 0.63% higher to start the new trading week and month.
• On the commodities front oil is trading 6.77% higher at US$80.87/barrel after OPEC oil producers announced a surprise cut in oil output to support market stability following the recent dive in oil prices. Saudi Arabia is cutting its output by 500,000 barrels per day while Iraq is cutting by 211,000 barrels per day, among other countries making cuts to output. Gold is trading down 0.73% at US$1965.73/ounce and iron ore is up almost 0.8% at US$127/tonne.
• The Aussie dollar is buying US$0.67, 88.93 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its rating on The A2 Milk Company (ASX:A2M) from a buy to a hold, and reduced the price target on the dairy company from $7.65 to $6.80 following the company’s infant formula producer, Synlait Milk (ASX:SM1), downgrading its earnings guidance and pushing out its expected GB registration in China. Bell Potter sees the balance dates between A2M and SM1 don’t align, as well as cost of goods sold being expected to rise in FY24.
• Trading Central has identified a bearish signal on TPG Telecom (ASX:TPG) on the 25th of March, following the formation of a pattern over a period of 20-days which is roughly the same amount of time the share price may fall from the close of $4.81 to the range of $4.47 to $4.55 according to standard principles of technical analysis.

The rally on Wall Street continued overnight as investor fears of a regional and global banking crisis continued to ease as President Biden urged federal regulators to take up a set of reforms to safeguard the banking system.

Weekly jobless claims in the US increased by 7000 to 19,800, in yet another sign the Federal Reserve’s aggressive interest rate action to tackle inflation in the US is starting to take effect. The rise in jobless claims is also another sign the fed could begin easing its rate hike stance. The Dow Jones closed 0.43% higher on Thursday while the S&P500 added 0.57% and the tech-heavy Nasdaq rose 0.73%.

Over in Europe, markets continued to rally as investor fears of a banking crisis also continued to ease in the region. UBS shares jumped 3.4% again on Thursday as investors responded to the news of Sergio Ermotti retaking his position as CEO ahead of the Credit Suisse takeover. Germany’s DAX added 1.26%, the French CAC added 1.06% and, in the UK, the FTSE100 rose 0.74%.

Locally yesterday, the ASX jumped 1.02% joining the global rally as banking crisis fears ease, with technology stocks leading the gains yesterday as the sector closed up 1.7%. Materials and Financial stocks also felt some relief yesterday following a week of turbulence in these respective sectors.

What to watch today: 

• Ahead of the local trading session here in Australia the SPI futures are anticipating the local market to open 0.53% higher, extending on the global rally from the past 2-sessions.
• Taking a look at commodities, crude oil is trading almost 2% higher at US$74.37/barrel, gold is up 0.81% at US$1979.94/ounce and iron ore is also up 0.8% at US$125.50/tonne. 
• Stocks trading ex-dividend today include Harvey Norman (ASX:HVN), and Russell Investments High Dividend Australian Shares ETF (ASX:RDV). If you’ve been thinking about these stocks, it might be worth considering buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.
• The Aussie dollar is buying US$0.67, 89.05 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its price target on Synlait Milk (ASX:SM1) from $3.20 to $2.55 but maintain a buy rating on the company as the dairy company faces a few unknowns in the current environment including whether it can deliver acceptable returns on the new Pokeno nutritionals customer, as well as successfully navigating A2 Milk’s new-GB registration in China. The company also faces higher costs of production due to the volume uplift for the new Pokeno customer.
• Trading Central has identified a bullish signal on Regis Resources (ASX:RRL) following the formation of a pattern over a period of 26-days which is roughly the same amount of time the share price may rise from the close of $2.00 to the range of $2.17 to $2.21 according to standard principles of technical analysis. 

The global banking crisis took an historical turn this morning with investment bank, UBS, agreeing to buy Credit Suisse Group in a deal worth $4.5 billion to restore investor confidence in the global banking sector. The crisis worsened on Friday after a fourth bank, the First Republic bank, received a US$30 billion lifeline from a group of big banks including Goldman Sachs and Bank of America, after customers began withdrawing their deposits from First Republic bank amid the collapse of SVB. Shares in First Republic Bank tumbled 33% on Friday to close the week down 72%. On Friday, the Dow Jones closed 1.2% lower, the S&P500 fell 1.1% and the Nasdaq closed down 0.74%. For the week though the Nasdaq rose 4.41% as investors bet on technology and growth stocks ahead of the FOMC meeting this week.

Over in Europe, markets closed lower on Friday as investors digest the fallout from Credit Suisse accepting financial help to stabilise the banking system. Germany’s DAX fell 1.33% on Friday while the French CAC lost 1.43% and in the UK the FTSE100 shed just over 1%.

In Australia, markets closed 0.42% higher on Friday but 2.1% down for the week as the local index was caught up in the global banking crisis driven sell-off. 

What to watch today:

• In commodities, oil Is trading 2.36% lower at US$66.74/barrel, gold is up almost 3.6% at US$1988.08 and iron ore is flat at US$132/tonne.
• The Aussie dollar has slightly strengthened to buy US$0.67, 88.53 Japanese Yen, 54.89 British Pence and NZ$1.07.
• Ahead of the local trading session the SPI futures are anticipating the ASX to open 1.4% lower as investor sentiment continues to ride on the unfolding global banking crisis.
• Stocks trading ex-dividend today include HUB24 (ASX:HUB), Adairs (ASX:ADH), and Duratec (ASX:DUR). If you’ve been thinking about these stocks it might be worth considering buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.

Trading Ideas: 

• Bell Potter has downgraded its price target on Synlait Milk (ASX:SM1) from $4 to $3.20 but maintain a buy rating on the company. The downgrade in price target comes after the company downwardly revised FY23 NPAT expectations relative to market expectations ahead of its 1H23 result. NPAT guidance has been downwardly projected to now be $15-$25m NZ dollars, which is much lower than Bell Potter’s expectations of a forecasted NZ$35.8m and consensus expectations of NZ$50m. Major drivers of the change in NPAT forecast from the company have been attributed to order deferrals from major IMF customers, inflationary cost pressures, lower milk production and higher working capital costs.
• Trading Central has identified a bearish signal on Ansell (ASX:ANN), following the formation of a pattern over a period of 40-days which is roughly the same amount of time the share price may fall from the close of $26.14 to the range of $20.90 to $21.80 according to standard principles of technical analysis.

The Australian market extended last week’s rally into this week with the key index closing the session 1.02% higher, boosted by a surge in materials and technology stocks.

The best performing stock today was Nickel Industries (ASX:NIC) soared 6.7% after announcing an upgrade to its Hengjaya Mine Resource, increasing the resource from 2.4m tonnes to 3.7m tonnes of contained nickel metal. Gold Road Resources (ASX:GOR) also lifted just over 5% today. Other stocks that investors bought into today included Mineral Resources (ASX:MIN), with shares in the mining services giant soaring to a fresh record high of $74.20 today during the session. The a2 Milk Company (ASX:A2M) also lifted today following its New Zealand-based baby formula producer for the Chinese market, Synlait Milk (ASX:SM1), being granted renewal of its State Administration for Market Regulation licence to continue manufacturing the baby formula for China until 21 February 2023.

Investors sharply sold out of Liontown Resources (ASX:LTR) today despite the company announcing it has executed a letter of award with Zenith Energy (ASX:ZEN), one of Australia’s leading independent power producers, to supply electricity to its Kathleen Valley Lithium project in Western Australia for a 15-year period. Other losing stocks today included Sims (ASX:SIM) and Lake Resources (ASX:LKE).

The top traded stocks by Bell Direct clients today are Pilbara Minerals (ASX:PLS), Fortescue Metals Group (ASX:FMG) and Lake Resources (ASX:LKE).

On the economic calendar for tomorrow, investors will gain an insight into just how confident both consumers and businesses are with current market and economic conditions, with Westpac Consumer Confidence data for September out in the morning followed an hour later by the release of NAB’s Business Confidence data for August. US Core inflation data for August is also out later tomorrow night.

The SPI futures are suggesting a flat start to the week for the Aussie share market. On Friday, the ASX200 fell 0.4% and lost 0.8% on the week, falling for the 3rd straight week.  

What to watch today:

• Watch iron ore stocks amid worry of China’s Evergrande, retail stocks amid supply-chain issues, and financial stocks given end of quarter profit taking. 
• The oil price rose 3% to US$74.43, to an eight week high. The gold price rose slightly, while the iron ore price slowly bounced off its low, trading at US$120, after falling below US$100 last week. However, iron ore last traded lower on Friday. As a result of this, New York listed BHP and Rio Tinto closed in the red. 
• In corporate news, Synlait Milk (ASX:SM1) forecasts a return to robust profitability. The company says it will return to pre-pandemic levels of profitability by the end of its 2023 financial year. SMI, the milk powder producer, reported a loss of $20 million for its financial year ended July 31, due to disruptions brought on by the pandemic and from its key customer A2 Milk. However, for this current year results will be bolstered as production is ramping up for the new multinational customer and normal business conditions should return. 
• Companies going ex-dividend today include Imdex (ASX:IMD) and Gold Road Resources (ASX:GOR). 
• In economic news, retail sales data will be released on Tuesday and building permit data will be released on Thursday. 

Trading Ideas: 

• Citi expects Accent’s (ASX:AX1) shares to fall amid supply chain disruptions. This is partially due to Nike downgrading its 2022 outlook, as freight and supply issues mean the company can’t keep up with strong demand. Citi believe shares in the shoe store giant, Accent with fall to $2.14, however it is expected to maintain a dividend yield of 3.7%. 
• Bullish charting signals have been seen in Exopharm (ASX:EX1), Orthocell (ASX:OCC) and Catapula Group (ASX:CAT), according to Trading Central.

Yesterday, the Aussie share market reached its highest level of 7,418 points. 

Today the futures are suggesting the Aussie share market will lift 0.3% or 19 points. 

What to watch today: 

• Australia awaits news on Victoria, South Australia and NSW lockdown restrictions. 
• Virgin Money (ASX:VUK) are set to report their results today. 
• Temple and Webster (ASX:TPW) reported earnings results this morning. TPW’s full year revenue is up 85% and their earnings (EBITDA) are up 141% in the year.  
• Oil Search (ASX:OSH) have reported their quarterly results, with a 22% up in revenue. 
• Oz Minerals (ASX:OZL) have also reported quarterly results, with upgraded full year production. 
• The copper price surged over 4% to its highest level since June. The price was boosted by the news that China sold less reserves than expected. 
• The iron ore price fell 0.4%, while the oil price rose 0.4% to US$72.18. 

Trading Ideas: 

• Fresh milk company Synlait Milk (ASX:SM1) was reiterated as a Bell Potter BUY, with an increased price target of $4.40, implying 29% share price growth in a year. 
• Paladin (ASX:PDN), Neometals (ASX:NMT) and Redbubble (ASX:RBL) are all giving off bullish charting signals according to Trading Central.