Synlait interim results due to tomorrow, page-49

Yes, we see that, and we must also consider what that FY17 forecast actually represents.

It very probably represents a flatter or flat growth rate as one can’t squeeze much more production out of a plant which is at or near full capacity, and, any forecast will simply represent remaining available headroom, if any now.

SML are no longer pursuing their 'milk the a2 opportunity' campaign and have previously announced that they have a waiting list for suppliers now for the first time.

They ramped up the Dunsandel plant quicker than planned and I think that has taken many by surprise actually. It’s a solid testament to the demand of a2 platinum and other quality Synlait products over the last year or so.

Going forward, there are some options for A2M,

> They could appoint a second contract IF supplier and continue at similar growth rates, perhaps after a short plateau in growth while they ramp up, it’s getting very late to announce a second supplier if they were to aim for seamless growth.

> Or the A2M Board may just decide they are carrying more than enough grey market risk for now, and pause on infant formula growth until Synlait expand their facility. Some interim growth in the US market representing diversification away from a dependency on the Chinese grey market may just suit them about here.
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