Its a NZD$200m Capital Raise, page-24

Not sure how much confidence I can instil in you but it’s not all doom and gloom for SM1 at least not for the current SP. The currently SP actually looks interesting and may present an entry point for a long term investment. Let me go through a few things.

1) The current P/E after taking into account the 50% downgrade on last year’s profits is currently sitting at 22. This is that bad in the current market.

2) SM1 is a completely different business to A2M. The nature of their business defines them as a high Capex low margin producer rather than a Capex light distribut
or and marketing corp which is The case of A2M.

3) If you look at the below table Bulk Powder accounts for slightly less than 2/3 of their business, IF is about 1/3. A2’s current issue will have down the track impact on SM1 but let’s not blow it out of proportion.

4) Commodity price for SM1’s main business Bulk powder is increasing at a pace not seen for years thanks to a global commodity price boom in anticipation of a perceived inflation as an end product of massive QE( Refer below screen shot) Currently about 40%+ up compared to averaged price last year. And the milk intake price has gone up for about 15%. This may provide nice earning support provided SM1 has the brain didn’t lock in their future product sell price for 2H 21 too early

5) SM1 is in possession of a much sought after Chinese IF license and new license has been issued in Southen hemisphere since 2017. They also have state of the art processing plant which underpins their assets should liquidity comes into a question

6) SM1 knew A2 is weaning away from them after recent MVM purchase hence the deal for another international IF brand.

7) Coming from Shanghai where SM1’s main share holder Bright is from, let me assure you Bright is a solid solid dairy business in China , their controlling stake in SM1 is a guaranteed ticket to SM1’s bulk powder off-take .

Agreed with you the current management has a lot of BSxxters but with the current SP , it present values to me.

All the sellers should be done with their business and IMO in all the downgrade has already been priced in SP. Let patience play it’s course and see what SM1 can deliver on 29/03.