Media Updates, page-12646

Yes it is a soft downgrade no matter which way you slice it. Some posters still have not yet grasped that there is a difference between what the company gives as formal guidance and what the market collectively decides to expect based on this and everything else it knows.

However it is also useful to put the change in perspective. Prior to this the company said in August 2022 it was expecting low double digit revenue growth for FY23 and then it reaffirmed this in February this year. No specific figure was given but one could assume a maximum range of 10-13%.

What we have now is a specific figure of ~10% and no change to margins. If it is a wobble, it seems to me like a very minor one and largely based on supply chain issue resulting in delayed timing of sales pushed into FY24, more so than reduced overall sales. e.g. "the impact of significant cumulative delays in English label consumer-packaged IMF deliveries from Synlait to a2MC over an extended period expected to be fulfilled in 4Q23".

ANZ Daigou / reseller market has been weak for years, but it is also a more marginal aspect of the business (relative to CBEC) nowadays. You mention A2M pinning all its hopes on strong China label growth, but it is also important to recognise that this update confirms that there has been continued strong double digit China label growth in the past 2 months since the previous update. So it is hardly pinning its hopes on some kind of fantasy, that is what the sales data indicate. Of course analysts will do what analysts do.

A2M's announcement throws a lot of shade back on Synlait and unusually gives specifics that show the reductions in production quantities ordered by A2M are small in the scheme of Synlait's overall Advanced Nutrition output. The question is whether the market has punished A2M accurately given its forecast + everything we know about A2M, or whether it has put too much stock on Synlait's narrative and overcooked things.