A2M management saw the previous buyback at ~$6 or so SP level as a good use of capital at the time.
Surely, by that same logic, a buy back at $4-5 levels represents even better value, given the company is more progressed in its turnaround and has ticked a number of boxes since then such as its FDA and China label approvals. So something must have changed in their plans around capital management since the previous buyback.
Synlait's fairly dramatic downgrade in April this year is the event that sticks out to me. The dualling announcements from A2M and SM1 was interesting. SM1 seemed to throw A2M under the bus as the source of reduced demand, whereas A2M came out and expressed surprise at SM1's poor performance.
In the end A2M was vindicated IMO. In the FY22 outlook they predicted high single digit revenue growth for FY23; in the interim FY23 report they predicted low double digit growth; and in responding to Synlait's downgrade, they clarified again to predict about 10% which is what they hit. With all the uncertainty going on, that is quite accurate at each stage in terms of estimation going right back to the outlook given in FY22.
Contrast that with Synlait's estimates and performance, and you could see why they might be surprised. They simply can't get a handle on their own projections and financials. A2M and Bright Dairy were working closely together on the China approval at the time, and I think the whole episode would have really underscored to both companies just how unsustainable the Synlait situation has become. Synlait is already divesting of its more peripheral assets Dairyworks and Talbot Cheese. Perhaps the first step in the process.
If it's Synlait, then it does explain why A2M can't say much more about capital management at this point other than "supply chain", as just about any iota of speculation about the A2M-SM1 relationship usually seems to smash the SP of both companies these days.
(20min delay)