Synlait Milk is nearing completion of the second major capital expenditure phase, during which it will invest NZ$400m in four major growth projects. Morgans believes the new investment will drive strong volume-led earnings growth over FY19-21.
However, with legal proceedings risking the time of the Pokeno commissioning, the broker initiates coverage with a Hold rating and $10.10 target. Morgans awaits a resolution in order to de-risk the company’s strong growth outlook.
Sector: Food, Beverage & Tobacco.
Target price is $10.10.Current Price is $9.38. Difference: $0.72 – (brackets indicate current price is over target). If SM1 meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).