SM1 – UBS rates the stock as Neutral

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Guidance for FY20 addresses UBS concerns regarding lower initial returns on the Pokeno factory and “Everyday Dairy” plant.

The broker envisages scope for the relationship between Synlait Milk and a2 Milk ((A2M)) to be restored as earnings growth picks up and operating risks moderate.

The main risk in the near term is for lower daigou sales via a2 Milk. Neutral rating. Target is reduced to NZ$9.60 from NZ$9.70.

Sector: Food, Beverage & Tobacco.

Current Price is $8.00. Target price not assessed.

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