Synlait Milk cream of the the nation's dairy sector
Synlait Milk investors are the winners of soaring milk powder prices fuelled by Chinese demand.
However, Fonterra Fund shareholders are nursing battered shares and dividends.
Synlait's shares yesterday closed up 20 cents at $3.95 after Synlait confirmed it would benefit from Chinese demand.
In contrast, Fonterra disappointed farmers yesterday by holding its forecast milk payout at $8.30 a kilogram of milksolids, when it was expected to rise up to $9, and slashing its forecast dividend from 32c to 10c.
The Fonterra Shareholders' Fund shares plunged 35c to $5.75 after that. Investors in that fund buy the right to the Fonterra dividends. Yesterday's close is only 25c higher than what investors paid when the fund listed just over a year ago.
In contrast, Synlait investors have a paper profit of $1.75 a share after paying $2.20 a share in July.
Synlait managing director John Penno signalled its earnings may rise, because its exports are dominated by milk powders.
But, he did not provide new numbers, saying the company would let the dairy season run a on a bit longer and then update Synlait's forecasts in the New Year.
In its prospectus, released in July, Synlait forecast an annual net profit ending June 2014 of $19.67 million.
"We now expect the company will benefit from both earnings growth in our value-added categories, a favourable product mix, and lower than expected milk prices," Penno said.
"This is likely to mean Synlait's earnings for the half and full FY[full year]14 will be ahead of forecast."
- © Fairfax NZ News
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