Fifth CEO in six years: What’s next for Synlait? And is Genesis undervalued? - Stock Takes

Wyeth, who came from Westland Milk and Miraka, was appointed in March 2025 and started on May 19.

This month, Leon Fung was appointed acting chief executive, and market insiders say he is likely to remain in the job for the foreseeable future.

Fung’s career spans nearly 30 years across production, operations, capex investments, and market development.

He has held senior executive leadership roles, including as chief executive of NIG Nutritionals and operations director for Danone Oceania, both based in Auckland.

Fung joined Synlait as a director in June 2024 and served as chairman of its people, environment and governance committee from November last year.

His appointment makes it five CEOs in just over six years, which is starting to look a little excessive, and the market is still largely in the dark as to why Wyeth – a well-credentialled dairy executive – left.

The revolving door at Synlait follows a first-half result in March that was much worse than the market expected.

The company reported a net loss after tax of $80.6 million, with reported earnings before interest, tax, depreciation and amortisation coming in at a loss of $34.7m.

Much of the loss was driven by manufacturing challenges, costs associated with ramping up production for a2 Milk, and poor whole milk powder prices towards the end of the calendar 2025 year.

The company did not issue guidance for the second half.

Synlait’s (market cap $253m) performance issues tend to reflect on a2 Milk ($4.9 billion) as it is a2’s main supplier of infant formula and, despite their best efforts, the two remain joined at the hip.

The dairy company’s mutually beneficial relationship with a2 Milk started to unravel in the Covid era, which saw the collapse of the unofficial daigou trade in infant formula to China, a2’s most important market.

Craigs senior research analyst Stephen Ridgewell noted that the company’s first-half loss was driven by one-offs, but said the company has a history of one-offs.

He calculates that since first half of 2023, one-offs totalled a net $131m – or an average of $38m a year.

Synlait’s latest issues follow on from a major make-or-break recapitalisation of the company in 2024, which saw China’s Bright Dairy’s holding go from 39% to 65%.

Ridgewell said the sale of Synlait’s state-of-the-art factory at Pōkeno to Chicago-based Abbott for $307m last year will result in a material reduction in debt.

“But we think that they will still have $150m of core debt on the balance sheet at the end of the year,” Ridgewell told Stock Takes.

Early this month, Synlait said it had received two waivers in relation to its syndicated bank facilities.

“As detailed in its interim result, Synlait has faced a number of headwinds outside of its control which continue to impact its financial performance,” it said then.

Ridgewell noted the waivers but said there was still time for Synlait to improve its performance.

“It does not need to raise capital – just to be clear – but if your question is can we rule it out, then no, we can’t rule it out.

“What you need as a dairy processor is a diverse range of customers, so I think it’s been a difficult relationship [with a2] on both sides,” he said.

“Synlait has not been able to diversify its high margin revenue streams so we have seen significant missteps at a time when [competitor] Fonterra has been making good money.

“Really, Synlait has needed to diversify its customer base for years now.

“We have seen some signs of that, but they are a long way from achieving meaningful diversification from a2.

“They do need to improve their operational performance materially to continue without raising capital.”

Infratil’s 11% uplift in earnings to $989m for 2026, primarily driven by investments in Australasian data centre business CDC and United States renewable energy business Longroad Energy, was “relatively in line”, Forsyth Barr says.

Much of the attention centred on CDC, which is just under half owned by Infratil.

“CDC continues to advance discussions with customers for further large contracts, but no additional colour was provided – we believe this was the market’s biggest disappointment,“ Forsyth Barr said in a note.

The Infratil-owned telco One NZ delivered a pleasing result with small beats relative to Forsyth Barr’s expectations.

“The most interesting new information from the result was Longroad indicating it is pursuing a data centre strategy.

“What exactly this looks like is unclear, but it has land adjacent to some of its renewable energy projects for 4GW of data centres.”

“Longroad won’t transform into another CDC but rather could develop powered shells (halfway to a CDC-like colocation data centre), potentially alongside a partner.”

Forsyth Barr retained its “outperform” recommendation for Infratil.

“Over the next 12 months, we expect further CDC contract wins and an update on Longroad’s data centre plans.”

Craigs Investment Partners says power generator and retailer Genesis Energy is undervalued.

“Genesis Energy is one of the most complex and least-well-understood companies on the NZX. This makes it prone to being mispriced,” Craigs senior research analyst Joshua Dale said in a report.

“We argue at its current $2.43 share price, investors are paying for the value of Genesis’ hydro alone and getting the other assets for free.

“Our work also suggests it can fully displace its reliance on must-run gas generation while sustaining and growing its sector-leading dividend.”

Craigs has upgraded its recommendation on Genesis to “overweight” with a $3 target price.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.