The stock value for Synlait Milk Ltd [NZX:SML] rose by over 3% today.

Synlait Milk holds the exclusive rights as the manufacturer of the popular dairy product for The a2 Milk Company [NZX:ATM]. Both companies cooperate heavily on exports to China. As a result, the success and performance of the two stocks are closely aligned.

At the time of writing, Synlait has a market capitalisation of $1.55 billion and the share price is at $8.65.

A2 Milk is also up 2.26% at the time of writing, with a market capitalisation of $7.64 billion, and the share price is sitting at $10.40.


Why has the [NZX:SML] share price increased today?

In September and October, both Synlait and a2 Milk were plagued by negative publicity. This was the result of sudden stock sell-offs by company executives such as a2 CEO Jayne Hrdlicka.

There was also the ongoing secondary issue of the new regulatory environment that China intends to enforce for cross-border e-commerce (CEBC). From 1 January 2019 onwards, Kiwi exporters will be required to adhere to higher quality standards when selling and distributing their products in China.

All of this contributed to a state of uncertainty for Synlait and a2 Milk shareholders.

However, presently, these fears have eased as the operating environment has stabilised.


So where could the Synlait Milk share price go from here?

The moment of volatility appears to have passed, and Synlait has resumed the positive growth they have experienced over the past year.

We anticipate that the long-term share price may be able to continue its upward trajectory.




Taylor Kee,
Editor, Money Morning New Zealand