SKC - Sky City

[percy]

Rich and famous " Gamblers " ???.. I think not Perc.. Not their area of business really..

Auckland .. Maybe.. Fly in.. fly out.. Time is money..

I have seen the rich and famous gamble at Monte Carlo.
They will gamble at Queenstown.Great destination sumer or winter.
Macau,LasVegas,Queenstown.
People will go the extra distance for somewhere special such as Queenstown.

[janner]

I have seen the rich and famous gamble at Monte Carlo.
They will gamble at Queenstown.Great destination sumer or winter.
Macau,LasVegas,Queenstown.
People will go the extra distance for somewhere special such as Queenstown.

You obviously travel in different circles than I Perc.. So will bow to your superior knowledge..

Keeping my pennies in the pocket until proven..

[janner]

SKC that is.. Not your sightings :-)0

[winner69]

not that anybody here seems to be interested.....????


Pretty ho hum announcement really drongo

I always have a laugh at the treatment of the high rollers take ..... like if they win or lose than a specified %age the difference is abnormal ...... maybe it is abnormal ..... like last year these punters lost more than the house thought but this year they made more


Question for you drongo then .... in this context .... what is a normal shareprice for SKC at the moment

[winner69]

before somebody else asks is drongo the new bongo

If so welcome back

[Baddarcy]

Finally !!! AG report tomorrow.

[Baddarcy]

The sell side is looking a bit thin today. I don't recall the last time i saw it so empty.

I guess everyone is holding and waiting for the convention centre deal details.

Mini breakout coming maybe?

[Baddarcy]

Looks like a proud day for SH's, this should continue the upward trend for quite awhile. Looks like another holder and keeper long-term!

I'm not so sure, at a glance the deal looks more expensive and delivers less than what was being anticipated. The cost seems to have increased to $400m+ from $350m and the number of extra pokies has dropped from 300-500 range to 230.

Or am i just pissed that i sold my holding that i had held for 3 years, 2 weeks ago to buy MRP??? :-)

[CJ]

Share market:

I'm surprised the share price is up so much. Surely anyone could see the deal would be approved so that should have been factored into the shareprice. 230 machines is lower than expected so should really decrease the share-price. The 35 licence is a good bonus but again, it would be very bad for a licence not to be renewed so the renewal now just means they dont need to horse trade in the future.

Politics:

Greens are outraged which means... actual it doesn't mean much at all as they are diametrically opposed to anything National did even if it was funding a environmentally friendly tofu factory.

The fact is there is much more control over problem gambling in a casino that a local pub. More can be done which is why new proposals/conditions have been put in place. The casino is so crowded that problem gamblers cant get a seat already so more machines isn't going to do much.

[Beagle]

Share market:

I'm surprised the share price is up so much. Surely anyone could see the deal would be approved so that should have been factored into the shareprice. 230 machines is lower than expected so should really decrease the share-price. The 35 licence is a good bonus but again, it would be very bad for a licence not to be renewed so the renewal now just means they dont need to horse trade in the future.

Politics:

Greens are outraged which means... actual it doesn't mean much at all as they are diametrically opposed to anything National did even if it was funding a environmentally friendly tofu factory.

The fact is there is much more control over problem gambling in a casino that a local pub. More can be done which is why new proposals/conditions have been put in place. The casino is so crowded that problem gamblers cant get a seat already so more machines isn't going to do much.

I agree, PE ratio for a very modest growth stock makes this company look fully priced, (mind you its far from the only one on the New Zealand exchange). I'm also surpised there was a bounce...and am sure this will prove to be a catalyst for some holders to take a profit.

[Beagle]

Since my last post on this stock on 13 May, quite a bit of the froth has come out of this stock and I feel while its no bargain, (in answer to the thread title), it is relative value compared to many other blue chip stocks on the N.Z. market at around $4.20 and has some reasonable prospects for the years ahead.

[Snoopy]

Have had another good look at my SKC spreadsheet, and in particular the growth levels inside and outside of the Auckland home site. Based on post financial crisis performance, I have revised my projected return on equity figure of the Auckland site down to 25% (down from 27.3%). The Auckland site has done well, but as a counterpoint to that, management have spent an awful lot of money to make it perform!

I have also raised my 'out of Auckland ROE' from 8.2% to 8.6%. This reflects the significantly improved returns from Darwin and Hamilton in particular. These two changes have meant very little to my ongoing earnings projections though.

If the convention centre is approved, the SKC share price I think would break the $4 barrier.


As a long-term shareholder, I have just finished my annual ‘stocktake’ on SKC.

I bought my very first SKC shares in 1999. But I now have a median holding time of 5 years on my total SKC holding. My average acquisition price is $2.77, thanks to a big top up I did at capital raising time in 2009. Market price today has risen to $4.15. Cash dividends of 76.75c per share were paid over the five years. That adds up to a compounding annual total return of 12.2% per annum net, all since the GFC! That’s about 17% gross on a one-year annualized basis. I am more than happy with my SKC return. Without it, I wouldn’t have been able to outperform the NZX market by as much as I have for so long. However, I do believe the party music for SKC is about to stop. Read on to find out why!

I view SKC as an Auckland ‘growth engine’ supporting other lesser casino operations around Australasia. Since the last SKC capital raising in 2009, the dollar return on the Auckland site has largely flat-lined, even as a large amount of capital has been spent. ROE ‘Auckland’ has dropped from 25% to 20% (still good). This is expected. Much money was required to refurbish the casino, Sky City and Grand hotels and to develop Federal Street. This spending will not slow as the new International Convention Centre is built. The spending, while necessary, will not bring instant or even medium term further riches to shareholders. Indeed the International Convention Centre carries both property development risk and marketing implementation risk. Both now fall squarely 100% on SKC shareholders shoulders, not the government. I am enthusiastic about the long-term future of the International Convention Centre. Nevertheless, I can see ‘speed bumps’ along the way.

The first ‘speed bump’ is the Convention Centre build cost blowout: From an envisaged $350m to over $400m. $400m represents some 70c per share, which is 35c of equity if the build is done on a debt equity ratio of 50:50. Current NTA is $1.41. Therefore, this is a big commitment even for a company as well capitalized as Sky City. Moreover, I haven’t even mentioned what SKC is set to pour into the Adelaide redevelopment! The change in dividend policy to a minimum 20cps annual pay out will help support the SKC share price in the short term. However, it will also mean the time taken to save the underlying ‘incremental capital’ from retained earnings to underwrite future building programs is stretched out.

To counter the flat to deteriorating medium term picture in Auckland, the Australian operations in Adelaide and Darwin are slowly lifting their game. This is perhaps best reflected in my own calculated ‘non Auckland’ ROE which has risen from 7.7% in 2009 to 9.4% in 2013. This trend is promising. Yet the fact remains that profitability of all ‘non Auckland’ operations, as a group, is only half that of the Auckland site. Another positive of the Australian renaissance though, is that SKC are now paying Australian imputation credits to Australian shareholders. That has to boost demand for SKC shares from Australia.

Basic assumptions of my SKC ‘equity growth’ model are as follows:

1/ ROE for ‘Auckland’ is 24%, and ROE for ‘Non-Auckland’ 8.8%. (These are the actual averages over the last five years.)
2/ Future share price based on a PE of 17.1 (actual operational average over last ten years)
3/ Annual dividend the maximum 80% of future earnings, or 20cps whichever is the larger. I calculate dividend will remain at 20cps until 2021.
4/ Retained earnings supplemented by limited share reinvestment plan amounting to 1cps per year.

Significant differences from last year are:

1/ The higher dividend payout ratio, up from 70% to 80%
2/ ‘ROE Auckland’ slightly lower (-1%) and ‘ROE Non–Auckland’ slightly higher (+0.2%)
3/ PE increased from 17.0 to 17.1
4/ Base share price increased from $3.80 to $4.15 to reflect the SKC share price rise over the year.

The net result of these changed assumptions is that my expected 10-year annual overall return has sunk from 9.53% to 7.0% gross. The biggest effect was the share price rise over the year building more future earnings into today’s share price, but conversely leaving less to come on the table in future years.

In summary, my opinion: If you are now overweight in SKC, then some time over the next few months would be a good time to reduce your holding. However, if you are happy with a reasonably reliable 4.9% annual return going forwards, equivalent to about 7% gross, then keep your shares. I will be keeping mine. I don’t see a big fall in the SKC share price coming because the declared 20cps minimum annual dividend policy going forwards should underpin the share price at around $4. But neither do I expect the share price to be above $5 in ten years time. From an investor perspective, I see SKC as becoming ‘rather boring’, which is not always a bad thing.

SNOOPY

[FarmerHamilton]

As a long-term shareholder, I have just finished my annual ‘stocktake’ on SKC.

I bought my very first SKC shares in 1999. But I now have a median holding time of 5 years on my total SKC holding. My average acquisition price is $2.77, thanks to a big top up I did at capital raising time in 2009. Market price today has risen to $4.15. Cash dividends of 76.75c per share were paid over the five years. That adds up to a compounding annual total return of 12.2% per annum net, all since the GFC! That’s about 17% gross on a one-year annualized basis. I am more than happy with my SKC return. Without it, I wouldn’t have been able to outperform the NZX market by as much as I have for so long. However, I do believe the party music for SKC is about to stop. Read on to find out why!

I view SKC as an Auckland ‘growth engine’ supporting other lesser casino operations around Australasia. Since the last SKC capital raising in 2009, the dollar return on the Auckland site has largely flat-lined, even as a large amount of capital has been spent. ROE ‘Auckland’ has dropped from 25% to 20% (still good). This is expected. Much money was required to refurbish the casino, Sky City and Grand hotels and to develop Federal Street. This spending will not slow as the new International Convention Centre is built. The spending, while necessary, will not bring instant or even medium term further riches to shareholders. Indeed the International Convention Centre carries both property development risk and marketing implementation risk. Both now fall squarely 100% on SKC shareholders shoulders, not the government. I am enthusiastic about the long-term future of the International Convention Centre. Nevertheless, I can see ‘speed bumps’ along the way.

The first ‘speed bump’ is the Convention Centre build cost blowout: From an envisaged $350m to over $400m. $400m represents some 70c per share, which is 35c of equity if the build is done on a debt equity ratio of 50:50. Current NTA is $1.41. Therefore, this is a big commitment even for a company as well capitalized as Sky City. Moreover, I haven’t even mentioned what SKC is set to pour into the Adelaide redevelopment! The change in dividend policy to a minimum 20cps annual pay out will help support the SKC share price in the short term. However, it will also mean the time taken to save the underlying ‘incremental capital’ from retained earnings to underwrite future building programs is stretched out.

To counter the flat to deteriorating medium term picture in Auckland, the Australian operations in Adelaide and Darwin are slowly lifting their game. This is perhaps best reflected in my own calculated ‘non Auckland’ ROE which has risen from 7.7% in 2009 to 9.4% in 2013. This trend is promising. Yet the fact remains that profitability of all ‘non Auckland’ operations, as a group, is only half that of the Auckland site. Another positive of the Australian renaissance though, is that SKC are now paying Australian imputation credits to Australian shareholders. That has to boost demand for SKC shares from Australia.

Basic assumptions of my SKC ‘equity growth’ model are as follows:

1/ ROE for ‘Auckland’ is 24%, and ROE for ‘Non-Auckland’ 8.8%. (These are the actual averages over the last five years.)
2/ Future share price based on a PE of 17.1 (actual operational average over last ten years)
3/ Annual dividend the maximum 80% of future earnings, or 20cps whichever is the larger. I calculate dividend will remain at 20cps until 2021.
4/ Retained earnings supplemented by limited share reinvestment plan amounting to 1cps per year.

Significant differences from last year are:

1/ The higher dividend payout ratio, up from 70% to 80%
2/ ‘ROE Auckland’ slightly lower (-1%) and ‘ROE Non–Auckland’ slightly higher (+0.2%)
3/ PE increased from 17.0 to 17.1
4/ Base share price increased from $3.80 to $4.15 to reflect the SKC share price rise over the year.

The net result of these changed assumptions is that my expected 10-year annual overall return has sunk from 9.53% to 7.0% gross. The biggest effect was the share price rise over the year building more future earnings into today’s share price, but conversely leaving less to come on the table in future years.

In summary, my opinion: If you are now overweight in SKC, then some time over the next few months would be a good time to reduce your holding. However, if you are happy with a reasonably reliable 4.9% annual return going forwards, equivalent to about 7% gross, then keep your shares. I will be keeping mine. I don’t see a big fall in the SKC share price coming because the declared 20cps minimum annual dividend policy going forwards should underpin the share price at around $4. But neither do I expect the share price to be above $5 in ten years time. From an investor perspective, I see SKC as becoming ‘rather boring’, which is not always a bad thing.

SNOOPY

Awesome analysis Snoopy, well done !!

I have done very well out of SKC shares since they listed , traded them rather actively including the instalment receipts many years ago. I got out from about 2006 until earlier this year when I bought back in at $3.90. I think you are possibly under-estimating the future performance of Adelaide & Darwin so I am fully expecting the share price to be significantly north of $5 at some point in the next ten years unlike you.

For both our sakes let's hope I'm right and your wrong hey !!

[percy]

A great deal of capital is being spent/invested in improving the assets,Auckland,Adeliade,Darwin and in time Queenstown.
I think management are doing the right things.Time will tell whether we get the returns or not.Happy to enjoy the dividends until we find out.

[Snoopy]

Awesome analysis Snoopy, well done !!

I have done very well out of SKC shares since they listed , traded them rather actively including the installment receipts many years ago. I got out from about 2006 until earlier this year when I bought back in at $3.90. I think you are possibly under-estimating the future performance of Adelaide & Darwin so I am fully expecting the share price to be significantly north of $5 at some point in the next ten years unlike you.

For both our sakes let's hope I'm right and you're wrong hey !!

I would be very happy if I am proved wrong Farmer Hamilton, or if not very happy certainly wealthier!

I do agree with you that with Darwin likely to to undergo a military population boom and Adelaide at last on equal regulatory terms with other Australian casinos that basing growth on the previous five years of ROE returns, will more than likely underestimate the contribution from Australia. One potential problem I see is that putting Adelaide on equal terms regulation wise with say Sydney, may not be enough. Compare the number of air links going into Sydney verses Adelaide and you will see what I mean. Now do the same with air links to Asia and the relative picture looks even worse. Yet I suspect the costs of redeveloping a casino in Adelaide and Sydney, or Melbourne are similar.

In general my approach with mathematical modelling is to use actual company metrics generated by a track record of financial results. An alternative way would be to modify my model results by a fudge factor to take into account where I believe future trends will deviate from past metrics. However, I find it is too easy to convince myself that some impressive expected return I generate using such an alternative technique is real, simply because a number dropping out of a calculator seems more real than an optimistic thought I hadn't put on paper. Much better I think to generate a 'real' number then throw it open to reasoned criticism, as I have done here. As I said before, I take your dissent as valid. But, to put the ball back in your court....

I am worried that my modelling has overestimated the future contribution from Auckland. As I said I modelled an ROE on the Auckland assets of 24%, but last year ROE at Auckland was only 20%. I can't see how pouring capital in a construction hole across the street will benefit SKC either in the short or medium term. It certainly will not improve 'ROE Auckland' until the convention centre is finished and even then it may never do so. Granted the ICC was all necessary to get the certainty on the casino licence going forwards. But to blindly assume Auckland will be some kind of cash cow over the next five years is I think an equally misleading proposition to assuming that growth in Australia, in particular Darwin, will not accelerate. On balance I think the slowdown in ROE at the Auckland site will more than outweigh the underassumed potential growth in Australia. If that is true,it means my projection of a 7% gross yield over the next ten years is actually optimistic. But as I said before it would suit me very much financially if I am wrong.

SNOOPY

[BlackCross]

SkyCity Entertainment Group, New Zealand’s only listed casino operator, slipped 3.7 percent to $3.94. Chief executive Nigel Morrison told the company’s annual meeting in Auckland that normalised revenue dropped 2.8 percent so far this financial year as a higher New Zealand dollar crimps returns from its Australian businesses.
“It does seem to have maybe disappointed the market today,” Smalley, a director at Hamilton Hindin Greene, said. “It does affect quite a few companies on the bourse, that kiwi/Aussie cross. That is something that investors have to be aware of right across the New Zealand market.

[winner69]

Snoopy says I need to stop the evil Morrison getting his way with the convention centre ....from another thread

Don't worry shareholders ....upsides of this not in the shareprice anyway

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11146564

[Beagle]

I'm normally a fundamental type chap but I looked at the chart of SKC last evening, sorry havn't got an image and am I the only one seeing a classic head and shoulders formation about to be completed with a signifiant fall off the right shoulder ?

Buy depth looks very weak and any buy pressure is well taken care of in recent weeks. Recent financial performance with negative comparison to previous compareable period was quite a disappointment.

With all the capex coming up over the next few years is the market concerned they won't generate an acceptable return ?

Disc - Sold out a little while ago @ $4.00.

[percy]

I sold out last week for much the same reasons as you.The PE of 17 looked to be a lot higher than growth rate.

[peat]

Seems legit Roger

[modandm]

SKC is a great company but it is finding growth increasingly hard to come by - and increasingly expensive in terms of capex. Execution risk goes along with that. Then add political risk with an election next year... Its tough.

Fundamentally what sort of sustainable earnings growth can they generate? 3-6% maybe (not much). It's a steady eddy to be sure - and a superior bet to the powerco's in my view. I think it needs to offer a higher yield to be attractive - something around 6% (to offer 9-12% total return). For that the share price needs to be about 3.40-3.50. I would expect to see it head that way...

[Beagle]

Very mature stock and as others have observed growth only comes from expensive capex, Adelaide has hardly been a roaring sucess to date has it and look at all the money they're going to pump into that in the next few years.
I think the best SKC can hope for with their existing facilities is for growth to match GDP growth, circa 3% per annum plus hope to get an acceptable return from forthcoming capex which looks pretty intensive for the forseeable future.

Thanks Peat. Looks pretty clearly defined to me. With no divvy's on the near horizon I think there's some pain coming for holders.

[Snoopy]

I think it needs to offer a higher yield to be attractive - something around 6% (to offer 9-12% total return). For that the share price needs to be about 3.40-3.50. I would expect to see it head that way...

Modandm, the CEO has promised a minimum annual dividend of 20cps going forwards. At $3.78 that means SKC is on a gross yield of 7.6% going forwards. There aren't (m)any? on the market paying a higher divdend yield than that.

SNOOPY

[Snoopy]

Very mature stock and as others have observed growth only comes from expensive capex, Adelaide has hardly been a roaring success to date has it and look at all the money they're going to pump into that in the next few years.
I think the best SKC can hope for with their existing facilities is for growth to match GDP growth, circa 3% per annum plus hope to get an acceptable return from forthcoming capex which looks pretty intensive for the foreseeable future.

Thanks Peat. Looks pretty clearly defined to me. With no divvy's on the near horizon I think there's some pain coming for holders.

I think your view is unnecessarily pessimistic Roger. SKC have paid a dividend at least every six months without fail since listing. To say there are no divvys on the near horizon is not correct. I expect a 10cps interim divvy in April, and there is no reason to suppose that I will not get it.

The problems with Adelaide have been to a significant extent because of unfavourable government regulation vis a vis other Australian states. Nigel Morrison and the team have negotiated their way around this, as per the 11th October press release:

--------

Following the assent of enabling gambling Legislation in August this year,
the parties have now signed a new Approved Licensing Agreement (ALA) and a
new Casino Duty Agreement (CDA). The terms of the revised regulatory and
taxation environment are contained in those binding contracts and will come
into effect once the remaining conditions precedent are satisfied.

"The signing of these key agreements is an important milestone and paves the
way for SKYCITY to proceed with its A$350 million investment to transform
Adelaide Casino into a world class integrated entertainment and tourism
complex," SKYCITY Chief Executive Nigel Morrison says.

Deputy Premier John Rau said, "This agreement is a step towards Adelaide
Casino becoming a world class gaming and entertainment destination that many
South Australians and tourists will enjoy."

-------------

Then you claim that a 3% incremental return on existing facilities is all that can be hoped for, while seemingly saying that all of the expansion projects that will transform the existing facilities into something better (needed if you truly believe the alternative is muddling along growing the existing facilities at 3%) are not worth doing! Please don't bother applying for Nigel Morrison's job when he eventually calls time on it!

SNOOPY

[Snoopy]

With all the capex coming up over the next few years is the market concerned they won't generate an acceptable return ?

Disc - Sold out a little while ago @ $4.00.

In the absence of a new explanation, I'll stick with what CEO Morrison said at the AGM for an explanation. The high NZ/AUD exchange rate is killing the Australian growth seen in NZD terms. I believe the exchange rate will come back against the Oz dollar, so as a shareholder since near birth I am not concerned.

SNOOPY

[Beagle]

Hi Snoopy. Just to clarify, by near horizon I meant in the next few months and it was never my intention to question the ability of the company to pay regular six monthly dividends and of course I accept that despite high capex over the next few years with cheap corporate debt widely available, there's no reason to question their ability to pay them. In other words I'm not implying their balance sheet is stretched, despite record projected capex.

Intrinsic growth within existing facilities looks flat to me, whether this can be dramatically enhanced commesurate with the amount of capex required to enhance Adelaide, Darwin and whether the Auckland Casino receives additional business in line with expectations built into the modelling envisaged with the new $400m confernce facilities remains to be seen but I forsee execution risk given what must be close to somewhere approaching $1b in capex over the next few years.

Fundamentally I don't think the company is expensive on its current PE ratio but technically with a clear head and shoulders pattern the SP looks vulnerable.

It seems to many commentators that the N.Z. economy is gaining relative strength against the Australian economy. This is normally a precursor for further strengthening in the Kiwi dollar. Anyone remember when we were at 97 cents Aussie, possible re-test of that in 2014/15 ? Aussie economy is really flat according to people I talk too with little prospect for early improvement. Meanwhile with possible interest rate increases here next year by the Reserve Bank, this will be further fuel for a re-rating of the Kiwi.
Nigel Morrison has a ready made excuse for the next couple of periods, in my opinion.

[Beagle]

P.S. On the positive side, a Kiwi / Aussie cross in the nineties will make their Australian capex less expensive in $Kiwi terms. But like a lot of Australian contrstruction projects somehow any contingency seems to be eaten up in over-runs in some other area.

[Snoopy]

P.S. On the positive side, a Kiwi / Aussie cross in the nineties will make their Australian capex less expensive in $Kiwi terms. But like a lot of Australian contrstruction projects somehow any contingency seems to be eaten up in over-runs in some other area.


I did note that SKC announced an increase in dividend right at the same time they signed casino development deals with the NZ and South Australian governments.

I do believe the two large expenditures on the horizon are balanced assessments that will require an uplift in business at both Auckland and Adelaide to justify the significant new capex expense that the extended casino sites' redevelopments will require in both cities. It did cross my mind that the increased dividend may be an attempt to shore up the SKC share price should another capital raising be required. If Labour/Greens move to crimp earnings in Auckland that might yet be needed. However I am mentally keeping aside enough capital to support such an equity raising and would certainly do so.

SNOOPY

[Snoopy]

expect a possible down sided price of 3.50 but with a 20 cents dividend this year expect a summer price of 4 dollars . Accumulate on this stock but really its profits are not an indication of its assets value so down the track this stock is cheap if the convention center is built and tourist numbers increase.

Skc's real value is in its assets and remember we are still in a time of tight wallets so in hide sight the market has been a lot tougher then they want to say.


Surfersteve, total shareholder equity was listed at $812.9m in the annual report. There are 577.0m shares on issue.

So net asset backing for SKC is only 812.9m/577m = $1.41

Since the share price trades at more than double that, it is clear to me that the value of SKC is not in the assets! You could easily replicate all the buildings that SKC have and you would be nowhere near market capitalization of the company.

If you look further into the accounts under 'intangible assets' (included in the assets above) you will see that the Auckland casino licence is carried in the accounts at no value, because no dollars were outlayed for it. IMO the Auckland casino licence is the most important 'asset' that SKC owns. But this 'asset' is really just political goodwill between the ruling government and Sky City.

If the political goodwill between the government and SKC goes sour then SKC is in big trouble. The assets of SKC are almost immaterial to the business in my view.

SNOOPY

[BlackCross]

From The Herald "...SkyCity fell 1.6 per cent to $3.72 and was the most heavily traded stock by value, at $33.7 million. It was among companies added to the MSCI small cap New Zealand index on Tuesday....."


I don't understand this? Wasn't SkyCity in the index previously? Or does it mean it's weighting was increased? If so I wonder why it has it fallen?

http://www.msci.com/resources/factsheets/index_fact_sheet/msci-new-zealand-imi.pdf

[Snoopy]

From The Herald "...SkyCity fell 1.6 per cent to $3.72 and was the most heavily traded stock by value, at $33.7 million. It was among companies added to the MSCI small cap New Zealand index on Tuesday....."


I don't understand this? Wasn't SkyCity in the index previously? Or does it mean it's weighting was increased? If so I wonder why it has it fallen?

http://www.msci.com/resources/factsheets/index_fact_sheet/msci-new-zealand-imi.pdf

Looks like a reporting error to me Blackcross. SKC is in the top ten by market capitalization in the NZX. It is definitely not small cap. I think they must be referring to some other MCSI index that is not solely NZ based.

SNOOPY

[Snoopy]

as a person who has spent 35 years in the accounting business i can read a balance sheet and you are correct NTA listed on the NZX is very low.

I don't think it is easy to replicate the SKY tower inside the next 12 moths. Nor would it be easy to build a new brand inside 12 months. "assets also includes PEOPLE". Getting those visitors through the door is the real Asset and revenue is in the billions.....

I agree with that Surfersteve. I would have said that SKC has a 'wide moat' protecting its business rather than saying it was 'asset rich' to make the same point.

If however Labour /Greens reneged on the convention centre more pokie agreement and let Sky City's casino licence expire at the end of the current licence agreement, I reckon the share price would dive though.

SNOOPY

[Snoopy]

snoopy do more research that new agreement has SKC covered very nicely if labour greens reneg on it.


Yes I know there are penalty clauses should the government renege. But even so pre-election bluster from the greens has had them saying they reserve the right to rewrite that legislation.

SNOOPY

[Snoopy]

recent heavy trading was simple,

Index fund rebalancing with over 70 million share traded ....

Some more index rebalancing over the rest of the month perhaps?

------

SKC
06/12/2013 11:15
GENERAL

REL: 1115 HRS SKYCITY Entertainment Group Limited (NS)

GENERAL: SKC: SKYCITY Entertainment Group Confirmed in ASX 200

Standard & Poors today announced the inclusion of SKYCITY Entertainment Group
Limited in the S&P/ASX 200 index, effective after the close of trading on
December 20, 2013.

The inclusion comes as a result of the December quarterly review. SKYCITY
Entertainment Group Limited will continue to trade under the code SKC.

----

To be honest, I thought SKC was in the ASX 200 already. But with index guys buying in this time, it isn't hard to work out which way the share price will go short term.

SNOOPY

[Snoopy]

it went up over 30 cents in 2 days ........ missed the bounce? The brokers are accumulating and did you miss the investor update and the craigs price of 4.20.....

if you bought at 3.55 well done... i accumulated at 3.67....

look for some pull backs up till mid january ...

this is now a very tradable stock with retracements ....

I don't trade Surfersteve, but I did put a cheeky bid in the market at $3.50 which will probably expire unfilled. Never mind. I do have a good holding in SKC already with an average acquisition price that has a 2 in front of it. So I can't really complain.

SNOOPY

[winner69]

Profit downgrade

https://www.nzx.com/files/attachments/187076.pdf

Some of you guys did sort of suggest that things not that bright

Almost becoming like the thl of old ......always something going wrong that holds them back

[Balance]

Profit downgrade

https://www.nzx.com/files/attachments/187076.pdf

Some of you guys did sort of suggest that things not that bright

Almost becoming like the thl of old ......always something going wrong that holds them back

Very aggressive sell down last week - wonder if someone knew something?

FMA and NZX will have a busy time if they really did their job but we know from experience that NZX is asleep most of the time, save when it's bonus time and monopoly screw time.

[winner69]

No damage today ....still above where it was last week

Punters see it business as usual ......little earnings growth but a solid dividend

What will happen when punters can get 8% to 9% from the bank

[percy]

No damage today ....still above where it was last week

Punters see it business as usual ......little earnings growth but a solid dividend

What will happen when punters can get 8% to 9% from the bank

The PE is 17.36.Dividend yield of 5.22%.
With the down turn in Australian mining,retail and now motor industry I think it will be a long time before we see any growth in earnings.
Pleased I sold.

[percy]

Fundamental



P/E
17.630


EPS
$0.221


NTA
$0.734


Gross Div Yield
6.641%






Slightly different from DB's,however same result.
Sell.Wait until signs of growth.

[winner69]

since when have banks in new zealand paid a long run average of 9%.....

stats please ....

and if they did kiss good by to the whole market ...

and then the value of money

http://www.rbnz.govt.nz/statistics/key_graphs/inflation/


Bank 90 day rates seemed rather high not that long ago Ssurfersteve

Must be a mistake .... but from the same website you linked

[winner69]

and then if you if put it in for years and not months they were higher eh

Oh hells bells ... no wonder the old folks are maonign and groanings and moved their TD into shares .... they must have taken a huge cut in income when their 9% term deposits matured

[winner69]

surfersteve's excitement over SKC lead me to having another look at their prospects. Hadn't really looked at for years so updated some of the old files

My lasting impression with SKC is that even with all the good stuff they do they never seem to grow. Doesn't seem to have changed

Always best to look at a full cycle of say 10 years because half cycles of 5 years can be misleading, especially these days as 5 years ago was has the impact of the GFC in the numbers. Not a good place to start looking at long term performance over a complete cycle

SKC NPAT and Dividends since 2003 charted below. I think Adelaide/Hamilton were on stream then, Darwin a bit later.

But whatever the key metrics are -

- Revenues have grown at 4.5% pa over the last 10 years. Not that staggering is it
- NPAT (normalised) has ranged between $98m and $141m with an average of $111m. Growth rate from 2003 has been 2.4% pa which is slightly less than what revenues have grown by.
- Already a earnings downgrade this year so forecast is NPAT to be down in 2014 and recovering in 2015.
- Dividends have ranged from 15.5 c/s to 26.5 c/s and averaged 20 c/s. The 26 c/s payouts were back on 2004 and 2006 and going from memory the need for capex was not that great. Dividends since then have been lower and the current 20c/s is the highest for some time.
- Broker forecasts suggest 19c/s to 20 c/s in 2014 and 20c/s in 2014
- If we agree that 20c/s is a good number for the next few years than one could hardly call SKC a growth company can we. At best all the indications based on the past and the guru expectations are that 20 c/s is the shareholders lot.

So is valuation of SKC essentially what punters are prepared to pay for a 20 cent dividend ..... maybe a little future growth built. Based on the current shareprice that seems the case .... and there is little to suggest the shareprice itself is likely to boom from here.

Yes, no discussion about future prospects of having a convention centre and boom economic times. But over the last 10 years SKC have expanded, there has been boom times and there has been other ups and downs, just like the future will entail

So my feeling is that SKC will generate revenues of $800-$900m and make about $130-$140m and pay a 20 cent dividend for the next few years

Niot much to get excited about

[Snoopy]

Sell.Wait until signs of growth.


Easier to just move to Australia Percy, where SKC earnings are still growing when measured in that currency. I guess this is just another example of how misleading it is to only look at the share price in NZ.

All SKC plans are still on track in Australia. The appreciation of the NZ dollar has reduced the upcoming capital spend in Adelaide Australia by $NZ50m, which will more than offset any drop in earnings from Australia over the next five years. The winding down of Holden will provide plenty of job hunters to staff the new expanded casino in Adelaide. I would say SKC is one of the few obvious buys on the NZX. I would be buying myself if I didn't already hold a significant parcel. And even so, I do have a cheeky bid in the market to buy more if the share price should decline in the short term.

SNOOPY

[winner69]

never said this was a high growth company ........

its a TRADE stock ......

we run very large scale computer models here .....

with a runtime that even rod dury doesnt own ....

so we know the numbers for skc and other stocks that are run real time on our systems ...

Just thought you might have changed a bit from reading some of comments yesterday about the 'fundamentals'. obviously mistaken so please forgive me

Least it made me have a look

Keep to your 5 screens ad make heaps steve ......does sound more like you anyway

Cheers

[Snoopy]

remember y'all i am not a long term holder of this stock, and i m only excited because it swings up and down to so much because we hold several portfolio's some long some short ....


You hold SKC both short and long? Care to further explain that Surfersteve?



yes i would not sell here but wait to buy and sell again later .... IE for the next 3 years... you wont get a stock like this one very often ..


Whatever the share price does, as per Winner's post this has been a stable reliable dividend play over many years. So maybe Mr Market not very good at assessing this one?



if you are a long term holder perhaps you would like to buy retirement villages ....

these are stocks you should have bought 7 years ago ....

they pay no dividends much but you will make good gains ...


With hindsight I agree with you. But I do think the Ryman business model is much more difficult to understand than SKC!



if you trade then SKC is a good TRADING stock ..


Only in the sense that anything perceived as volatile is a good trading stock. My only problem with trading a share that is fundamentally fair value or below fair value is that eventually your trading system will have you out of SKC when all the fundamental signals say you should be in (like now?). Long term being out of SKC is not where you want to be!

SNOOPY

[Snoopy]

My lasting impression with SKC is that even with all the good stuff they do they never seem to grow. Doesn't seem to have changed

Key metrics are -

- Revenues have grown at 4.5% pa over the last 10 years. Not that staggering is it
- NPAT (normalised) has ranged between $98m and $141m with an average of $111m. Growth rate from 2003 has been 2.4% pa which is slightly less than what revenues have grown by.
- Already a earnings downgrade this year so forecast is NPAT to be down in 2014 and recovering in 2015.
- Dividends have ranged from 15.5 c/s to 26.5 c/s and averaged 20 c/s. The 26 c/s payouts were back on 2004 and 2006 and going from memory the need for capex was not that great. Dividends since then have been lower and the current 20c/s is the highest for some time.
- Broker forecasts suggest 19c/s to 20 c/s in 2014 and 20c/s in 2014
- If we agree that 20c/s is a good number for the next few years than one could hardly call SKC a growth company can we. At best all the indications based on the past and the guru expectations are that 20 c/s is the shareholders lot.

So is valuation of SKC essentially what punters are prepared to pay for a 20 cent dividend ..... maybe a little future growth built. Based on the current shareprice that seems the case .... and there is little to suggest the shareprice itself is likely to boom from here.


A 20c dividend is equivalent to a gross return of 7.5% at $3.80 share price. Not to be sneezed at. If interest rates go up will the share price fall to maintain a competitive yield? Possibly. But I think the growth initiatives in Auckland (Convention Centre), Adelaide and Darwin all of which are monopoly locations for casinos where SKC owns the licences are enough to counter the pressure from potentially rising interest rates.



Yes, no discussion about future prospects of having a convention centre and boom economic times. But over the last 10 years SKC have expanded, there has been boom times and there has been other ups and downs, just like the future will entail


IMO SKC have had a huge year, completely reversing your past snapshot Winner of a decade of no progress. The renegotiations of the casino contracts in both Auckland and Adelaide, traded off against the redevelopment capital expenditure commitments of course, clears the path forwards. A path forwards that has been muddied since the Americas Cup was last held in Auckland IMO. Sure there will be execution risk. But doing what you have always done only better at sites you know is one of the lowest execution risk paths to follow. Let's see what Mr Morrison can now do with the NZ and South Australian Government behind him.

The main downside risk I can see is Labour/Greens pulling out of the Convention Centre deal and SKC making a large profit of the proposed construction site. Maybe I'm a bit dull, but I find SKC carries exactly the right level of excitement for this mutt.

SNOOPY

[winner69]

miilions being dumped into the closing auction .. 14.4 million for the day .. 3.79

Your posts yesterday .....you still in the market buying SKC .....sound almost like an unofficial sand in the market

[Balance]

SKC is on the move.

Results in line with expectations and a profit upgrade is hinted at.

Meanwhile, BlackRock (the world's biggest asset manager) has been buying and has just added on another 6m shares during the price weakness.

Only one way for this share to go in the next 12 months.

Valuation from two major broking houses - in excess of $5.00.

[Balance]

balance ----> $$$$$ <----- plenty of ups and downs to come over the next 3 years ......

trade this stock ....

Happy to invest and hold.

Good dividend yield and an out of favor stock - local institutions selling and stock will be progressively moped up by overseas institutions.

Reminds me of GPG.

[ratkin]

Reminds me of GPG.

Is that a good thing?

[Balance]

Is that a good thing?

It's in the timing of the turnsound in sentiment.

Have a look at GPG closer, Ratkin.

It went seriously out of favor (and deservedly so due to the gross mismanagement by Ron and his piglets) but since middle of last year, offshore institutions (starting with Soros) started buying off local institutions.

Stock has put on 50% in 8 months.

Good enough for me.

[Balance]

I have received a research report from one of the major brokers with a valuation above $5.

Fully expecting the broker to give this stock a big push in Australia and Asia where investors love gambling stocks.

[dagoldtoof]

Sold mine at a reasonable profit six months ago, because as a smalltime gambler, (yes can afford it )have noted that the free spins and payouts of all pokie machines has declined over last 12months . now find TAB a better return......speaking to others who enjoy a night at the pokies the payout is shocking...

[dagoldtoof]

Yes Dividend is good....but will the joe blogg punter keep playing when they do not have a fun reasonable run for their money....instead of spending e.g.$100 for a couple of hours entertainment they will spend $40.00 and walk away...we did....If every punter thinks the way we do its a diminishing form of entertainment, guess the tax take has diminished the returns...Pleased we sold when we did...

[Balance]

large order @3.75 , 111 thousand, this stock very liquid ...

Think stock will breakout after today, be it on the downside or upside?

Buyer is obviously there and aware there are big sellers around - however, keep putting up 100k+ bids and happy to get stock.

[Balance]

Think stock will breakout after today, be it on the downside or upside?

Buyer is obviously there and aware there are big sellers around - however, keep putting up 100k+ bids and happy to get stock.

Looks like breakout will be on the upside.

Looks like BlackRock is paying up now so only one way to go.

Next stop $3.90, and if that breaks, me thinkth SKC will easily go to at least $4.50.

BlackRock is the world's biggest asset and fund manager - US$4,096,000,000,000 (yes, US$4.1 trillion) of funds under management, and 20% of SKC is but a flea bite.

[Balance]

Off topic question.

Balance do you have any SKC share? 4.50? Time Line?

Bought some when BlackRock disclosed shareholding, then some more when results announced.

Working off valuation of $5.00 plus by two brokers, expect $4.50 by JUne when company officially upgrades profit.

[Snoopy]

Sold mine at a reasonable profit six months ago, because as a smalltime gambler, (yes can afford it ) have noted that the free spins and payouts of all pokie machines has declined over last 12months . now find TAB a better return......speaking to others who enjoy a night at the pokies the payout is shocking...


Not sure if you can extrapolate your own experience to what happens to everyone else. If what you are saying is true it means that SKC has changed the payout ratio on their pokies. There has been no reason for them to do this. As far as I am aware the goverment tax take on pokies has not changed on a per machine basis. Tax equivalence seems to be the main issue with profitability of casinos. This is what has made Adelaide casino a dog for so long. There has been much crowing over the last few months as this issue has been 'fixed'. I suppose that SKC management could be paying out more larger jackpots and less smaller jackpots. But I imagine you can 'choose' this yourself by choosing the kind of machine you play (1c or $1 for instance). All gambling dens must strike a balance between retained bets and payouts. If the perceived payout is too low, then ultimately customers will not come in the door.

Revenue for the Auckland casino (excluding the high rollers) was listed at $213.5m for the half year ended 31st December 2013 , verses $213.1m for the half year ended 31st December 2012. Almost no change. Is there any evidence, apart from anecdotal, that SKC are creaming off more revenue to the bottom line? I am genuinely interested!

SNOOPY

discl: hold SKC

[Snoopy]

IMO SKC have had a huge year, completely reversing your past snapshot Winner of a decade of no progress. The renegotiations of the casino contracts in both Auckland and Adelaide, traded off against the redevelopment capital expenditure commitments of course, clears the path forwards. A path forwards that has been muddied since the Americas Cup was last held in Auckland IMO. Sure there will be execution risk. But doing what you have always done only better at sites you know is one of the lowest execution risk paths to follow. Let's see what Mr Morrison can now do with the NZ and South Australian Government behind him.

The main downside risk I can see is Labour/Greens pulling out of the Convention Centre deal and SKC making a large profit of the proposed construction site. Maybned if Asian investors had e I'm a bit dull, but I find SKC carries exactly the right level of excitement for this mutt.


The latest half year result is out and this time I want to have a little grizzle. It was a bit disappointing to see it lower than the prior comparable period, but that is not my main gripe.

Much of the decline can be attributed to the NZD/AUD exchange rate appreciation. That cuts down AUD profits and revenues in NZD terms. We all know this. Yet Morrison is quick to try and normalise his results, with reference to what would have happened if the NZD/AUD currency exchange rate had remained constant. See second slide of the half year presentation "1H14 Result Overview–Normalised Result." I don't buy the argument that the currency effect does not influence revenue. If the cost of visiting a country goes down, due to a weaker currency, you are liable to get more tourists coming in as they perceive your tourist destination as "better value". To emphsise what would have happened if the exchange rate had not moved is like looking at a theoretical marketplace for gaming that never existed.

The other reference comparison that I don't like is what would have happened if Asian investors had a 'normal' win rate in the high roller rooms. Why can't Morrison get over the fact that luck goes up and down and investors should not be thought of as idiots who do not recognise this?

The problem with reporting 'normalised high roller winnings' is that one day a high rolling investor is going to have a really big win. Morrison will come out and say:

"Well if he hadn't had that big win then our result would have been good."

The fact that he did have that big win and the result was a real cash outflow for SKC shareholders doesn't seem to register with Morrison.

SNOOPY

[macduffy]

Fair point, Snoopy.

"Normalising" the exchange rate to something more acceptable, ie last year's! would only make sense if there was a strong expectation that it will revert to those levels fairly quickly. In fact, there is good reason to believe that won't happen and that it is more likely that rates around current levels will be "normal" for the current financial year.

[Snoopy]

"Normalising" the exchange rate to something more acceptable, ie last year's! would only make sense if there was a strong expectation that it will revert to those levels fairly quickly. In fact, there is good reason to believe that won't happen and that it is more likely that rates around current levels will be "normal" for the current financial year.


Was rather surprised when filing away my interim dividend paperwork to see that SKC did not attach any imputation credits to it. Yet if you were Australian the same dividend was fully franked! That struck me as really strange for a company that purportedly makes most of its profits in NZ (p25 Interim Report)!

Digging a big further, Nigel Morrison states that the 'normalised' (there's that word again) profit was $66.4m (p5 interim report). Yet in the "Statement of Comprehensive Income" (p12), the actual profit for the period $61.061m has shrunk to $35.955m. A big jump in the "exchange differences on translation of overseas subsidiaries" up to -$24.116m (c.f. -$3.260m in the pcp) has done the damage. So I have to ask the question. Has Morrison being doing his own speculation on the exchange rates to the extent that all of the NZ profit for the period has effectively been spirited away?

SNOOPY

[Balance]

Looks like breakout will be on the upside.

Looks like BlackRock is paying up now so only one way to go.

Next stop $3.90, and if that breaks, me thinkth SKC will easily go to at least $4.50.

BlackRock is the world's biggest asset and fund manager - US$4,096,000,000,000 (yes, US$4.1 trillion) of funds under management, and 20% of SKC is but a flea bite.

https://www.nzx.com/companies/SKC/announcements/249635

Another 6m shares bought by BlackRock - these guys have the deepest pockets in the investment world so $4.50 by June now looks like it's going to happen.

[Balance]

Powering ahead.

Local fund managers starting to worry about under performance after going underweight?

$4.50 by end of June now brought forward to end of May.

[winner69]

Should have let mr Cortes kept playing .....seems like he was a very unlucky punter

http://www.stuff.co.nz/national/crime/9975226/Alleged-casino-cheat-very-unlucky

[winner69]

Powering ahead.

Local fund managers starting to worry about under performance after going underweight?

$4.50 by end of June now brought forward to end of May.

Still a bit short of your $4.50 mate but Black Rock don't care as they take another 1%

[troyvdh]

Skycity...you beauty...hope you get another "business excellence award'.

[Sideshow Bob]

Been watching Campbell Live Troy??

[NZSilver]

Ive been watching this one, has anyone else? - it dropped down from about 4.20 to a low of 3.70 over the last few weeks. I have though this is a good long-term hold, even though its facing some headwinds re high kiwi dollar eroding earnings and current low growth enviroment. However increased asain tourism, Auckland convention centre and its exclusive deals in australia should provide a good future even if growth is low over the next few years + a nice 5% div

Anyway I have been watching for 2 months and picked some up last week for 3.71 - see if I managed to time the bottom... for once...

Would like to know others thoughts?

Another option is CWN on the ASX

[RGR367]

...........
Anyway I have been watching for 2 months and picked some up last week for 3.71 - see if I managed to time the bottom... for once...

Would like to know others thoughts? Another option is CWN on the ASX

I got this stock right after its IPO and what I learned from it over the years is you won't go wrong buying it below its historical P/E of 18 (if I am not mistaken) which your purchase at 3.71 is just about there. It has been a very good provider all these years that I don't think I'll care anymore even if it loses its monopoly hold on casino gambling. But still, DYOR.

[Snoopy]

Ive been watching this one, has anyone else? - it dropped down from about 4.20 to a low of 3.70 over the last few weeks. I have though this is a good long-term hold, even though its facing some headwinds re high kiwi dollar eroding earnings and current low growth enviroment. However increased asain tourism, Auckland convention centre and its exclusive deals in australia should provide a good future even if growth is low over the next few years + a nice 5% div

Anyway I have been watching for 2 months and picked some up last week for 3.71 - see if I managed to time the bottom... for once...

Would like to know others thoughts?


There are a couple of negative factors that could be weighing on this share.

The Port Elizabeth closure of Holden will surely create a negative jobwash through South Australia in general and that includes Adelaide, and our SKC casino on the riverbank. But that 'news' is over six months old, so it could only be that fiurther downstream effects are now being priced into the South Australian consumer market that would cause the latest share price weakness. However, if we go by what happened with the decline of not so smart manufacturing in Auckland over the last fifteen years, I am not so sure the Auckland casino was affected. So I am guessing that Adelaide won't be either, in the long term.

Last week I got hold of a Morningstar report, datede 1st July 2014, that recommended Australians sell their SKC shares. However, the report stressed this was not because of any deterioration in the outlook of the company. It was because SKC was not going to be modelled by Morningstar any more in their new super duper computer system. If Australians are that fickle, I see it as my duty to relieve them of any SKC shares that come to market as a result.

The annual result is out this week and the SKC share price has been weakening in anticipation of nothing special. I expect the share price to bounce or stabalise when the annual results are released. I am with you NZ Silver and added to my holding last week.

SNOOPY

[macduffy]

It's a pretty sick chart at present. I'll wait for the announcement.

[winner69]

It's a pretty sick chart at present. I'll wait for the announcement.

Back in the days when good old Stolwyk was pushing this it was over 5 bucks.

Remember his twin sisters, AIA and SKC

Jeez he got heaps for ramping these two.

[winner69]

So so result but must be disappointing.

NPAT reported as $98m is a lot less than last years $127m isn't it

Love the way they say if we had made as much as we expected from our international business we would have made $15m - so lets normalise it eh and call it profit anyway.

What a rort. Surely in the gambling game you win and you lose. Those naughty punters winning more than they meant too and we spent. Fortune on entertaining them as well. Ironic in that 'the house' not winning as 'expected'

I'll run with the real number. SKC really push the boundaries of this "normalised profit" stuff. Maybe indicative of the culture involved with glamour and gambling

[Balance]

So so result but must be disappointing.

NPAT reported as $98m is a lot less than last years $127m isn't it

Love the way they say if we had made as much as we expected from our international business we would have made $15m - so lets normalise it eh and call it profit anyway.

What a rort. Surely in the gambling game you win and you lose. Those naughty punters winning more than they meant too and we spent. Fortune on entertaining them as well. Ironic in that 'the house' not winning as 'expected'

I'll run with the real number. SKC really push the boundaries of this "normalised profit" stuff. Maybe indicative of the culture involved with glamour and gambling

Not a good result - even normalized is below most analysts' expectations.

2 thoughts :

1. Sp has been falling steadily on volume so expectations are for a poor result.

2. Suspect Blackrock is not fazed by the result and they have been accumulating.

We will know within a few days, I guess!

[Beagle]

So so result but must be disappointing.

NPAT reported as $98m is a lot less than last years $127m isn't it

Love the way they say if we had made as much as we expected from our international business we would have made $15m - so lets normalise it eh and call it profit anyway.

What a rort. Surely in the gambling game you win and you lose. Those naughty punters winning more than they meant too and we spent. Fortune on entertaining them as well. Ironic in that 'the house' not winning as 'expected'

I'll run with the real number. SKC really push the boundaries of this "normalised profit" stuff. Maybe indicative of the culture involved with glamour and gambling

Well said mate and looks like a real sign of desperation to paint a slightly less grim picture. As for a massive expansion into Australia when the south Australian states are starting to implode with the imminent complete collapse of the Australian motor vehicle industry and the hundreds of associated small business component manufacturers leading to record unemployment...this is one of the worst timed business decisions you can imagine. $50B Federal deficit in Australia this year which won't be solved anytime soon either. Massive capex in Australia the panacea for a negative growth environment in New Zealand...I don't think so !! Frankly if you want to have a punt on this puppy, I think your odds are better inside one of their casino's than owning shares in them !!

[Hoop]

Broke the key 360 support yesterday indicating bear territory..next support 340
Depth holding up well with this mornings announcement, around 355c ...
bad news already factored in?

[Hoop]

........ Frankly if you want to have a punt on this puppy, I think your odds are better inside one of their casino's than owning shares in them !!

Hi Roger..
your above quote applies to all stocks that have suffered recent multiple TA sell signal breaks recently...good news is that at some point in the future they will trigger multiple buy signals...but in the meantime before those buy signals you don't want to be in any of those stocks..eh?

[Beagle]

Hi Roger..
your above quote applies to all stocks that have suffered recent multiple TA sell signal breaks recently...good news is that at some point in the future they will trigger multiple buy signals...but in the meantime before those buy signals you don't want to be in any of those stocks..eh?

Hi Hoop,
LOL fair comment, I'll see you down at the Hamilton Casino this afternoon then :). I should have ditched my AIR when they crossed the 100 day MA...oh well, hopefully they'll have a ripper annual result and special divvy like PGW yesterday.
Quite why the market for some reason seems to like this SKC result and market them up a bit this morning, go figure ? Surely people don't buy that very creative accounting of normalising international win ratio, or do they ?
Even if this creativity is somewhat believable its still an awful result in my opinion. Quite why a company would invest hundreds of millions into further development in a rapidly cooling Australian economy...the mind boggles...

[benjitara]

Is it just me or does the report (under the slide final dividend of 10c per share) DELIBERATELY use the CURRENT SHARE PRICE to get the yield? Surely if the report is to the end of the year June 30 then the share price at THAT time should be used to define a dividend yield?

[macduffy]

A moot point, benjitara. The market will be most interested in the yield at the current SP and, of course, prospects for the future. Commentators will focus on that. Not a great result but clearly the market was expecting something worse.

[benjitara]

A moot point, benjitara. The market will be most interested in the yield at the current SP and, of course, prospects for the future. Commentators will focus on that. Not a great result but clearly the market was expecting something worse.

Yes, well I am aware that the dividend will be paid after that point obviously but for their own "goodwill" businesses should surely be open to portraying the most accurate information. sigh ..
A funny company to assess for mine. A few "moat" aspects to the business but what sort of premium should we put on that. I'd be keen on seeing the sp down towards $3 before my money goes on...

[winner69]

Broke the key 360 support yesterday indicating bear territory..next support 340
Depth holding up well with this mornings announcement, around 355c ...
bad news already factored in?

I think punters getting excited about all the new hotels and convention centres {and the big punters losing losing more than as expected) that will make zillions for SKC in years to come.

Remember Blackrock accumulating. They know what they doing

[Balance]

Huge volume still going through - looks like BlackRock is happy to stand there and take whatever the sellers are prepared to sell.

So who has the bigger pocket?

[Balance]

Huge volume still going through - looks like BlackRock is happy to stand there and take whatever the sellers are prepared to sell.

So who has the bigger pocket?

Another big volume day with sp steadily recovering lost ground.

Very clear buyer (s) are very happy to take out all sellers around current levels.

Watch the institutions back off selling as a recovering sp will hurt their performances if they are underweight the stock.

[Balance]

Well said mate and looks like a real sign of desperation to paint a slightly less grim picture. As for a massive expansion into Australia when the south Australian states are starting to implode with the imminent complete collapse of the Australian motor vehicle industry and the hundreds of associated small business component manufacturers leading to record unemployment...this is one of the worst timed business decisions you can imagine. $50B Federal deficit in Australia this year which won't be solved anytime soon either. Massive capex in Australia the panacea for a negative growth environment in New Zealand...I don't think so !! Frankly if you want to have a punt on this puppy, I think your odds are better inside one of their casino's than owning shares in them !!

Sadly, Roger, it is a truism that in good times people drink and gamble but in bad times, people drink and gamble even more?

[maknz]

Surely people don't buy that very creative accounting of normalising international win ratio, or do they ?

It makes sense to me given they're in the gambling industry - they're going to be prone to statistical variance. Normalizing for win-ratio (expected value) is sensible for mid-long term profit projections.

It would be interesting to see if they exceed their expected win ratio, whether they normalize profit downwards too. If not, then it's definitely convenient and creative accounting.

[Balance]

It makes sense to me given they're in the gambling industry - they're going to be prone to statistical variance. Normalizing for win-ratio (expected value) is sensible for mid-long term profit projections.

It would be interesting to see if they exceed their expected win ratio, whether they normalize profit downwards too. If not, then it's definitely convenient and creative accounting.

It's a nonsense, maknz, as far as I am concerned because normalization is to take out one-offs (used to be called abnormals) to show underlying performance.

Presumably the accounting standards these days allow this nonsense but as they say, an accountant will ask you what profits you want to report and adjust accordingly to achieve!

[Snoopy]

NPAT reported as $98m is a lot less than last years $127m isn't it

Love the way they say if we had made as much as we expected from our international business we would have made $15m - so lets normalise it eh and call it profit anyway.

What a rort. Surely in the gambling game you win and you lose. Those naughty punters winning more than they meant too and we spent. Fortune on entertaining them as well. Ironic in that 'the house' not winning as 'expected'

I'll run with the real number. SKC really push the boundaries of this "normalised profit" stuff. Maybe indicative of the culture involved with glamour and gambling

I think you have it wrong Winner.

Rather than implicitly criticising Nigel Morrison, you should be praising the theoretical Nigel Morrison. I am talking about the one that booked the theoretical high roller win rate for Sky City IF those dice had landed according to how statistics said they should have landed. In theory those high roller profits should have been real. And the least you could do is give some theoretical praise for the theoretical Nigel Morrison who did book those statiscally expected 'normalised profit's if the dice had landed the right way, at least in theory.

SNOOPY

[Snoopy]

It's a pretty sick chart at present. I'll wait for the announcement.


As I predicted the share price did bounce on the profit announcement. Ok at $3.62, it is still a few cents below the $3.65 I paid last week. But a few cents is neither here nor there taking the long view. Dividend is steady. The real engine of the company, the Auckland casino, probably going a little better than expected. Good luck to those waiting for a $3 entry price.

SNOOPY

[winner69]

I think you have it wrong Winner.

Rather than implicitly criticising Nigel Morrison, you should be praising the theoretical Nigel Morrison. I am talking about the one that booked the theoretical high roller win rate for Sky City IF those dice had landed according to how statistics said they should have landed. In theory those high roller profits should have been real. And the least you could do is give some theoretical praise for the theoretical Nigel Morrison who did book those statiscally expected 'normalised profit's if the dice had landed the right way, at least in theory.

SNOOPY

thanks for that brilliant feedback snoopy

I'll pass it on to the guys at Kathmandu etc and suggest that they should look at 'normalising' profit by adjusting for excessive discounts because winter came late.

[Beagle]

Great comedy today :laugh: :laugh:

[winner69]

Great comedy today :laugh: :laugh:

Those international guys laughing all the way to the bank over the last six months

Full year difference to expected wins was $15.4m

At the half year it was $1,9m

Goodness gracious those guys have had the luck on their side beating the stats by $13,5m in the last six months of the year

All this stuff is evil and I have only spent 10 minutes in the Auckland den of inequity so don't know how it all works but SKY said this in the H1 report "for a number of players, the IB win rate was well in excess of the theoretical 1.35% and for these players that lost significantly and therefore earned less
commission, we paid a higher level of complementary expenses"[/I]

Does that mean if you win more than you should you keep the money but if we win more than we should we'll give you a meal and champagne and a bed for the night so you come back the next day to win more than you meant to

Maybe I misunderstand all this stuff. Maybe even the assumption that punters win more than they are meant to is even wrong .... but that's how I read the reports anyway

[Balance]

thanks for that brilliant feedback snoopy

I'll pass it on to the guys at Kathmandu etc and suggest that they should look at 'normalising' profit by adjusting for excessive discounts because winter came late.

:D :D :D

So freaking true and I am writing as a shareholder!

[winner69]

how normal is normal

I think your friend Nigel better do his sums again.

FY12 was $4.2m and FY13 $2.3m and this year the $15.4m

Past years the bulk of it may have been shouting the losers but this year it looks like the punters did beat the odds at the table

I have sent Nigel an email asking him how it works but probably Nigel has more important things to do than explain this to me. Maybe he will pass it on to that new communications guy they have taken on from Fairfax

[Beagle]

I'm pretty sure I recall a few months back a segment on CNBC that eluded too rumours of a bunch of big rolling hounds doing the rounds of Asian and pacific casino's who were experts at card counting, anyone else heard this ?
I've never been in the high rollers room but certainly on the main floor most if not all of the blackjack tables now have card shuffling machines which effectively negate anyone's ability to count cards but not so sure about the high rollers room. Anyone been in there ?

[winner69]

Analysts pleased - that's all that matters

Goldman Sachs really +ve about the future - Curley is forecasting $145 million net profit after tax for the June 2015 year and has a buy rating on the company, saying the company was exposed to two high-quality projects in Adelaide and Auckland. Doak (Mcqauries) has a $4.68 valuation on the shares, which closed up 7c yesterday at $3.62.

Good eh Balance

[winner69]

Maybe we should look at the Australia perspective more often

Bell Potter "A quick way to look at the SkyCity result is [Australian dollars] normalised [earnings before interest, tax, depreciation and amortisation] is up 8 per cent over the last year, yet the [Australian dollars] share price is down 9 per cent - this is an anomaly that we believe is unwarranted and today's result highlights why SkyCity has been oversold recently,"

Remember it is these guys (and Blackrock) that drive the shareprice

[winner69]

Gaynor not impressed with SKC performance but in defence of SKC it just shows that analysts are useless at forecasting earnings. I've always discounted valuations / targrts by 20% to reflect reality

But heck increasing those being paid over $700k by seven in a couple of years is amazing, esp as profits go backwards. Must e the place to work.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11312951

Extract -

Sky City's performance has been particularly poor as its net earnings have declined for two consecutive years and the company's 20 cents dividend is well below the 26 cents it paid for the June 2006 year.

The casino operator continues to underperform relative to analysts' forecasts as follows:

• After the June 2012 year result analysts had an average June 2013 year forecast of $145.6 million but the company achieved only $136.3 million.

• After the 2012-13 result the average analyst forecast was $142.8 million for the June 2014 year but the actual outcome was just $123.2 million.

• The average net earnings forecast for the June 2015 year has been cut from $168.7 million after the June 2012 year result to $163.1 million after the 2012-13 year announcement to just $132 million at present.

• Meanwhile the number of SkyCity executives earning $700,000 or more a year has jumped from none in 2011 to five in 2012 and eight in 2013.

It will be fascinating to see how many executives were paid $700,000 or more in the June 2014 year as there doesn't seem to be a close correlation between performance and executive remuneration at SkyCity.

[Snoopy]

Gaynor not impressed with SKC performance but in defence of SKC it just shows that analysts are useless at forecasting earnings. I've always discounted valuations / targrts by 20% to reflect reality

But heck increasing those being paid over $700k by seven in a couple of years is amazing, esp as profits go backwards. Must e the place to work.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11312951

Extract -

Sky City's performance has been particularly poor as its net earnings have declined for two consecutive years and the company's 20 cents dividend is well below the 26 cents it paid for the June 2006 year.

The casino operator continues to underperform relative to analysts' forecasts as follows:

• After the June 2012 year result analysts had an average June 2013 year forecast of $145.6 million but the company achieved only $136.3 million.

• After the 2012-13 result the average analyst forecast was $142.8 million for the June 2014 year but the actual outcome was just $123.2 million.

• The average net earnings forecast for the June 2015 year has been cut from $168.7 million after the June 2012 year result to $163.1 million after the 2012-13 year announcement to just $132 million at present.

• Meanwhile the number of SkyCity executives earning $700,000 or more a year has jumped from none in 2011 to five in 2012 and eight in 2013.

It will be fascinating to see how many executives were paid $700,000 or more in the June 2014 year as there doesn't seem to be a close correlation between performance and executive remuneration at SkyCity.

Winner, I am very disappointed to see you highlighting the actual quotes by the outlier Brian Gaynor as regards Sky City. Of far more significance are the theoretical quotes that a normalised Brian Gaynor would have made had all of those analyst expectations been satisfied. You need to open your mind to the possibilities and not get too hung up on reality with Sky City. Believe in what could happen and all of those positive theoretical quotes just write themselves.

SNOOPY

[bunter]

You need to open your mind to the possibilities and not get too hung up on reality with Sky City. SNOOPY

Nicely put.
SKC have had well-below-average 'win rates' for the past two years - maybe longer. SKC normalise their profits to account for their 'bad luck' - i.e. restates them _as if_ they'd had the theoretical win rate.
I wonder if they are being robbed by professional gamblers or cheats.
How many years of low win rates would it take before SKC did something?
Is this company badly managed?

Notably, director Treacy sold 70,000 shares at $3.78 on 1/9/14, and the stock is weak in a rising market.

Might sell mine too - copying the directors' trades is a proven successful strategy.
BTW my dividend-flow valuation (c) is 3.63.

[winner69]

Huge volume still going through - looks like BlackRock is happy to stand there and take whatever the sellers are prepared to sell.

So who has the bigger pocket?

Blackrock been selling, not buying, over the last few months ....interesting

[Snoopy]

Nicely put.
SKC have had well-below-average 'win rates' for the past two years - maybe longer. SKC normalise their profits to account for their 'bad luck' - i.e. restates them _as if_ they'd had the theoretical win rate.
I wonder if they are being robbed by professional gamblers or cheats.
How many years of low win rates would it take before SKC did something?
Is this company badly managed?


The argument is that if enough gamblers gamble long enough, the return will revert to the statistical odds. However, your point is an interesting one Bunter. I must trawl back through the actual results and see how far behind SKC are in their theoretical win rate.

Lots of crowing about how good the 'normalised' performance of the Auckland casino is in the annual report. But if you add on the high roller earnings to the Auckland property (assuming most high roller activity is actually in Auckland) , the real performance is actually negative.

The other point that worries me is that SKC consistently seem to pay less tax than the 28% company tax rate would imply.

Sky City are transforming themselves from an 'income' play to a 'growth' play according to the annual report. So no worries, everything is on track. That is the message from 'our Nigel'.

SNOOPY

[klid]

Well, what's the answer to the question? Is SKC a bargin (sic) at present? $3.50! Hasn't been here since July 2012.

[skid]

I know an experienced TA guy who just sold out --if thats any help

[Beagle]

Doesn't look too bad. I guess the key is whether Blackrock continue selling.
https://nzx.com/companies/SKC/announcements/256534

[winner69]

Doesn't look too bad. I guess the key is whether Blackrock continue selling.
https://nzx.com/companies/SKC/announcements/256534

Good to see the high rollers are being screwed at last --- winning lot less than they can

Crowne et al in Aussie seem to be the targets of these big punters this time around

Hope they stay away for shareholders sake

PS = I take it we don't 'normalise' earnings when wins are ahead of theory

[Beagle]

Good to see the high rollers are being screwed at last --- winning lot less than they can

Crowne et al in Aussie seem to be the targets of these big punters this time around

Hope they stay away for shareholders sake

PS = I take it we don't 'normalise' earnings when wins are ahead of theory

LOL LOL That's Gold :)

[winner69]

Stupid woman, doesn't she realise that she is just a commodity and a resource that is needed to line the pockets of the rich. She needs to realise that SKC is not some benevolent society.

Fancy bringing her tears to a shareholders meeting, they wouldn't get it either. they only worried about earnings per share and managing resources like people is part of that equation.

Bet you Morrison and his mates just took this as a minor interruption and maybe even joked about over the champagne later on.

But one day they will get their comeuppance. The poor will one day continue their uprising against greedy corporates run by self centred fat cats with obscene pay packets who have no real sense of The real world. Maybe this brave lady might be that trigger

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11344363

[mayday]

Nice bounce today :)

[kiora]

Say it again Sam :)


Nicely put.
SKC have had well-below-average 'win rates' for the past two years - maybe longer. SKC normalise their profits to account for their 'bad luck' - i.e. restates them _as if_ they'd had the theoretical win rate.
I wonder if they are being robbed by professional gamblers or cheats.
How many years of low win rates would it take before SKC did something?
Is this company badly managed?

Notably, director Treacy sold 70,000 shares at $3.78 on 1/9/14, and the stock is weak in a rising market.

Might sell mine too - copying the directors' trades is a proven successful strategy.
BTW my dividend-flow valuation (c) is 3.63.

[Balance]

Stupid woman, doesn't she realise that she is just a commodity and a resource that is needed to line the pockets of the rich. She needs to realise that SKC is not some benevolent society.

Fancy bringing her tears to a shareholders meeting, they wouldn't get it either. they only worried about earnings per share and managing resources like people is part of that equation.

Bet you Morrison and his mates just took this as a minor interruption and maybe even joked about over the champagne later on.

But one day they will get their comeuppance. The poor will one day continue their uprising against greedy corporates run by self centred fat cats with obscene pay packets who have no real sense of The real world. Maybe this brave lady might be that trigger

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11344363

Moneymen control the world - that's the cold hard truth.

Look at the mess made by the *ankers and financial players with the GFC but they are back after being bailed out by governments and taxpayers - bonuses are bigger than before and new products are being churned out to lay the foundations for even bigger bonuses and even bigger messes.

Gotto join them, get your share and do good with your share.

[kiora]

Say it again bunter :)


Say it again Sam :)

[Beagle]

WOW - Major blowout in the estimated cost of constructing the convention centre. With this and other major capex shareholders don't need to gamble with their funds it appears SKC are doing that for them:eek2:
http://www.sharechat.co.nz/article/2b291ef4/auckland-convention-centre-cost-jumps-by-a-fifth.html?utm_medium=email&utm_campaign=Auckland+convention+centre+cost+jumps +by+a+fifth&utm_content=Auckland+convention+centre+cost+jumps+ by+a+fifth+CID_dc33b55834fcd978c155a1ad1b8277eb&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle2b291ef4auckla nd-convention-centre-cost-jumps-by-a-fifthhtml SKC morphing into the ultimate punters stock ?

[bunter]

WOW - Major blowout in the estimated cost of constructing the convention centre. With this and other major capex shareholders don't need to gamble with their funds it appears SKC are doing that for them:eek2:
http://www.sharechat.co.nz/article/2b291ef4/auckland-convention-centre-cost-jumps-by-a-fifth.html?utm_medium=email&utm_campaign=Auckland+convention+centre+cost+jumps +by+a+fifth&utm_content=Auckland+convention+centre+cost+jumps+ by+a+fifth+CID_dc33b55834fcd978c155a1ad1b8277eb&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle2b291ef4auckla nd-convention-centre-cost-jumps-by-a-fifthhtml SKC morphing into the ultimate punters stock ?

"...Morrison said. "However, the Crown and SkyCity will work constructively to identify additional options to address the funding of any costs over and above *SkyCity’s $402 million contractual obligation*"

Could be bad news for the taxpayer and good news for Sky.
Sky seems to have capped its expense contractually at 402m.

I wonder too if Sky quietly increased the specification, hoping the government would wind up paying for it.

[Beagle]

Any way you slice and dice this that's more uncertainty hanging over the stock and we all know Mr Market doesn't like uncertainly. Even before this announcement and possible extra SKC cost there's far too much capex coming up for my liking. I'm not convinced the balance sheet isn't going to be a bit stretched and that's leaving aside as a separate issue whether they'll get an adequate return on new funds invested. I'll avoid until the dust settles after all capex complete.

[Aaron]

SKC saying that convention centre blow out should be paid by the NZ taxpayer. About $100mill blowout. Here is an idea Nigel don't pay a dividend for a year. The 2014 dividends of $95 mill should plug the funding shortfall. Why should the NZ taxpayer stump up funds so Nigel can keep paying dividends to the shareholders. It is called investing and the return on the investment will pay back the shareholders in the future. SKC & Nigel Morrison starting to sound like scabby bludgers to me. Welfare for those who need it I say.
Disclaimer don't currently hold SKC shares and my opinion would be a lot different if I did.

[winner69]

SKC saying that convention centre blow out should be paid by the NZ taxpayer. About $100mill blowout. Here is an idea Nigel don't pay a dividend for a year. The 2014 dividends of $95 mill should plug the funding shortfall. Why should the NZ taxpayer stump up funds so Nigel can keep paying dividends to the shareholders. It is called investing and the return on the investment will pay back the shareholders in the future. SKC & Nigel Morrison starting to sound like scabby bludgers to me. Welfare for those who need it I say.
Disclaimer don't currently hold SKC shares and my opinion would be a lot different if I did.

Yes SKC have no moral fortitude and typical of what's wrong with the world and yes shareholders are greedy. SKC also have it made with a neo liberal government running the country as well. Their comeuppance will come one day.

Best summed up by Balance a few weeks ago -

Moneymen control the world - that's the cold hard truth.

Look at the mess made by the *ankers and financial players with the GFC but they are back after being bailed out by governments and taxpayers - bonuses are bigger than before and new products are being churned out to lay the foundations for even bigger bonuses and even bigger messes.

Gotto join them, get your share and do good with your share.

[Jay]

Heard a commentator the other day saying that he has never known a Quantity Surveyor to come in below budget, usually way on the conservative side, that is adding a few extra $ here and there round it up etc etc..
So maybe not as much as they think and/or is Nigel trying to see how far he can push the envelope

Good share to be out of at present me thinks

[Beagle]

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11378108

Shaping up as a messy bun-fight.
As an Auckland ratepayer I for one am sick and tired of paying for facilities I never use. I suggest Joyce and Brown tell Morrison to fund it themselves or pull the plug and revoke the extension to SKC gaming licence and facilities at the same time. I honestly reckon with all SKC's other capex they could do without this convention centre and I'm not convinced Auckland needs it anyway. There's enough of then around already. To those that argue that Auckland needs a world class convention centre I say why ? central Auckland is over-crowded already.

[macduffy]

Yes, it's the "keeping up with the Jones" syndrome, Roger. Sydney, Melbourne etc have first class big conference centres and the fear is that Auckland won't attract the business without one. Rationalised, of course, by extravagant estimates of all the business and jobs that would be missed out on.

Disc: I hold SKC so am a bit biased - but still far from convinced either way.

[Beagle]

Yes, it's the "keeping up with the Jones" syndrome, Roger. Sydney, Melbourne etc have first class big conference centres and the fear is that Auckland won't attract the business without one. Rationalised, of course, by extravagant estimates of all the business and jobs that would be missed out on.

Disc: I hold SKC so am a bit biased - but still far from convinced either way.

Hi macduffy,

You've nailed it. Its all about keeping up with best international standards. I am so over the B.S. trotted out by Brown about having a "world class city". All most ratepayers want is reasonable infrastructure and a city they can afford to live in !! The giant amalgamation experiment has gone horribly wrong as far as costs are concerned and to add insult to injury we were all told it would result in significant rates efficiencies, what a bloody joke. Our rates in our beautiful Titirangi home used to be just under $1,800 in 2001 incl of wastewater and inorganic collection. Now they'll be $4,000 plus another $500 for wastewater ($4,500 total) and we don't get an inorganic collection anymore. We're paying 2.5 times the rates we were 13 years ago and general inflation in that period is only up about 30% !!

I'm sorry but as far as I am concerned SKC can stick their convention centre right up their own....you know where and while they're at it Brown can stick his pet rail link project there too.

[RGR367]

Hi macduffy,

You've nailed it. .....................

I'm sorry but as far as I am concerned SKC can stick their convention centre right up their own....you know where and while they're at it Brown can stick his pet rail link project there too.

Exactly the reason why SKC should walk away from starting the convention building too. I'm not faulting its management on the way they would want to go out from this deal. Better for the Auckland ratepayer to say, "we don't want it" because they can accept that rather than management admitting "we ****ed up our cost analysis". Gut feel, SKC wants out really from this.

Disc holding a lot of it but finding it now to be expensive based on its historical P/E

[Beagle]

Hi RGR367 Yep, to be honest although not a SKC shareholder at present, (have been at times in the past), I can't see the business case for it from SKC's perspective. That and I think their balance sheet would be quite stretched if it goes ahead considering all their other capex.

[Beagle]

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11378528

Auckland Revolts against Sky City. I think Winston Peters absolutly nailed it with his comment.

[theace]

Interesting (from Morningstar)

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11384141


I had been undecided to hold or sell for a while .... finally decided to sell and get out for now.

[Beagle]

Interesting (from Morningstar)

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11384141


I had been undecided to hold or sell for a while .... finally decided to sell and get out for now.

First time I've agreed with Morningstar for a very long time. Like I said earlier, it appears if you're a SKC shareholder you no longer need to gamble as well, SKC are doing that for you !!

[babymonster]

does anybody know what's the HY report going to be next week?

[bunter]

does anybody know what's the HY report going to be next week?

Will probably include P&L, balance sheet and some comments on the outlook.

Have been wondering whether to sell or not. The price has just been churning for the past year.

Random speculations...
1) The HY report will be disappointing
2) Once again, the win percentage will be below average.
3) SKY don't mind in the CC goes ahead or not - if it doesn't I suspect they are sitting on a nice no-risk capital gain on the land they bought.

[bunter]

...and this afternoon Deutsche Bank says sell.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11395891

So I did.

[babymonster]

yeah, that's my feeling that the profit will be disappointing..

[janner]

...and this afternoon Deutsche Bank says sell.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11395891

So I did.

Deutsche Bank know all about indebtedness..

‘Deutsche Bank’s derivative debt is greater than the global economy. That is one bank. $72 trillion in derivative exposure. The entire global economy, all the countries in the world is only $66 trillion GDP’.

[Beagle]

yeah, that's my feeling that the profit will be disappointing..

They'll be okay after they normalise the result for unusually low win percentage, unfavourable trading conditions, (so hot everyone went to the beach) and adverse visitation caused by adverse publicity about their convention centre fiasco :D

[winner69]

NPAT down 10% but normalised only down a fraction

Those horrible greedy (sneaky / smart) international punters still winning more than they should. A $10m adjustment shown in their reconciliation between reality and theory

Love it

[winner69]

Shareholders still should be happy that the dens of iniquity make heaps of money

Oh sorry I don't get it ...like the new set of ads tell the are really into the feeding / dining business .....and do heaps of good stuff for the community in an attempt to say they good guys.

[bunter]

Another mediocre result with low win%, as predicted.

The 10c div is fully unimputed.
So the gross div is the same as 2014, and less than 2013.

If SKC can't do well now, when will they?

Glad I sold.

[Beagle]

Woof woof, the dividend hounds will be barking mad that there's no imputation credit and only 25% imputation planned for the 2015 final divvy. A little while back SKC were touting themselves as a good yield story. Talk about a kick in the guts. Paying out 10cps unimputed when real EPS, (before all their creative excuses) is only 9.3 cps when the company has a massive amount of capex coming up looks like a really questionable dividend policy to me. Who are they trying to kid and what's the point of previously touting yourself as a yield investment knowing imputation credits were running out. Tut tut, poor form by the Directors in my opinion.

[bunter]

This was interesting
"...Actual win rate for the month [Jan] of 3.84% resulting in a win rate of 1.50% for the seven months ended 31 January.."
Have SKC spotted a problem and fixed it? Or is it just a random fluctuation.

Would like to know what the month-to-month win rate is (SKC seem to know).

In the 'watch' pile for now.

[Beagle]

First quarter win rate from memory was outstanding so second quarter must have been a real shocker. January, who knows...any way you slice and dice this thing with expected "unfiddled" EPS of about 20 cps for the year that puts this no present growth and very low prospective growth sin stock on a forward PE of about 19 with massive capex to come and a slightly stretched balance sheet...what's to like ?...any wonder the brokerages have a sell rating on it !!

[Biscuit]

...any wonder the brokerages have a sell rating on it !!

Reuters survey of analysts has an average rating of "hold", but I agree there's little there to get excited about in the near future. I sold down a while ago but still hold. One of the few holdings you can get in the sin sector in NZ.

[Beagle]

http://www.sharechat.co.nz/article/45ef03b5/skycity-s-big-spending-plans-may-not-deliver-enough-to-earnings-investors-say.html?utm_medium=email&utm_campaign=SkyCitys+big+spending+plans+may+not+d eliver+enough+to+earnings+investors+say&utm_content=SkyCitys+big+spending+plans+may+not+de liver+enough+to+earnings+investors+say+CID_dcc7510 3e45d5faa07436b1c086bae4f&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle45ef03b5skycit y-s-big-spending-plans-may-not-deliver-enough-to-earnings-investors-sayhtml

SKC taking the biggest punt of all with shareholders $800m ?

[winner69]

Snoopy, you done heaps of work n Sky City over he years

Been stuff all / no earnings growth for some time now.

Do you ever think they will make more than $130m / $140m again. This year looks like $125m. In other words is current level of profitability, where it has been for a few years now, there lot in life.

All normalised earnings of course

[winner69]

The differences between normalised and reported NPAT since 2009 have been $4m / $8m / $2m / $9m / $4m and the latest half year close to $10m

All adverse of course

Begs the question what really is abnormal?

Management says normalised best reflects the underlying performance of he business ...looking forward of course. But if there are always abnormals why bother **** your self wih his 'normalised' stuff.

Perhaps indicative of the sin business they are in.

[Beagle]

http://tvnz.co.nz/national-news/skycity-backs-down-convention-centre-cash-plea-6235224

SIN City have been forced to back down. I for one am very pleased that the ratepayers and public revolted against SKC's arrogant demands.
By my reckoning this is a public relations disaster for SKC..and this coming from a company that's trying its best to fool us that it's a good corporate citizen and something completely different from its root business that is nothing more than owning multiple den's of iniquity that's a blight on society. Pure SIN stock in every sense of the word aptly illustrated by the way they grossly mismanaged this fiasco.

[Bjauck]

http://tvnz.co.nz/national-news/skycity-backs-down-convention-centre-cash-plea-6235224

SIN City have been forced to back down. I for one am very pleased that the ratepayers and public revolted against SKC's arrogant demands.
By my reckoning this is a public relations disaster for SKC..and this coming from a company that's trying its best to fool us that it's a good corporate citizen and something completely different from its root business that is nothing more than owning multiple den's of iniquity that's a blight on society. Pure SIN stock in every sense of the word aptly illustrated by the way they grossly mismanaged this fiasco.

Were SKC being arrogant or just trying to interpret the contract or agreement they had entered with the Crown?

sin=religious (or moral) transgression

SKC = gambling = possible addiction
AIR=Pollution possible disease and injury and oil demand which often leads to wars (ie killings)
HNZ= usury, depending on your interpretation & religion

etc.

Disc:Holdings in HNZ, AIR, SKC

[couta1]

http://tvnz.co.nz/national-news/skycity-backs-down-convention-centre-cash-plea-6235224

SIN City have been forced to back down. I for one am very pleased that the ratepayers and public revolted against SKC's arrogant demands.
By my reckoning this is a public relations disaster for SKC..and this coming from a company that's trying its best to fool us that it's a good corporate citizen and something completely different from its root business that is nothing more than owning multiple den's of iniquity that's a blight on society. Pure SIN stock in every sense of the word aptly illustrated by the way they grossly mismanaged this fiasco.
Well said Roger, I wonder how many people have taken their own lives through their involvement with this place and how many families have been ruined? One of the only stocks I will never touch, a place that's made out as fun when in reality as you say is just a den of iniquity.

[tim23]

Why not a rights issue for expansion plans like any other company? Nigel Morrison or oliver twist?

[Bjauck]

Well said Roger, I wonder how many people have taken their own lives through their involvement with this place and how many families have been ruined? One of the only stocks I will never touch, a place that's made out as fun when in reality as you say is just a den of iniquity. Emotive vilification of NZ listed companies is nothing new of course. Den of iniquity. Emotive stuff. The TAB and Lotto encourage iniquity in NZ? Are all the other companies legally operating in NZ without "sin" with their product (mis-used or not) causing no-one harm or suffering? Or is it a arbitrary decision according to whatever "scale" is currently being used? If you are looking at the operations and product which can cause problems whether used to excess or mis-used then the sin-bin will be pretty full. However I do applaud you if you do have a strict moral/religious code and apply it consistently and without exception when making your decisions. That you have only been involved with or funded companies that have never caused heart-ache, suffering and family discord. Then you can cast as many stones as you wish with clear conscience.

[RGR367]

Well said Roger, I wonder how many people have taken their own lives through their involvement with this place and how many families have been ruined? One of the only stocks I will never touch, a place that's made out as fun when in reality as you say is just a den of iniquity.

Isn't this exactly why SKC has a so called "moat" because it's the only type of sin being on "gambling"? And that moat which will be expanded up to almost infinity because of the deal on building an eyesore has made me got into it in the first place. Am I wrong? Don't think so. But on PR matter, yes, this was a bomb that came back to SKC to further expose how much of the lousy sin it got.

[bunter]

"All modern commerce is a swindle" - George Orwell
Most I reckon. Wouldn't be many stocks left to pick if you left out the ones that lie for money.
Accept it and deal with it.

[skid]

How to perfect the art of lieing---Become a lawyer--politician--or Marketing executive...of course the list goes on....

[skid]

Well said Roger, I wonder how many people have taken their own lives through their involvement with this place and how many families have been ruined? One of the only stocks I will never touch, a place that's made out as fun when in reality as you say is just a den of iniquity.

He says as he looks for the next share to gamble on:)

[couta1]

"All modern commerce is a swindle" - George Orwell
Most I reckon. Wouldn't be many stocks left to pick if you left out the ones that lie for money.
Accept it and deal with it.
Everyone must stand up for their own intrinsic values, I for one have no desire to have any participation in adding to the misery of a fellow human beings life by promoting a highly addictive environment dressed up as being just harmless fun.

[couta1]

He says as he looks for the next share to gamble on:)
Even with all my losses both actual and on paper i have a balanced happy life and marriage even though the sharemarket has caused me much grief, but i view it as a challenge to master not a gamble even though it has that element:cool:

[Beagle]

Everyone must stand up for their own intrinsic values, I for one have no desire to have any participation in adding to the misery of a fellow human beings life by promoting a highly addictive environment dressed up as being just harmless fun.
Yep that's bang on the money mate. Pretty sure their harm mitigation "policy" is almost completely ineffective. Random audits / sting operations have shown that to be the case.

[Beagle]

Were SKC being arrogant or just trying to interpret the contract or agreement they had entered with the Crown?

sin=religious (or moral) transgression

SKC = gambling = possible addiction
AIR=Pollution possible disease and injury and oil demand which often leads to wars (ie killings)
HNZ= usury, depending on your interpretation & religion

etc.

Disc:Holdings in HNZ, AIR, SKC

SKC's harm minimisation policies are almost completely ineffectual. Just words ?
AIR - You are drawing an incredibly long bow there, (I presume you bike to work ?). For what its worth you'll know they're investing heavily in new fuel efficient aircraft. Other policies, they were the first in the world to pioneer the advanced winglets you see on the domestic A320's which cut fuel consumption by 4%.
HNZ - Usury ?? - Oh Please...lets get real. They're a million miles from being pay-day loan sharks.

[skid]

Even with all my losses both actual and on paper i have a balanced happy life and marriage even though the sharemarket has caused me much grief, but i view it as a challenge to master not a gamble even though it has that element:cool:

Despite my dig--I agree on the pokies---I remember coming in to do some painting and seeing those mothers with kids throwing their money away was just SAD

[skid]

SKC's harm minimisation policies are almost completely ineffectual. Just words ?
AIR - You are drawing an incredibly long bow there, (I presume you bike to work ?). For what its worth you'll know they're investing heavily in new fuel efficient aircraft. Other policies, they were the first in the world to pioneer the advanced winglets you see on the domestic A320's which cut fuel consumption by 4%.
HNZ - Usury ?? - Oh Please...lets get real. They're a million miles from being pay-day loan sharks.

And Air have smaller seats to encourage you to lose weight and save the earths food:):)

[Snoopy]

Snoopy, you done heaps of work n Sky City over he years

Been stuff all / no earnings growth for some time now.

Do you ever think they will make more than $130m / $140m again. This year looks like $125m. In other words is current level of profitability, where it has been for a few years now, there lot in life.

All normalised earnings of course.


SKC is a company in transition Winner. Two very big spending projects on the table. Lot's of doubters about the execution. There were some good years when the America's cup was in town. So maybe more regular big events will help things along. Great idea! Why not build an international convention centre? Attract a few more of those big spending international professionals!

Adelaide OTOH has never really fired. But Adelaide was at a competitive disadvantage compared with the gaming laws operated in other Australian states. Great idea! Get the South Australian government to put their gaming laws on the level with other Australian states. Then we can build a new improved casino in partnership with the rest of the state capital spending on the riverbank development. Casino monopolies confirmed in South Australia and Auckland along the way.

I think we will have to wait until the Adelaide and Auckland construction projects are finished before we know if the grand plan will pan out. Looks like the SKC is 'priced to stumble' on the market today. Might look to reduce my holding if all was priced to perfection. Instead I will be looking to up my holding with any general market weakness during the year (did the same last year buying an additional parcel around $3.60) . This is my investment strategy with SKC for FY2015. Hoping for $3.60ish again.

SNOOPY

discl: hold SKC

[Bjauck]

SKC's harm minimisation policies are almost completely ineffectual. Just words ?
AIR - You are drawing an incredibly long bow there, (I presume you bike to work ?). For what its worth you'll know they're investing heavily in new fuel efficient aircraft. Other policies, they were the first in the world to pioneer the advanced winglets you see on the domestic A320's which cut fuel consumption by 4%.
HNZ - Usury ?? - Oh Please...lets get real. They're a million miles from being pay-day loan sharks.

AIR - every flight spews pollution - even the latest engines on the latest planes. I have SKC and AIR shareholdings. I own a car as I recognise that all legal human activity has a cost/benefit.

HNZ - Loan sharks they are not. However they loan money to others for interest -whether it is a "sin" depends on your ethical, religious and moral judgment. For you and me, it is presumably acceptable. Inability of borrowers to meet loan obligations is a great cause of family stress and personal suffering.

For me, rather than my SKC shares, I would be more likely to sell my RBD holding on my (personal) ethical grounds. I think processed foods high in salt, sugar and fat can be addictive and can cause very broad and severe suffering to families when consumed to excess. Processed foods, confectionery and takeaways and those people who supply them should be government controlled and taxed in the same way as the petrochemicals, gambling, alcohol and tobacco industries. Is it ethical to have sugary snacks at child height sometimes near cash registers? In pretty colourful wrappers advertised by celebrities and glamorous people? The display in shops is designed to be appealing so you come back for your next sugar rush or fatty satisfaction and buy the high margin treats that become necessities for some.

Anyway I do not wish to fall out with you and other posters. So I hope we can agree to disagree.

[Biscuit]

We all have to draw our own lines on this one. Personally, I am happy to invest in NZ companies doing unethical things in New Zealand if I can make a dollar out of it and its legal. I've invested in companies undertaking activities that I certainly don't support and that in the past I have protested about. I've always taken the view that if someone is going to make a dollar out of it, it might as well be me. If you think something is unethical - change the law, its your country. I draw the line where companies are clearly taking advantage of poor regulation in other countries.

[Beagle]

AIR - every flight spews pollution - even the latest engines on the latest planes. I have SKC and AIR shareholdings. I own a car as I recognise that all legal human activity has a cost/benefit.

HNZ - Loan sharks they are not. However they loan money to others for interest -whether it is a "sin" depends on your ethical, religious and moral judgment. For you and me, it is presumably acceptable. Inability of borrowers to meet loan obligations is a great cause of family stress and personal suffering.

For me, rather than my SKC shares, I would be more likely to sell my RBD holding on my (personal) ethical grounds. I think processed foods high in salt, sugar and fat can be addictive and can cause very broad and severe suffering to families when consumed to excess. Processed foods, confectionery and takeaways and those people who supply them should be government controlled and taxed in the same way as the petrochemicals, gambling, alcohol and tobacco industries. Is it ethical to have sugary snacks at child height sometimes near cash registers? In pretty colourful wrappers advertised by celebrities and glamorous people? The display in shops is designed to be appealing so you come back for your next sugar rush or fatty satisfaction and buy the high margin treats that become necessities for some.

Anyway I do not wish to fall out with you and other posters. So I hope we can agree to disagree.


I enjoy a good debate mate so no drama as far as I'm concerned and I take your point on some of the dubious sales tactics employed by the supermarkets. The fat thing is a difficult one...where do you draw the line, shall we ban V8 cars because they're no good for the environment ? The main issue I have with SKC is are they playing fair ? I think we can easily show that AIR's pollution is fair and reasonable for the aircraft services they provide and that HNZ's interest rates under generally accepted N.Z. consumer law are more than fair and reasonable for the loans they make and that they wouldn't knowing do business with any party if they thought that party couldn't reasonably comfortably afford the repayments. OTOH according to a recent investigation (not sure if it was run by Internal Affairs or not), SKC are only paying lip service to their official harm minimisation policies. Hmmm, is that fair and reasonable ????
http://thedailyblog.co.nz/2014/07/10/skycitys-commitment-to-preventing-harm-non-existent/
http://www.scoop.co.nz/stories/PA1412/S00131/pq-12-gambling-harm-minimisation.htm
http://tvnz.co.nz/national-news/more-children-abandoned-skycity-casino-5712238

[Bjauck]

I like a good debate too. I think if there are harm minimisation requirements there should be a procedure to oversee and enforce them. The requirements should be clear and enforced for the period of their licence. TBH I don't know if SKC is any better or worse than my other holdings at sticking to its operational rules, fairness, company law and NZX requirements. Some holdings have been quite creative!

[Biscuit]

according to a recent investigation (not sure if it was run by Internal Affairs or not), SKC are only paying lip service to their official harm minimisation policies. Hmmm, is that fair and reasonable ????


Internal Affairs did run a mystery shopper investigation of casinos and pubs etc and they concluded (with regard to casinos):



Improvement is needed by the casinos to monitor behavioural indicators of potential problem gambling.
Casino staff may be using casual conversations to establish a rapport which can build an environment in which customers are more willing to ask for help if they’re experiencing gambling problems.


So not really saying that casinos are only paying lip service to their host responsibility.

[Beagle]

People interested can judge for themselves if we're talking about lip service or not. I've read the PowerPoint summary and I'm not impressed.
http://www.dia.govt.nz/diawebsite.nsf/wpg_URL/Services-Casino-and-Non-Casino-Gaming-Mystery-Shopper-campaign?OpenDocument#one

[Biscuit]

I guess the main risk to SKC in that perception of sin and lip service is that it might attract more compliance or regulation. On the upside though, the moat that protects SKC is further entrenched by the same negative perception. More compliance and regulation is likely to more negatively effect the competition, so its hard to see how they can lose.

[pierre]

Well - what do we think of the result announced today. Pretty ho-hum judging by the lack of comment on here this morning.

NP up 30.2% and EPS at 22.0 compared with 17.0 last year seems pretty damn good to me. The benefits of the additional gaming concessions in Auckland haven't started yet either.

[winner69]

Well - what do we think of the result announced today. Pretty ho-hum judging by the lack of comment on here this morning.

NP up 30.2% and EPS at 22.0 compared with 17.0 last year seems pretty damn good to me. The benefits of the additional gaming concessions in Auckland haven't started yet either.

It's ho hum because you need to look at normalised numbers. That's what Sky City want you to do.
U
NPAT up 8% and eps from 21.3 to 23.9

Not as exciting as the numbers you quoted eh

[stevevai1983]

I think it's a pretty average report.
Auckland is doing great and i think it will continue to grow in 2016: additional gaming concessions
Adelaide's EBITDA recuded by 19%!! But at least in 2015H2 it's revenue increased by 4m. I hope it will do better next year as the refurbishment works is complete.

[winner69]

The high rollers didn't do as well this year after cleaning up last year.

The den of iniquity must have sussed them out and played the card / rolled the dice a bit better this year

[Beagle]

Adelaide has been the consistent underperformer over so many long years now. I'm surprised they invested so much on the expansion programme there, wasn't it $300m ?
Maybe Adelaide folk a parochial bunch and don't like giving Kiwi's their money ?
Yes Winner, IIRC there were rumours going around that certain overseas people had worked out how to scam the system here. Expert card counters to call it what it is. I guess some of them weren't welcome back at a SKC casino in FY15?

[limmy]

30% Profit Hike。

[winner69]

Poor Lewis

Hamilton posted a damning review to his 3.2 million Twitter followers: "Don't ever go to the sky city casino in Auckland, they treated me like dirt. Can't believe how rude they were. Worst casino experience ever!"


Teach him for going to such a den of iniquity


http://www.stuff.co.nz/sport/motorsport/77881770/formula-1-champ-lewis-hamilton-blasts-sky-city-casino

[Snoopy]

Poor Lewis

Hamilton posted a damning review to his 3.2 million Twitter followers: "Don't ever go to the sky city casino in Auckland, they treated me like dirt. Can't believe how rude they were. Worst casino experience ever!"


Teach him for going to such a den of iniquity


http://www.stuff.co.nz/sport/motorsport/77881770/formula-1-champ-lewis-hamilton-blasts-sky-city-casino

If this means that SKC is not like other Casinos that Lewis has experienced, I see this as a good thing.

SKC has been a core part of my investment portfolio back before the Stolwyk days. So successful was my investment in SKC, that I was looking at other casinos in Sydney, Melbourne and even Macau to provide a complimentary investment to pair up with the dollars I have in SKC. After some personal visits, all I thought were just horrible: real 'glitter gutter' floor experiences. I came back and put more money in SKC shares instead. 00 on the roulette wheel is always the best number to pick for a real return!

The market likes Lewis's free publicity twitter spree too. Any publicity is good publicity in the entertainment industry. SKC SP up 4% today.

SNOOPY

[winner69]

Horrible places, I agree Snoops

Surprised Roger has started ramping SKC after his visit there he other day - the eating places but he might have sneaked into the real dens of iniquity

[winner69]

Stolwyk was a real character and a good bloke.

Remember his reminding us all the time that Auckland Airport and Sky City were twins.

Probably great investments over that time eh

I sometimes wonder if Roger is Stolwyk's son.

[percy]

Formula 1 is not exactly the Vienna Boys Choir,Bernie paid 100mil Euro to stop being prosecuted.
Lewis does have history.
Poor Lewis's "super trendy" gear did stop him gaining entry to the Royal box at Wimbleton,and The Queen did have to explain table etiquette to him,when she had him as a dinner party guest.

[stoploss]

Formula 1 is not exactly the Vienna Boys Choir,Bernie paid 100mil Euro to stop being prosecuted.
Lewis does have history.
Poor Lewis's "super trendy" gear did stop him gaining entry to the Royal box at Wimbleton,and The Queen did have to explain table etiquette to him,when she had him as a dinner party guest.

Percy the Bernie payment was even better than that wasn't it . Facing charges he gave someone a bribe , the German Govt let him off if he paid them !!!!!

http://www.telegraph.co.uk/sport/motorsport/formulaone/f1news/11012490/F1-supremo-Bernie-Ecclestone-pays-60m-to-clear-his-name-in-bribery-trial.html

[macduffy]

Rumours of an Australian takeover bid for SKC.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11607909

[trader_jackson]

SkyCity Entertainment Group had 9.1 million shares traded today, relatively high I believe.

[Snoopy]

Rumours of an Australian takeover bid for SKC.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11607909

Hands off 'Sky City', 'Star Entertainment Group'! The casinos you operate in Australia are just horrible compared to what Sky City do here from NZ. We need your management expertise for 'Sky City' like a hole in the head. Long suffering 'Sky City' shareholders have backed the Adelaide Casino over many lean years. And now, just when the redevelopment plan aligns with more equitable South Australian government regulations, you want to take that hard won improvement away from the shareholders who backed it? I for one will not be selling out, should an offer from Star emerge!

Except, I suppose, evey mutt has a level in their supper dish that can't be ignored. I still remember when Nigel Morrison took over at Sky City. Nige mentioned his goal was to to get to the share price to $10. Is a Star takeover the way to fulfill this promise? Ten bucks Nige, is what it will take for my moral stand to be distracted enough, so that I go the way of my bulging supper dish.

SNOOPY

[winner69]

SKC market cap $2.9 billion and debt of $0.7 bilion

Say 20% premium to take over and one needs $4.1 billion

Annual operating cash flow (before capex) say $0.3 billion plus maybe a bit more

A 7% return might be attractive for lie minded suitors who never seem too worried about loads of debt and paying over the odds.

And our government prob happy to allow Aussie rogues to take over the NZ licences,

[Big Blind]

Nigel Morrison stepping down at the end of the month. Was just contemplating buying some more this morning.

https://www.nzx.com/files/attachments/233341.pdf

[777]

Market didn't like it. Down 4%.

[Mickey]

2.8M shares already traded this morning - it'll be interesting to see where it goes today

[777]

Market really doesn't like it.

I see a teleconference is being arranged with analysts, institutional investors and fund managers.

[Snoopy]

Why not a rights issue for expansion plans like any other company? Nigel Morrison or oliver twist?


Nigel Morrison has gone. Not sure if Oliver Twist will be the new CEO. But the board has heard you Tim.

A 1:10 rights issue at $4.40. Ostensibly this rights issue is becasue Sky City have decided not to sell their new downtown hotel after all. Or maybe the sharemarket has reached such a level that tapping the market for new capital, for what I think is quite a high price in historical terms, was just a no brainer.

I won't be playing the roulette wheel to celebrate. But I'll be taking up my rights. I have found in the past that backing my favourite number '00' is the most rewarding way to go gambling.

SNOOPY

PS Am a little disappointed to see that although institutional investors and retail investors are being offered shares on the same terms, any undersubscription my retail investors will be offered to institutions. IOW we retail investors can't oversubscribe, but the big boys can.

[stevevai1983]

Nigel Morrison has gone. Not sure if Oliver Twist will be the new CEO. But the board has heard you Tim.

A 1:10 rights issue at $4.40. Ostensibly this rights issue is becasue Sky City have decided not to sell their new downtown hotel after all. Or maybe the sharemarket has reached such a level that tapping the market for new capital, for what I think is quite a high price in historical terms, was just a no brainer.

I won't be playing the roulette wheel to celebrate. But I'll be taking up my rights. I have found in the past that backing my favourite number '00' is the most rewarding way to go gambling.

SNOOPY

PS Am a little disappointed to see that although institutional investors and retail investors are being offered shares on the same terms, any undersubscription my retail investors will be offered to institutions. IOW we retail investors can't oversubscribe, but the big boys can.

Hi Snoopy, how to participate this? The record date is 16May.
I am living oversea atm.

[Snoopy]

Hi Snoopy, how to participate this? The record date is 16May.
I am living oversea atm.

Have a look here Steve

https://www.nzx.com/companies/SKC/announcements/282159

As long as you have a registered address in NZ or Oz you should be OK. This from p7 of the offer document.

"Alternatively, Applications may be made by Eligible Retail Shareholders online at www.skycityshareoffer.co.nz without the requirement to complete the Entitlement and Acceptance Form."

So if you have internet access, you should be OK. You have until June 2nd to get your money in.

SNOOPY

[stevevai1983]

thank you Snoopy:)
I lived in oversea for 3 years now but i have NZ registered address.

[tango]

I took up the bonus shares.

Does anyone know when will they be allocated? Do they show up in our account on the 2nd of June?

[Big Blind]

I took up the bonus shares.

Does anyone know when will they be allocated? Do they show up in our account on the 2nd of June?

Looks like shares allotted on 10th June. See p4 in this link

https://www.nzx.com/files/attachments/235187.pdf

[macduffy]

Not a bonus issue. I had to pay for mine!

Shares to be allotted 9 June. Trading to commence 10 June.

[tango]

Thanks everyone! I missed that bit

Yep you're right macduffy - I worded that wrong...
Still the price is below market so I'm happy to have a small gain

[pierre]

Annual result is out and it appears the market thinks a 13% increase in NPAT is not enough.

Bit of a worry for the reporting season if that applies to all companies on the NZX!

[sb9]

Annual result is out and it appears the market thinks a 13% increase in NPAT is not enough.

Bit of a worry for the reporting season if that applies to all companies on the NZX!

Sure, that's the big conundrum of expectation vs actual. And the way things are going on NZX of late if not all most of stocks either fully priced in or close to. Will be interesting to see when other big ones start reporting later this week or next week.

Sorry to be bit off topic, I know this is SKC thread.

[pierre]

Sure, that's the big conundrum of expectation vs actual.


SKC now down 26 points! If that occurred after a 13% lift in NPAT, what kind of result do you think the market was actually expecting?

[Balance]

SKC now down 26 points! If that occurred after a 13% lift in NPAT, what kind of result do you think the market was actually expecting?

Mr Morrison getting rid of rest of his shares?

[sb9]

SKC now down 26 points! If that occurred after a 13% lift in NPAT, what kind of result do you think the market was actually expecting?

I'm afraid couldn't answer that question as I don't own any SKC shares nor do I follow their numbers. However, my comments were more along overall market sentiment not just SKC. Another anecdotal evidence can be found in the way PGW price moved before and after the result.

I guess Balance has a more valid point from his post earlier re SKC.

[macduffy]

I wouldn't be too concerned, SKC has risen from around $4.40 at the end of July! A classic case of over-expectations!

[Harley]

Annual result is out and it appears the market thinks a 13% increase in NPAT is not enough.

Bit of a worry for the reporting season if that applies to all companies on the NZX!

Most companies on the NZX don't lack a basic fundamental, a CEO.

[sb9]

SKC now down 26 points! If that occurred after a 13% lift in NPAT, what kind of result do you think the market was actually expecting?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11690944

Might be able to answer some questions re today's weakness.

[Biscuit]

I wouldn't be too concerned, SKC has risen from around $4.40 at the end of July! A classic case of over-expectations!

NPAT up about 30% first half wasn't it? Maybe that led to over-expectation.

[winner69]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11690944

Might be able to answer some questions re today's weakness.

Pretty negative weren't they all

[winner69]

NPAT up about 30% first half wasn't it? Maybe that led to over-expectation.

2nd half normalised profit same as last year - no profit growth

Bit slack eh

[Marilyn Munroe]

SKC shares getting thrashed today.

Probably the fallout from the Beijing offices of underarm bowler casino operator Crown being raided. This is being interpreted by commentators as the Peoples Dictatorships disapproval of high roller marketing to their lumpen proletariat. I understand SKC view high roller gambling as a top product.

Boop boop de do
Marilyn

[winner69]

Not the flashiest of reports on Q1 - whether you look at real numbers, with or without the IB or the 'normalised' ones

Whatever they say a return to growth for these dens of iniquity

[bull....]

bad report, ib will take a big hit from this crown saga which will flow thru to all there casinos in the short term I reckon

[Leftfield]

Charts not looking good. Now south of previous support levels. Glad not holding.

8397

[NZSilver]

Can you please explain IB?

[winner69]

Can you please explain IB?

International Business

The high rollers who get the special treatment to lose heaps

Decent chunk of their overall business

[carrom74]

Up 3%..It seems to be an overreaction in terms of last week's fall(China's raids helped the cause).

[stevevai1983]

very very bad month for me.
my 3 large holdings : SKC TIL SUM
TIL: big drop from 4.8 to 3.8
SUM: big drop from peak
SKC: big drop from 4.6 to 3.8

[NZSilver]

Or you could see the positive - a handy month if you wanted to top up or re-enter positions. I topped up on til last week and got back in sky city today. Note SKC still moving up on ASX so we should see another rise tomorrow

[carrom74]

Can anyone clarify with this SSH Notice. Thanks

https://www.nzx.com/companies/SKC/announcements/291710

Is Nigel Morrison selling SKC or Buying it?(of late)

[macduffy]

Can anyone clarify with this SSH Notice. Thanks

https://www.nzx.com/companies/SKC/announcements/291710

Is Nigel Morrison selling SKC or Buying it?(of late)

Buying and selling - but the net result is an increase in his direct and indirect holdings.

[macduffy]

The AFR carried a story last week speculating about a possible merger between SKC and Star Entertainment following the actions in China recently against Crown Casino employees. Reckoned that SKC's Auckland, Adelaide and Darwin casinos would make a nice fit with Star's Sydney, Brisbane and Gold Coast operations. Does anyone have access to that article?

[Hectorplains]

The AFR carried a story last week speculating about a possible merger between SKC and Star Entertainment following the actions in China recently against Crown Casino employees. Reckoned that SKC's Auckland, Adelaide and Darwin casinos would make a nice fit with Star's Sydney, Brisbane and Gold Coast operations. Does anyone have access to that article?

Basically, it's about synergies of $50 million a year from a merger. At 10-times EBITDA, instantly $500 million value for shareholders. I'll message you the full text - I got knuckle wrapped for a previous paywalled site cut and paste.

[NZSilver]

Hectorplains - could you please flick me a copy. Thanks in advance

[winner69]

The AFR carried a story last week speculating about a possible merger between SKC and Star Entertainment following the actions in China recently against Crown Casino employees. Reckoned that SKC's Auckland, Adelaide and Darwin casinos would make a nice fit with Star's Sydney, Brisbane and Gold Coast operations. Does anyone have access to that article?

Same old story that's churned out every time the share prices take a hit ......but one day it just might happen, one never knows

SKC market cap $2.6 billion - for anybody to get your shares say it cost $3.0 billion ....plus $0.4 billion debt ....total cost $3.4 billion .....a lot to get SKC ebitda of just over $0.3 billion

And what about government approvals re licences - that's a political hot potato

Aren't synergies a great thing .....why doesn't everybody merge with everybody else?

[macduffy]

SKC appoints new CEO.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11743529

[NZSilver]

Interesting times for SKC, more info out to day re star looking at merger/takeover. Noticed some large trades today

[Bjauck]

Interesting times for SKC, more info out to day re star looking at merger/takeover. Noticed some large trades today Another NZ Share market listed investment about to disappear? NZ is running out of government assets left to boost the local share market. NZ household wealth will end up even more dependent on expensive residential property.

[Master98]

http://www.theaustralian.com.au/business/dataroom/star-looking-to-roll-dice-on-merger-with-nz-rival/news-story/138c51098f9fbc65df8fce8dc158752e

Investment bank Macquarie Capital and advisory firm Flagstaff are understood to be in the corner of The Star Entertainment Group nutting out the options for a potential merger with its New Zealand-based rival Skycity Entertainment Group, which is taking advice from Credit Suisse-First NZ Capital, according to sources.

The banks are believed to be weighing various options for a tie-up or takeover deal between the two groups, which could create a newly merged $7 billion casino operator.
The latest takeover talk about the two companies follows a recent agreed $11.3bn merger between Australian-listed gaming and wagering heavyweights Tabcorp and Tatts Group, which is on track to be finalised next year subject to approval from the Australian Competition & Consumer Commission.
Investment banks are working behind the scenes for the two casino operators Skycity and The Star as tensions escalate at Skycity between investors and the company’s board.
Plans are afoot by a group of Skycity investors, believed to be Perpetual, Masco Capital and Investors Mutual, to call an extraordinary general meeting in an effort to oust chairman Chris Moller, who fund managers say is refusing to properly engage with Star Entertainment chairman John O’Neill about the prospect of a merger between the two companies.
Bad blood is believed to exist between Mr Moller and Mr O’Neill from negotiations over the hosting of the Rugby World Cup more than a decade ago.
Mr Moller at the time was chief executive of the New Zealand Rugby Union, while Mr O’Neill was CEO of the Australian Rugby Union.
At the time, New Zealand missed out on hosting the event due to a contractual dispute over ground signage rights.
Another point of contention is that the group embarked on an equity raising to fund its developments, rather than divesting assets within its property portfolio.
Sources yesterday said some members of The Star’s board were lobbying for a merger to occur, but the company’s Malaysian shareholder Genting, which controls 6.6 per cent of the company according to Bloomberg, is reluctant for a deal to proceed.
Other major shareholders are in favour of a merger, and it is understood chief executive Matt Bekier has told investors he would be in favour of an acquisition of Skycity, subject to the right price.
One view is that both parties may also face regulatory hurdles over a deal proceeding.
Mr Moller has been meeting with Sky shareholders this week.
Skycity and The Star Entertainment have been in merger talks before and The Star’s performance has strongly improved since that time.
However, buying Skycity could currently be a tough ask for the Star Entertainment business.

[winner69]

Are you guys hoping for a takeover / merger?

[Master98]

Are you guys hoping for a takeover / merger?
takeover with good price:t_up:

[winner69]

takeover with good price:t_up:

A good price would mean $3.5-$4.0 billion needed by Star for current ebitda of $0.3billion (see earlier post)

The last sentence from the bit from The Australian - However, buying Skycity could currently be a tough ask for the Star Entertainment business.

But then when egotistical casino operators start gambling with other peoples money anything can happen eh?

[NZSilver]

Running hot this morning, should see $4+

A solid underlying business with good div. Recent sell off has created plenty of value. Back in an uptrend now after share price fell following IB issues bad publicity re crowns troubles in china.

[macduffy]

Headline in the AFR Markets section, two minutes ago:

"Star, Perpetual, hose down hopes of a merger with Sky City....."

Anyone with access to this?

[Bjauck]

A good price would mean $3.5-$4.0 billion needed by Star for current ebitda of $0.3billion (see earlier post)

The last sentence from the bit from The Australian - However, buying Skycity could currently be a tough ask for the Star Entertainment business.

But then when egotistical casino operators start gambling with other peoples money anything can happen eh? NZ investors have had past experience with other NZ companies, who did not operate casinos, gambling with their money. One of the reasons why so many Kiwis stay away from financial investments and stick their money into land.

[NZSilver]

Yeh I read it - basically says star/perpetual(owns 9.5%) saying nothing's happening on their end. I've heard that before though

[Balance]

Yeh I read it - basically says star/perpetual(owns 9.5%) saying nothing's happening on their end. I've heard that before though

No smoke without fire.

Hardly expect them to say anything else - they must be already extremely annoyed word leaked out which has resulted in Sky City's sp going higher.

[NZSilver]

Yep to right, what are the current price targets on SKC?

[winner69]

Yep to right, what are the current price targets on SKC?

Some as high as $5.30

[BlackCross]

I see SKY (UK) have received a bid approach... http://uk.reuters.com/article/us-sky-m-a-twenty-first-fox-idUKKBN13Y20M

[RGR367]

I see SKY (UK) have received a bid approach... http://uk.reuters.com/article/us-sky-m-a-twenty-first-fox-idUKKBN13Y20M

Wrong thread BC. You misread SKC to be the SKY TV thread :t_down:

[winner69]

Lots of money being made from punters (many who probably are living a life of misery because of this)

Reduced dividend might upset some shareholders who support this outfit.

https://www.nzx.com/files/attachments/252577.pdf

[carrom74]

SKC on fire....Out from it's lows...I suppose the market liked the way Skycity got its profit pretty close YOY despite a sizable drop from its International business of high rollers...Adelaide and Darwin are still a worry

[Out to lunch]

Good they changed their payout policy, in the years ahead P+L is not going to be similar to cash flow due to the huge capitalised interest. Will also need to adjust my forecasted P/E ratio calculations accordingly.
AKL still the jewel and associated concentration risk will need to be included in a price valuation. Also I note some hints around CNY performing well for the 3 months to March 17 which could have influenced the price as well today.

[sb9]

What's with big crossing of 35ml shares @4.05 a piece this morning?

[macduffy]

What's with big crossing of 35ml shares @4.05 a piece this morning?

Obviously some big holder selling down. Wait for the substantial holder notice.

[macduffy]

Chairman Chris Moller to step down at end of the year.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11883017

[hogiela]

Chairman Chris Moller to step down at end of the year.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11883017



Market over-reacting to this? Crazy selling happening ... wish I had've waited until today to purchase my holding grrrr

[carrom74]

Market over-reacting to this? Crazy selling happening ... wish I had've waited until today to purchase my holding grrrr

Would be interesting whether the new incumbent chairman will be able to resist the take over bids from Investors in Australia...Chris was stubbornly resisting it.AFR ran a report not long ago.

The downfall is knee jerk Hogiela...will be up soon...

[macduffy]

Market over-reacting to this? Crazy selling happening ... wish I had've waited until today to purchase my holding grrrr

Not so much the change of chairman, more the 35m shares crossed at $4.05 this morning I would think. Market is adjusting to this, for the time being, at least.

[hardt]

Buy time...

[JoeGrogan]

Buy time...

Indeed :t_up:

[Mickey]

Buy time...

What in your mind makes them a buy at the moment hardt?

[King1212]

What in your mind makes them a buy at the moment hardt?

That was what I about to ask....

[Balance]

That was what I about to ask....

Rob Campbell joining the Board as Chairman is actually one good reason to buy - his track record at THL, Precinct and Summerset is absolutely superb.

Any sell down of this size usually involves the one seller needing to discount down to a level where other sizeable buyers will find attractive to 'help' relieve the seller.