Only down 3% odd. must have been baked in?
Printable View
Surely the fine will be all the profit gained plus a penalty. Crown made $1.1bil from its breaches. Analysts have pegged the fine for Adelaide at $50m but that seems way light. Given the debt covenant breaches and waiver forbids new debt issuance SKC is in a pickle. I am going to stab in the dark at a fine NZD$250m, Westpac got a A$1.1B fine. A $250m fine is 12% of market cap, $50m priced in so another 7% to fall.
Really SKC should detail how many breach events(up to A$22m fine per breach) and of what nature and profit gained. Otherwise the market is blind and has to throw the dart like I have.
whats wrong with gambling? for the majority its fine.
wouldnt want the minority to kill it for the rest of us. well guess thats how the world works
lots of punters buying SKC. Might even finish up for the day!
Down a miserable 3c.
What the hell is wrong with the market?
Does the market not know bad news and has it forgotten to panic?
Damn!
Here is a prediction.
The stock is cum equity raise of circa $400m. With that done the debt guys will throw in more debt if required for the fine.
Depends on how good a legal team they can assemble.
They will need to fight this one with everything they can muster.
Even if they a bare faced about it and guilty they will have to say anything that sticks... look it was a rain soaked day everyday and how do they know where paper comes from... anything really...
after all they dont have a tracing scanner for every bit of paper that is OTC...
the market might give some OPPO's going forward though.
Certainly going to mean this one wont recover anything soon after the Buggy bug bug ...
This article explains hoe SKC Adelaide got into trouble.
The amounts of cash some individuals are said to have presented to the casino beggar belief. The sheer volume of cash should have set alarm bells clanging in the compliance office.
https://www.abc.net.au/news/2022-12-...ents/101745798
Boop boop de do
Marilyn
Top tip: The more you gamble the more the arithmetic grinds you into dust.
Will the usual Class Action appear shortly...?
new tax on casino's in NSW proposed ... might spread to other regions ?
https://www.nzx.com/announcements/406680
Reported: Net Profit After Tax: $22.8m ($56.6m) 167.8%
Normalised: Net Profit After Tax: $73.1m ($92.7m) 474.3%
wonder how skc adelaide going after reading star announcement yesterday
The Group is experiencing a significant and rapid deterioration in operating conditions, particularly atThe Star Sydney and The Star Gold Coast.This has largely been driven by the compounding impact of regulatory operating restrictions andexclusions, and by an emerging weakness in consumer discretionary spending behaviour
To put the operating environment into perspective, the Group’s current earnings performance is atunprecedented low levels
http://research.iress.com.au/IDS/old...091850000&ppv=
Jeez....death by a thousand cuts!! 224 as I type.
I wonder if the fine to be imposed by AUSTRAC is about to be announced?
If anything like the Star Entertainment Group fine ($AU100m) could be no divie for the next 12-18 months? Last dividend here was $NZ45 million.
Don't hold, but want to get back in at some stage.
Max fine A$60
The verdict soon ...rekon
aye this is one I'm watching and have done a little bit of work on, but I'm on a total purchase ban until after the debt limit issue is resolved (or not) in America, and otherwise holding more cash than I'd like given the macro environment.
At face value the metrics look good:
* EV/EBITDA: 6.9x, 6.7x, 6.1x, FY23-25 respectively. 5yr pre covid average of 9.5x.
* PE: 16.8, 10.8, 10, FY23-25 respectively. 5yr pre covid ave. of 17.9
* Cash yield: 5.7%, 7%, 8.1% FY23-25 respectively (fully imputed). 5yr pre covid ave. 4.9%.
Consensus estimates for any potential fine seems to hover around the A$45m mark.
The SP before the day of the fine was $2.72 and it closed today at $2.29. That's a 43c diminution in value, multiplied by 760.2m shares outstanding, equating to a market implied fine/impact on operations of $327m, or $279m more than estimates of the fine. Since the announcement of the AU proceedings, Skycity recommenced its dividend programme and announced its 1H FY23 result which beat analyst forecasts at the EBITDA, EPS and DPS level.
In fact at today's price it looks to me if the market has priced in that Skycity has to pay the fine and shut down its Adelaide operations.
SKC has invested tremendous capital which has yet to earn a return on (convention centre, soon Auck carparks), but is expected to start producing in FY25 (and in FY24 for the carparks), and as tourism eventually recovers to pre covid levels
With FY23 largely in the bag (only 8 weeks before start of FY24) and focusing on FY24 and FY25:
* Consensus EBITDA of $337m in FY24 and $365m in FY25
* Adelaide EBITDA consensus of $50m in FY25 and $58.6m in FY25
* Net of Adelaide: $287m and $306m
* Consensus NPAT of $151m and $166m across FY24 and FY25
* Pro rated NPAT net of Adelaide: $128.5m and $139m
* Implies that at todays market cap, and if adelaide was shut down, SKC would still only be trading at 13.5 and 12.5 PE across those years. and if a 75% payout ratio, 5.5% and 6.0% cash yield.
* and of course, adelaide may continue on.
There would be some debt constraints and there is the question of SKC having to fund the purchase of the Auckland carpark which was originally intended to be purchased by Macquarie. That is dragging out and will probably be higher than desirable, but SKC has ample liquidity to purchase. My back of the envelope suggests they could pay the fine, lose adelaide, buy the carparks, and keep net debt to EBITDA below 2.5x. Which should allow dividends to continue, assuming consensus estimates are reasonable.
So what is missing? What is the chart telling us to ask ourselves from a fundamental point of view?
* Casinos are buggered? Crown delisted by Blackstone after Packer went nuts. Nine Entertainment run afoul and so has SKC Adelaide? Loads of incremental compliance costs are already being borne by SKC and included in the YTD results as well as legal fees associated with the Austrac proceedings
* Has revenge tourism peaked? some anecdotal signs out there tourism may be peaking. However Auckland is still running well below pre covid levels and SKC's international business remains well below pre covid. I checked Stats NZ and it appears aggregate visitor numbers are still well down on pre covid.
* Concerns over overheads? labour super expensive and getting more expensive in all jurisdictions
* Recession going to whack revenue? less disposable income, though saw some interesting stats on the impact of the GFC on underlying performance on SKC and casinos more generally
* long term chart not flash?
* Independent director recently resigned?
* Has a lot of Aussie instos who are sick of their AU casino losses and pulling back on the industry, although Allan Gray keeps buying.
* A concern that historic revenues are not repeatable in light of new AML restrictions and oversight?
What else am I missing here? Open, honest question. Because even if SKC had to shutter Adelaide (highly unlikely & undesirable) the investment still looks to me that it could stack up as a long term yield investment, and of course, they may just have to pay the fine and ensure they are hyper vigilant on AML.
I'm less interested in missing out on a few bips of yield of the price rises and this was a good opportunity, than I am in understanding what's on the horizon and what I am missing.
A bit of a wild lights show on Sky Tower tonight:
https://www.nzherald.co.nz/nz/fresh-...EORUWEXNYEQJE/
Tend to agree with your assessment, FM.
The share register consists principally of overseas and Australian institutions these days and I suspect some of them have simply had enough of the punishment they received from being in the sector - Star Entertainment has been a disaster.
Things like SKC I've perpetually expected online gambling to takeover. Hasn't happened and SKC in fact now have online and see it as a growth opportunity (though in the 1H result it flatlined as punters went back into bricks & mortar). Can't quite shake the fear.
Obviously not ESG (and that's fine by me) and # of instos able to invest in the likes of SKC shrinking. but does create long term slack in the register.
Thanks for sharing your thoughts Moose.
I'd figured the depressed pricing could be partly as a result of less instituitional buying interest due to ESG Mandates.
Allan Gray adding further at these low levels provides confidence as have followed in behind them previously to good effect. They seem to be quite contrarian.
Suspect it potentially has $3 written on it not long after the Austrac fine is known.
Continuing to watch this stock.
SKC coming out of the MSCI Small Cap Index at month end.
Crown trial timetable about to be set and lots of negative publicity about the sector in OZ which Skycity and Star Entertainment invariably get mentioned. Would expect this negative news cycle to flow for a while yet & weigh on sentiment.
https://www.afr.com/companies/games-...0230510-p5d7eb
https://www.afr.com/companies/games-...0230512-p5d7x6
Red flag on regulations and pending outcome from Skc Adelaide
SKY CITY update ....
appoint someone to have a look around the place ... have a few drinks at the bar and come back saying ... boy that game was a cracker. Wow that screen is BIG!!!!
mst be a huge fine coming surely ...
https://www.nzx.com/announcements/412147
cant see any gang bikes in the car park ...standard of dress needs to go up a bit as the punters from china dressed better.
should take it out of DIV ... buying oppo ..
could be a steal...
Crown resorts fined $425m.... would see SKC soon down to $2?
the size of the crown fine ( third biggest in aus history ) probably surprised many , im thinking the size of the fine skc may get might be bigger than many analyst's had factored into the price hence the stock coming under pressure now
Crown Resorts and AUSTRAC agree to $450 million fine over money laundering breaches
https://www.abc.net.au/news/2023-05-...trac/102410670
https://www.newsroom.co.nz/crown-fin...S19F-Tqw%3D%3D
At least A$50m fine
SKC could become even cheaper... take a few years to come back from ... but a bargain if it sinks under 2...
SKC is an Aotearoa company - the Ozzies will be licking their lips as they work out every which way that they can sting the company for as much as possible.
More like $150m?
Sp to go below $2.00 soon as the investigation & deliberations drag on.
A very good thing to happen imo as the casino industry has been crime-friendly. A clean up is entirely appropriate.
The court date was 17th July... expecting an update next week?
https://www.nzx.com/announcements/416274
ACCOUNTING PROVISION IN RELATION TO AUSTRAC CIVIL PENALTY PROCEEDINGS, IMPAIRMENT OF SKYCITY ADELAIDE CASINO LICENCE, FY23 GUIDANCE CONFIRMED
Key Points
• The AUSTRAC civil penalty proceedings may result in SkyCity Adelaide being ordered to pay a penalty. However, AUSTRAC has not detailed the amount of any civil penalty it proposes to seek and those proceedings are at an early stage.
• Pursuant to accounting standard NZ IAS 37 in connection with the preparation of SkyCity's FY23 financial statements, a A$45 million (NZ$49 million) provision has been booked as at 30 June 2023 for a potential AUSTRAC civil penalty and associated legal costs.
• Considerable uncertainty remains regarding the amount of any civil penalty SkyCity Adelaide may be required to pay. Any eventual civil penalty may be significantly higher or lower than the provision. The timing of any civil penalty to be paid by SkyCity Adelaide is also uncertain.
• In addition, pursuant to accounting standard NZ IAS 36, the Adelaide casino licence has been impaired by A$45.6 million (NZ$49.7 million).
• The provision and impairment are non-cash, and do not impact normalised earnings for SkyCity’s FY23 financial statements. SkyCity’s FY23 Group normalised earnings remain in line with the guidance range provided on 24 May 2023 of NZ$300 - $310 million normalised EBITDA.
• SkyCity’s FY23 financial statements remain subject to external audit.
Hard to know what to do with this one.
Would be a buyer below $2. Might get a chance soon....
yes it could be a great stock to rebalance into later ... real almost destressed assets status soon... cant imagine anything less than a ton fine at the MIN..
there only defence is what? they dont have glue do they about the size of the fine...
sell any share you have to a trust and then bank the gains later...tax free
SP holds up pretty solid considering The $100m impairment news
Well say goodbye to the coming dividend
Right.....tell us how you deduced that x-men? Announcement next wednesday.
I'd wager a ~6c final dividend, bringing the full year dividend to 12c (6c interim paid in march).
Then something like 14c in FY24, 16c in FY25, 17-18dps in FY26. Fully imputed.
disc...recently took a position in the low $2.20s.
Supposed to be a ? Mark on my post. $100 m impairment...will definitely impact the NPAT?
gotcha.
No I don't think it'll impact this year's final dividend.
The impairment is on the book value ascribed to the Adelaide license - it is totally non operational, non cash, and doesn't have any economic impact on the group. (It's worth questioning why the license (which are very long term AND exclusive) has been impaired and what that signals about the future. Interest rates are up but could also signal a slower return to pre covid tourism numbers as part of their modelling.)
The provision of A$45m I thought was a step in the right direction (& indeed think that would be a very good outcome for the business). Clearly Skycity was in the wrong and amends must be made and paid. The provision is again totally non cash and for the moment simply a guess - albeit the best guess that can be made by extrapolating the fine Crown paid in proportion to its contraventions and calculated pro rata to Skycity's offences. The ultimate cost may be higher or lower but we won't know until everything has gone through the system and the cash paid then.
But for this years result Skycity has reconfirmed its guidance that it'll do normalised EBITDA of $300-310m for the year ended 30 June 2023. So I don't see the FY23 final dividend at any particular risk.
Those are just my views. If you have access to broker research you could check that for alternative opinions or refresh the latest consensus estimates from marketscreener.
Still reckon NZ operations aren’t squeaky clean either …..same Board looking after both eh ……could be further troubles ahead.
Just my view
Perhaps. The whole industry has performed shamefully in my view and has been overdue for a clean up for sometime. No doubt negative sentiment could linger for a while yet.
[QUOTE=Fiordland Moose;1016310]gotcha.
No I don't think it'll impact this year's final dividend.
Might hit the divi, if they expect to have to pay out the fine soon. I would reduce the divi if I was in the driving seat....
Agree.
Which is why SKC trades on an Enterprise multiple of 6.75 times.
A lot of negatives and contingencies built into that multiple and sp.
SP imo should really trade under $2.00 until the Adelaide Casino AML & SA state tax issues are resolved.
Then, there's the carpark dispute with Macquarie and the never ending NZICC story.
A lot of overhang.
Whats the SA tax thing - did I miss something? NSW was about to hit casinos with a new tax but backed down a few days ago. There was an overhang/fear in the mkt that other states could follow but that seems less likely now unless I’ve missed something.
NSW tax still going ahead but at a reduced rate - basically to what Star can afford, saving the 3,000 jobs employed by Star Group there.
https://www.abc.net.au/news/2023-08-...jobs/102717236
Make $929.2 m revenue...NPAT is just around $8m
Poor SKC is no better than the greasy company RBD?
Normalised NPAT of $139m. lots of one offs and noise in the result (accts always a bit messy in my view). Includes a $6m upward adjustment for theoretical win rate (last yr was a negative 2.7m). Semi useful information but I don't accept it as a valid normalisation. anyway underlying result better than consensus of $109m. and there was the 6c fully imputed dividend I expected.
Guidance for FY24 a tad underwhelming.
Not too shabby if U read through...modest growth fy 24
no contribution from horizon till 25 or 26 ? and who knows how the gambling will go as the belt tightening in NZ deepens. lotteries do well in recession as small bet for big payday sounds worth it when your struggling but does the same apply to casino's ?
When U are addicted to gambling....bro...U will sell your wife b kids...lol
met a few gambling addicts in the day when i used to go horing with the boys
What a ridiculous report on One news, tried to make it look like sky had made a billion in profit. Just trying to stir up anti gambling rhetoric.
The result included $100m loss/ impairment for Adelaide Skycity....
That means the fund is there to pay any fines within that $100m ....won't effect fy24 result? Can someone care to explain?
I just feel there is a good value on this stock....seems reached the button and in recovery mode...
whooooooaaaaaaaaaaa!! :ohmy:
https://www.nzx.com/announcements/417565
APPLICATION TO TEMPORARILY SUSPEND NEW ZEALAND CASINO OPERATOR’S LICENCE FOLLOWING COMPLAINT BY A CUSTOMER
SkyCity Entertainment Group Limited (SkyCity) has been informed by the Department of Internal Affairs (Department) that the Secretary of the Department (Secretary) is making an application to the Gambling Commission (Commission) to temporarily suspend SkyCity Casino Management Limited’s casino operator’s licence for a period “in the range of 10 days”.
SkyCity Casino Management Limited (SCML), a subsidiary of SkyCity, is the holder of the casino operator’s licence for the SkyCity Auckland, SkyCity Hamilton and SkyCity Queenstown casinos in New Zealand. The Commission will now consider whether to make an order to suspend SCML’s casino operator’s licence and, if so, the duration of any such suspension. A decision may not be forthcoming for a number of months.
The application has been made pursuant to section 144(a) of the New Zealand Gambling Act 2003 (Act) and follows a complaint made in February 2022 to the Department by a former customer who gambled at the SkyCity Auckland casino over the period from August 2017 to February 2021. The Secretary states in the application that SCML did not comply with requirements in its SkyCity Auckland Host Responsibility Programme relating to detection of incidences of continuous play by the customer.
SkyCity will fully cooperate with the Secretary in relation to the application and process. Given that the application is before the Commission it would be inappropriate for SkyCity to comment further on the application and allegations at this stage.
Under section 144(a) of the Act, the Secretary may apply to the Commission for an order to suspend a casino licence if the Secretary is satisfied that the licence holder is breaching or has breached the Act or a condition of the casino licence or minimum operating standards. The Commission must then decide whether or not to grant the order sought by the Secretary after following the procedure set out in section 145 of the Act, including considering written submissions and (if applicable) convening a hearing – a process which could take some months to conclude. Should the Commission determine to grant an order to suspend SCML’s casino operator's licence, this would not impact SkyCity's non-gaming operations, including its hotels and restaurants.
SkyCity is committed to maintaining the highest standards of host responsibility best practice, with priority given to minimising the impacts associated with problem gambling as an area of primary focus. SkyCity has made, and continues to make, significant investment and enhancements in its host responsibility controls, technology and resources.
https://www.nzx.com/announcements/417565
SkyCity Entertainment Group Limited (SkyCity) has been informed by the Department of Internal Affairs (Department) that the Secretary of the Department (Secretary) is making an application to the Gambling Commission (Commission) to temporarily suspend SkyCity Casino Management Limited’s casino operator’s licence for a period “in the range of 10 days”. SkyCity Casino Management Limited (SCML), a subsidiary of SkyCity, is the holder of the casino operator’s licence for the SkyCity Auckland, SkyCity Hamilton and SkyCity Queenstown casinos in New Zealand. The Commission will now consider whether to make an order to suspend SCML’s casino operator’s licence and, if so, the duration of any such suspension. A decision may not be forthcoming for a number of months.
Not sure if this is a big deal or just a regular thing.....
SKC getting pumped at both ends of the tasman at the mo. Share price is holding up decently.....
I dont hold at the mo. Looking to build a stake at some point though.
Any thoughts people?
Share market is supposed to hate uncertainty. We must be at peak uncertainty with SKC today I reckon.
I dont have a good feel for this stuff but, possible suspension from casino in NZ, $100m fine in Oz, recession coming, china (main source of international gamblers) cratering.
Might see $2 this week?
Just another example of the toxic culture at Sky City. Rotten to the core.
Only matter of time what they caught for in Australia gets out into the open.
Love how they always ‘fully cooperate’ and how they are ‘fully committed to maintaining the highest standards’ ……..amazing they can say that without choking
WTF !!!! More problems
Down 10% in early trade …panic stricken punters?
It'll fall further imho
It's been on a downward trend for a long time, only a fool would pick a bottom here
Question is will the commission actually decide they have had enough and put some pain on. My pick is yes.
So more bad news to come?
They will probably line up the best legal team they can find ....
if change of government coming ACT will insist they limit internal affairs operations and knee cap the secretary...
like in the racing industry there is alway a fuss and then the knight hoods continue...
Imagine how many IWI would love to own that license...
You watch but they will fight it and it they continue to then a bargain will emerge as tourism picks up to full steam in the next 5 to 10 years...
Big legal and major expenses might be required in the mean time... Suspend DIV entirely possible but doubt it...
This customer wants some money back... internal affairs has been infiltrated by IWI and they want the license...
Someone at SKC board and C suite will have to walk the plank for this one and the Aussie one ...
Some Big Bucks changing hands in fines coming ...
Imagine "I was allowed to gamble for to long and now i want to my money back"
Thats like saying the stock market made me do it ...
These are the same government departments that waste tax payer money all over the place and steal billions of dollars of rate payer assets...
Pot calling the kettle black ...
Fully agree with your thoughts ...Though I am very surprised that Department recommending such action to Gambling Commission ....Normally all complaints by patrons which are many as SKC operates and behaves like a monopoly , are brushed under the carpet ...Department almost always sides with SKC .
This must be very serious matter or patron concerned very well connected ...Host responsibility is just the punching bag here ...something else cooking .
".something else cooking"
this one is pressure from players who want that license...
could end up before the courts ...
skc should halt trading as you could generate some inter holding company transactions here and have a nice paper loss ...
Will SKC sue the department when its all done and dusted?
Salt management questions the motives of the DIA...
SKC brings in high tech software to track customers in the casino's ...
This has a lot of moving parts ..
https://www.nzherald.co.nz/business/...JWH5RKAN4GDKU/
All starting to look rather uninvestable isnt it
I must admit I don't know the full story of this, but I still remember an acquaintance I have went to Skycity and was in the I believe "black club". Skycity had to ban him apparently because of the amount of time he spent on the machines and when they told him to hop off he abused them. At the end SKC banned him for 6 months or there about. I had to listen to him tell me that they were wrong and they judged him badly. The amount of people that SKC have to deal with (the EGOs) is difficult and I feel people need to have some personal responsibility instead of blaming those that allow them to gamble. Why not blame KFC for your heart problem, or that you had not lost weight because your personal trainer did not get you out of bed.
Share price recovered from 150 when covid hit so current 195 not too bad
But then again the share price was about that back at the turn of century
Just as well they generate zillions in cash from their dens of iniquity and pay a decent divie.
Complainant was a regular over a 4 year period.
So when he got home from a fruitless night/day of gambling, he doesn't think to say enough is enough. Or think he needs to approach Skycity to ask them to ban him.
I had a friend who was a gambling addict, he did exactly that. Asked them to ban him. The complainant had every opportunity to stop himself.
I think it's oversold. At worst it is a one off event. It's a debatable complaint and hardly something to lose a license over.
Correction: when I said one off event, I meant incurring a 10 day suspension.
Disc: I am not a holder.
Happens all the time, the regulator is being overly cautious here
As I mentioned before that this kind of complaints against Casino come dime a dozen but DIA does nothing ...why suddenly they ask for such extreme punishment for a Host responsibility lapse ...which happens at least 100 times a day ...thats what got me more worried ...thats why I still think ...there is something more which can be revealed latter
Winner() its no dif to Horse racing or the Doggies...
Its all gambling ... now lets hope there is a massive fine in NZ and also one in AUS.. stock gets hit even worse and then since nothing is happening on these markets there is an OPPO to make some serious money..
‘Suspension’ or putting covers over the booze so they can’t sell it for a week is quite common in supermarkets …..but then regulators are pretty useless regulators so they take the risk and continue selling to the under age.
Yeah...not to mention the share market....look at MFB, PEB...RYM...ATM
A broker recommend the client.....when SP so high..now initial capital under water
Just received an email from TAB advising that this week (September 4-10) is Gambling Harm Awareness Week.
What better way to raise awareness than to threatened skycity with a suspension.
Feels like someone is trying to justify their payroll.