SKC - Sky City

[bull....]

I believe you have gotten the FY24 update and FY25 forecasts confused.
All SKC have done is reiterated their earnings update from 06 of June.

Underlying Group EBITDA for FY24 of between $280 million and $285 million and underlying Group NPAT for FY24 of between $120 million and $125 million

Underlying Group EBITDA for FY25 to be between $250 million and $270 million.

so going forward they are going to make less money in yr25

[buy_high_sell_lo]

so going forward they are going to make less money in yr25

Correct however I imagine that is partly because they will need to absorb higher than usual opex for the NZICC without significant revenue to cover the expense in the first year of operations.

[bull....]

Correct however I imagine that is partly because they will need to absorb higher than usual opex for the NZICC without significant revenue to cover the expense in the first year of operations.

be the same with the convention centre. The return of GDP growth might help absorb the costs quicker. probably a yr26 + story considering the lag of int rate effect.

[bull....]

interesting the star boss saying casino's may not ever return to the boom days. business might end up being more about hotels and restaurants

Gaming no longer ‘glorious part of the business’: Star boss

https://www.afr.com/companies/games-...0240626-p5jozc

[Rawz]

bad news down cycle continues

https://www.nzx.com/announcements/434666

Will have a $5m impact to ebitda

SkyCity Entertainment Group Limited (SkyCity) advises that SkyCity Casino Management Limited (SCML) has reached an agreement with the Secretary for Internal Affairs (Secretary) to resolve the Secretary's application to temporarily suspend SCML’s casino operator’s licence (Application). As part of the agreement, SCML has agreed to close the gambling area of the SkyCity Auckland casino for five consecutive days in 2024.

[Leemsip]

This has been known for a while. $5m hit is fine.
One more shoe to drop on the Adelaide casino review...

[Rawz]

This has been known for a while. $5m hit is fine.
One more shoe to drop on the Adelaide casino review...

oh i thought it was another lol

[Nigelk]

If they're smart, they'll use the time the casino is closed to get every bit of maintenance done, so it doesn't impact on customers

[Sideshow Bob]

https://www.nzx.com/announcements/436314

Impairment of SkyCity Adelaide assets and adjustment for change to New Zealand tax legislation

Key Points

• SkyCity expects to impair its Adelaide assets by A$86.2 (NZ$94.3 million) to reflect updated assumptions regarding the introduction of mandatory carded play at the SkyCity Adelaide casino in 2026, and additional legal and compliance costs associated with SkyCity Adelaide’s uplift programmes.
• SkyCity also expects to record a tax adjustment of NZ$129.6m following recent changes to New Zealand tax legislation.
• The impairment and tax adjustment are both non-cash, and do not impact the SkyCity Group’s underlying EBITDA or underlying NPAT for the financial year ended 30 June 2024.
• These adjustments and SkyCity’s FY24 Group financial statements remain subject to external audit.

[Aaron]

This is starting to look pretty good price wise. Currently on p/e of 9 or 10, coming out of a huge capex cycle (Horizon Hotel, Conference centre), and having paid some serious wedge to settle fines. These new facilities will all start to print money when they go live, I think the latest on the hotel is August, not sure about ICC. Hopefully the company has taken action to ensure no further breaches of regulations etc.

I would press the buy button, but we are only mid way through the epic series of punishing regulatory actions. Still got Adelaide casino review (is SKC ok to keep holding the license) and the NZ govt (DIA) smack down to come...

So currently $1.50 share price. I am very confident this will work out well in the long term. However I think this goes down further when these next regulatory actions hit. Just a waiting game now... trying not to go too early... Crazy that this could go lower still....

I purchased some today, I was worried I may have put you off buying them, more fool you if you listened to anything I say. No detailed analysis from me but roughly.

They managed a 12 cent dividend or 15.38cents (incl imp crs) in the past so on $1.60 that is a 9.6% yield. By my calculations a 12 cent dividend on current shares is roughly $91mill pa (758,117,231 * .12). Doable???.

They used to manage 20cents or 25.6 cents (incl imp cr).

Dividends to hopefully commence again in Sept 2025, little over a year so gain in share price on falling interest rates should cover the 12 months without a dividend.

Too many assumptions re recessions, govt intervention, new hotel and conference centre etc etc. New boss in the herald on the weekend hopefully he does OK. Earnings out in 3 days. No idea what happens but will meet back here in a year to assess the success or failure of this speculation.