SKC - Sky City

[hardt]

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

This is not a long term buy for me, I have a target in mind and I will try not to be greedy with it.

Reversion to mean occurs more often than not after such a selldown and I expect the bulls behind SKC to see it back into 430+... I do not see much downside in holding for a short term from my entry.

[freebee]

Here it is:

SHINTR: SKC: SPH Notice - Artemis Investment Management LLP

Disclosure of ceasing to have substantial holding


To NZX Limited

and

To Skycity Entertainment Group Ltd

Date this disclosure made: 29/06/2017

Date last disclosure made: 07/04/2017

Date on which substantial holding ceased: 28/06/2017

Substantial product holder(s) giving disclosure

Full name(s): Artemis Investment Management LLP

Summary of previous substantial holding

Class of quoted voting products: Ordinary shares

Summary for Artemis Investment Management LLP

For last disclosure,--
(a) total number held in class: 33,556,824
(b) total in class: 667,376,523
(c) total percentage held in class: 5.03%

For current holding after ceasing to have substantial holding,--
(a) total number held in class: 0
(b) total in class: 667,376,523
(c) total percentage held in class: 0%

Details of transactions and events giving rise to ceasing of substantial
holding

Details of the transactions or other events requiring disclosure:

A sale of 35,372,990 shares vs NZD 143,260,609.50 with trade date 28/06/17
and settlement date 30/06/17.

[winner69]

Freebie - just Artemis packing a sad because TNZ beat them in LV Cup

[sb9]

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.

Bought a small parcel last week for medium term hold, purely on basis of Rob Campbell being the new Chairman.

[Snoopy]

OK time to put a stake in the turf and pick a valuation for this.

I use the 'Mary Buffett' model of compounding reinvested retained earnings to value my shares. That involves an assessment of ROE which based on the Auckland assets alone is 27%. The problem is the ROE on the other assets is much less, around 8%, so what to do?

As a conservative assumption I have assumed the Auckland based New Zealand Convention Centre will not be built by SKC, but the existing Auckland assets will retain their cash generating ability demonstrated in rugby world cup year. The non Auckland assets I have assumed will earn 8% on apportioned equity.

Putting those figures into my model and using a ten year time projection and using a buy price of $3.80, I believe the annual return on SKC shares will average around 5.12% net or 7.4% gross. This assumes steady dividends reinvested in those overseas properties and a share price in ten years time in the mid four dollar region.

I guess that outlook will sound fairly boring to some. But I favour boring investments, the more boring the better.


I wrote the above in September 2012.

5.12% on $3.80 represents just over 19cps. Dividends have averaged about that. With a share price of $4.25 we are up 45c since this post, and if anything maybe we are getting a little ahead of ourselves. So all looks on track, although my conservative assumption of SKC not building the Convention Centre was wrong. At any rate we are well overdue for an updated good look at SKC.

SNOOPY

[Snoopy]

At any rate we are well overdue for an updated good look at SKC.


Sky City Entertainment is the sole operator of casinos at five distinct locations across Australasia. The relative size of revenues for FY2017 is shown in the table below.



Sky City Business Units Revenue Percentage


Auckland$507.021m50.7%


Hamilton & Queenstown$59.370m5.9%


Adelaide$152,993m15.3%


Darwin$117.872m11.8%


"High Rollers"$162.391m16.2%


Total100%



‘Revenue’ encompasses casino, hotel, food, beverage and, at the Auckland business unit, tourism revenue associated with the Sky Tower. Casino revenues represent the ‘net win’ to the casino from gaming activities. (‘Amounts Wagered’-’Amounts Won by Punters’). In FY2016 77% of revenue came from gaming and 23% from a combination of hotel food and beverage. The EBIT picture is much more skewed, with 69.3% of EBIT coming from Auckland in FY2016. ,

Sky City is the only licensed casino operator in the geographic centres in which it operates. It is hard to imagine a stronger market position than this.

Conclusion: Pass Test

SNOOPY

[Snoopy]

YearNormalised Net Profit {A}No. Shares EOFY {B}eps {A}/{B}


FY2012$138.870m+0.72($4.274m-$1.756m-$0.582m)= $140.264m576.958m24.3c


FY2013$127.382m+0.72($3.235m-$0.947m+$0.249m)= $129.209m
576.958m22.4c


FY2014$98.537m+0.72($9.170m-$0.995m-$2.125m)-0.72($0.934m)= $102.221m582.088m17.6c


FY2015$128.744m+0.72($4.316m-$1.348m-$1.077m)= $130.106m
587.473m22.1c


FY2016$145.672m+0.72($1.553m-$0.944m-$0.709m) +0.72($2.7m+7.6m)= $152.319m656.987m23.2c



Notes:

1/ Each year’s profit is adjusted for ‘restructuring costs’, ‘property plant and equipment sales’ and ‘exchange rate contract losses/gains’.
2/ FY2014 result adjusted for sale of the Christchurch Casino shareholding.
3/ FY2016 result is adjusted for $2.7m of planning expenses from the abandoned Hamilton hotel project and $7.6, representing the book value of a now demolished car park on the Auckland Convention Centre site.
4/ These are all 'actual profits'. I do not subscribe to using the 'normalised profits' that management seem to favour.

We see a steady drop in 'eps' over three year before two years of recovery.

Conclusion: Fail test

SNOOPY

[Snoopy]

YearNormalised Net Profit {A}S/h Equity EOFY {B}td]ROE {A}/{B}[/td]


FY2012 $140.264m$809.1m17.3%


FY2013$129.209m$812.9m15.9%


FY2014$102.221m$773.8m13.2%


FY2015$130.106m$816.9m15.9%


FY2016$152.319m$1,113.0m13.7%



The FY2016 result is a little unfair. The end of the financial year is 30th June. So the $263m of new capital raised from shareholders in June 2016 was only on the books for a month. If I remove this new shareholder equity from my calculation I get an ROE for FY2016 of:

$152.319m/ ($1,113m - $263m) = 17.9%

On this basis I am prepared to overlook the failure for FY2016.

Conclusion: Pass Test

[Snoopy]

YearNormalised Net Profit {A}Revenues {B}td]Net Profit Margin {A}/{B}[/td]


FY2012$140.264m$960.2m14.6%


FY2013$129.209m$970.7m13.3%


FY2014$102.221m$928.2m11.0%


FY2015$130.106m$1,037.0m12.5%


FY2016$152.319m$1,131.5m13.5%



Despite the net profit margin being less than five years ago, the turnaround trend over the last three years shows that margin improvement is still possible.

Conclusion: Pass Test

SNOOPY

[Snoopy]

SKC is not a suitable company to apply the Buffett growth model to right now, because the the 'earnings per share' increasing trend that is required is not there. This doesn't mean that SKC is necessarily a poor investment though. It just means that we need a different method to analyse the likely investment potential from here. And that means rolling out the 'Capitalised Dividend Model' method (!). Stay tuned.

SNOOPY

discl: hold SKC

[Snoopy]

The indebtedness of a company is one factor that influences 'investment risk'. 'Investment risk' influences the return a new investor into Sky City today might expect.
Sky City earned $146.847m in normalised profit over FY2016. When you stack this up against the corporate loans that the company must eventually repay:



Current Loans$38.028m


Non-Current Loans$389.032m


Total Loans$427.060m



then the 'minimum debt repayment period' (MDRP) is a mere:

$427.060m / $146.847m = 2.9 years

That is expectedly (given the cash issue a month before balance date) low. Yet there was a reason behind the cash issue. SKC has committed to spending $NZ700m at the Auckland site, the majority of that going towards the new Convention Centre. Furthermore, Sky City is committed to spending $A300m ($NZ333m assuming $A0.9 =$NZ1-) more on the Adelaide development. These are huge committed costs, largely not reflected on the books as at 30-06-2016.

We are told that during the year $8.674m of interest has been capitalised at an interest rate of 6.03%. This implies capital expenditure of:

$8.674m / 0.0603 = $143.8m

I believe that this money relates to capital already spent developing the Auckland site. So this leaves:

$700m - $144m = some $556m still to spend

If we add the Auckland and Adelaide expected development debts to the company debt as at 30th June 2016, a different picture of indebtedness emerges.



Current Loans$38m


Non-Current Loans$389m


Incremental Auckland Indebtedness$556m


Incremental Adelaide Indebtedness$333m


Total Loans$1,316m



The MDRT now blows out to:

$1,316m / $152.3m = 8.6 years

I would describe this as getting towards the high end of 'medium indebtedness'. This is not unusual for a company with a relatively secure recession resistant cashflow stream available. I haven't considered any reinvestment via the dividend reinvestment scheme which would reduce this figure. But it is clear to me that SKC does not have a lot of room to move on any other capital initiatives.

Personally I am comfortable with the way SKC is managing its capital requirements, particularly as those very generous fellows at Fletcher Building have agreed to pick up all cost overruns on the Auckland site at least. I reckon retiring Flectcher CEO Mark Adamson deserves a seat on the SKC board - equivalent to a 'nod' (if the Convention Centre was a project the government had paid for I would have expected 'Sir Mark' to be knighted) - for all of the 'construction value' that he has generously donated to managing the Auckland Convention centre costs.

Yet 'medium to high' expected debt is 'medium to high' expected debt. Despite the likelihood of strong future cashflows, I will require a 6.5% gross return on my investment in SKC to make an investment deal in SKC today, work for me.

SNOOPY

[Snoopy]

Yet 'medium to high' expected debt is 'medium to high' expected debt. Despite the likelihood of strong future cashflows, I will require a 6.5% gross return on my investment in SKC to make an investment deal in SKC today, work for me.


The following is a record of all of the dividend payments over the last five years from a New Zealand perspective. 'From a New Zealand perspective' means that the investor concerned can take advantage of New Zealand imputation credits.



Payment DateDividend Imputation PercentageDeclared DividendGross Dividend (I/C adjusted)



17-03-20170%10.0cps10.0cps


16-09-201650%10.5cps12.54cps










16-03-20160%10.5cps10.5cps


02-10-201533%10.0cps11.0cps










02-04-20150%10.0cps10.0cps


03-10-2014100%10.0cps13.89cps











04-04-20140%10.0cps10.0cps


04-10-2013100%10.0cps13.89ps










05-04-201350%10.0cps11.94cps


05-10-201260%8.0cps9.87cps










Five Year Average19.8cps22.73cps



Assuming a required rate of return of 6.5%, this translates to a share price of:

$0.2273 / 0.065 = $3.50

This is a 'business cycle average' valuation. My rule of thumb is that under different market conditions, the share price is liable to fluctuate up to 20% above and down to 20% below 'fair value'. This implies an 'all the ducks lining up' top of the market valuation of $4.20 cum dividend. At a $4.25 close on the market on Friday, but with a dividend payment of some 10c due within a couple of months, SKC is looking very fully priced using this valuation technique. Perhaps reducing one's holding on any market strength from here is the way to go?

SNOOPY

[Snoopy]

Assuming a required rate of return of 6.5%, this translates to a share price of:

$0.2273 / 0.065 = $3.50

This is a 'business cycle average' valuation.


I have to admit, as a long term SKC shareholder, to being disappointed with this $3.50 valuation. It is a 'no eps growth' valuation, that's true. But the record is clear. Despite all the promise, there hasn't been any 'eps' growth over the last five years. That means assuming future growth, given the history, becomes a matter of faith. So far, I am still part of the SKC faithful. One thing that I cannot get my head around is the lack of imputation credits. If all dividends had been fully imputed over the last five years, then my valuation would change markedly:

($0.198/0.72) / 0.065 = $4.23

A lack of imputation credits is often a sign that the company is not making taxable profits. But as far as I can tell from the taxation reconciliation section of the accounts, the shortage of imputation credits is not fully explained by this. At the moment it is a mystery to me why SKC are not able to pass on more imputation credits than they do. The 'Capitalised Dividend Valuation Method' punishes companies that do not pay fully imputed dividends, and rightly so!

SNOOPY

[peat]

thanks for the posts Snoopy.
I appreciate the effort and the sharing.

fwiw my chartist view confirms a bearish view though a lot of support would be found at $3 the purple line
Note I'm not saying 3 will happen but the bearish gartley pattern will exert a lot of downside pressure.
9015
interestingly , or not , the chart resembles FBU another disappointing company although I've drawn a harmonic pattern on this one (the gartley), whereas for the FBU I drew a channel. SKC's channel is slightly expanding though, and it has tested more aggressively the lower levels of the channel , which I admit are not that clear to me (and I havent shown them). It may have even broken them. If that is so the situation now is one of 'coming back to test' and would make a sell even more enticing



Snoopy , your FA view says $3.50 is fair value. This chart targets $2.50 which would exactly be a 20% overshoot on the downside in accordance with your 'rule of thumb'. Probably require something pretty gnarly to happen for that to occur but just an interesting coincidence I thought.

[Snoopy]

Snoopy , your FA view says $3.50 is fair value. This chart targets $2.50 which would exactly be a 20% overshoot on the downside in accordance with your 'rule of thumb'. Probably require something pretty gnarly to happen for that to occur but just an interesting coincidence I thought.


I guess it isn't a real surprise that FA and TA end up being 'tied at the data point'. Ultimately they are different reflections of the same thing. I should point out though that a 20% discount to my 'fair value' of $3.50 is actually $2.80, not $2.50. Of course a 'rule of thumb' is just that. And should be treated with an amount of uncertainty that that phrase implies. I would struggle to paint the circumstances that would reduce the SKC price to even that $2.80 that level though.

I have been to the Sky City venue in Darwin. It is a little 'out of town' (not that town is really that big), so you have to make a conscious decision to go to the site rather than 'just wander in on a night out'. I see the NT government has allowed a 60% jump in pokie machine numbers in the pubs and clubs, while simultaneously grabbing another $1m a year off the casino in local taxes. That has to be a long term hurt. Big money has been spent at Adelaide casino itself, but the car park is still a work in progress. This seems to be management's excuse for the Adelaide refurbishment falling a bit flat (so far). Then there is the problem at all venues with the 'high rollers' not being able to get as much money out of China to gamble with as they had previously. But when it comes down to it, Auckland is what will drive this company going forwards. The coming Convention Centre in Auckland is talked up by all parties. But what happens if it adds on a whole lot of extra costs, without the consummate returns that the increased number of gaming machines should allow? If all these ducks are shot down in a row, maybe a share price plunge down below $3 is not so far fetched?

SNOOPY

[Snoopy]

A lack of imputation credits is often a sign that the company is not making taxable profits. But as far as I can tell from the taxation reconciliation section of the accounts, the shortage of imputation credits is not fully explained by this. At the moment it is a mystery to me why SKC are not able to pass on more imputation credits than they do.


For the last several years, there has been a note on 'Income Tax Expense' (note 11 in AR2016) that outlines a bridge from the 'nominal company tax' that would be paid at the company rate of 28% to the 'actual tax paid'. I have constructed the table below from the last five years of this information.



Prima Facie Income tax @ 28% {A}Actual Income Tax Expense {B}Implied Earnings Imputed Percentage {B}/{A}Imputation Credit %ge Available for Dividends (*)


FY2016$55.235m$51.597m93%100%


FY2015$47.840m$42.114m88%100%


FY2014$35.994m$30.014m88%100%


FY2013$47.018m$40.538m77%96.25%


FY2012$50.073m$39.962m80%100%



(*) Assuming an 80% payout ratio, in accordance with the dividend policy stated in AR2016 p8: "in line with out stated dividend policy of distributing at least 80% of normalised NPAT to shareholders each year."

Actual tax paid in any one year could fluctuate. For example, There might be a difference in timing of terminal tax based on inaccurate prior provisional tax payments that means that the tax paid in a particular financial year might not equate to 28%, even if the tax bill did come to 28%. Over the years though, such differences should average out.

Imputation credits are earned on all earnings for which tax is billed and paid. This means that if a company does not pay out 100% of earnings in dividends (the case for Sky City), there should be a gradual build up in the imputation credit account. This in turn means that in a lean year (like FY2013), there should be some surplus imputation credits that can be paid out to shareholders, should management dictate that dividend payments should be maintained above actual earnings for that one year.

The above table shows that in all years but FY2013, there should have been enough imputation credits to pay out fully imputed dividends to all shareholders. However, if you look at the actual payment record over the last five years (my post 512), only one dividend of the ten was paid out 'fully imputed''. If there were even a few imputation credits in the bank in FY2013, it should have been possible to pay out all ten dividends as fully imputed! So why was only one dividend paid out fully imputed? I am truly baffled. It doesn't make sense.

And lest anyone think I am getting hung up on a minor technical point, the difference between 'paying out dividends as they did' and 'fully imputed' changes the valuation of the company from $3.50 to $4.23. And that makes all the difference as to whether the company is an invest-able proposition going forwards or not.

SNOOPY

[hardt]

For the last several years, there has been a note on 'Income Tax Expense' (note 11 in AR2016) that outlines a bridge from the 'nominal company tax' that would be paid at the company rate of 28% to the 'actual tax paid'. I have constructed the table below from the last five years of this information.




Prima Facie Income tax @ 28% {A}
Prima Facie Income tax @ 28%
Implied Earnings Imputed Percentage
Imputation Credit %ge Available for Dividends (*)


FY2016
$55.235m
$51.597m
93%
100%


FY2015
$47.840m
$42.114m
88%
100%


FY2014
$35.994m
$30.014m
88%
100%


FY2013
$47.018m
$40.538m
77%
96.25%


FY2012
$50.073m
$39.962m
80%
100%



(*) Assuming an 80% payout ratio, in accordance with the dividend policy stated in AR2016 p8: "in line with out stated dividend policy of distributing at least 80% of normalised NPAT to shareholders each year."

Actual tax paid in any one year could fluctuate. For example, There might be a difference in timing of terminal tax based on inaccurate prior provisional tax payments that means that the tax paid in a particular financial year might not equate to 28%, even if the tax bill did come to 28%. Over the years though, such differences should average out.

Imputation credits are earned on all earnings for which tax is billed and paid. This means that if a company does not pay out 100% of earnings in dividends (the case for Sky City), there should be a gradual build up in the imputation credit account. This in turn means that in a lean year (like FY2013), there should be some surplus imputation credits that can be paid out to shareholders, should management dictate that dividend payments should be maintained above actual earnings for that one year.

The above table shows that in all years but FY2013, there should have been enough imputation credits to pay out fully imputed dividends to all shareholders. However, if you look at the actual payment record over the last five years (my post 512), only one dividend of the ten was paid out 'fully imputed''. If there were even a few imputation credits in the bank in FY2013, it should have been possible to pay out all ten dividends as fully imputed! So why was only one dividend paid out fully imputed? I am truly baffled. It doesn't make sense.

And lest anyone think I am getting hung up on a minor technical point, the difference between 'paying out dividends as they did' and 'fully imputed' changes the valuation of the company from $3.50 to $4.23. And that makes all the difference as to whether the company is an invest-able proposition going forwards or not.

SNOOPY

Deferred income tax is around 80-85M every year, would that have anything to do with the credits being retained by SKC?

My understanding is these credits can roll over and be used for future tax liabilities...

[winner69]

Snoops - 1) imputation credits can only be applied to earnings generated in NZ and 2) did you see that Note in the Accounts that some years they have had to prepay tax to keep the Imputation Credits Balance at year end positive (being negative is a no-no)

[Snoopy]

Deferred income tax is around 80-85M every year, would that have anything to do with the credits being retained by SKC?

My understanding is these credits can roll over and be used for future tax liabilities...


I am not a tax expert Hardt. But using my rudimentary tax knowledge I have always believed that:

1/ 'Deferred Income tax' was money that a company knew they owed to the tax department, and was listed as deferred because it was recorded on the books before the payment was made..
2/ 'Imputation Credits' are only earned as a book entry after the tax is actually paid.

So I find it hard to believe that 1/ could be a substitute for 2/ or vica versa.

Thanks for your suggestion though.

SNOOPY

[Snoopy]

Snoops - 1) imputation credits can only be applied to earnings generated in NZ


I might have to resurrect my spreadsheet where I tried to reconcile all of those divisional results. My memory though is that the Australian divisions are not that profitable.



and 2) did you see that Note in the Accounts that some years they have had to prepay tax to keep the Imputation Credits Balance at year end positive (being negative is a no-no)


I wish they had prepaid a bit more tax in that case!

Presumably if SKC don't keep their imputation balance positive, the liability to pay tax just falls on the shareholders. I guess the government doesn't mind if the company pays the tax or the shareholders pay the tax (which is what happens if the company pays an unimputed dividend). Either way the government gets the tax?

Could 'not paying their tax' just be a way for the company to hang onto some much needed cashflow?

SNOOPY

[winner69]

Snoops - look at the Cash Flow Statements for the last few years and see how much Income Tax has been paid (v the Taxation Expense)

Imputation credits are calculated from tax actually paid

Might make it a bit clearer

[winner69]

Snoops - ever looked at SKC's Return on Invested Capital (ROIC)

SKC's ROIC over the last 4 years has averaged 10.7% with F15 and F16 being 11.0% and 11.1% respectively

PWC calculate SKC's WACC as at December 2016 at 11.8%

Sort of says all that activity is not covering it's cost of capital - OK, lets be kind and say that iSKC is just covering its cost of capital if we allow for a few 'abnormal' things and for different methods of calculating the returns

Some call this 'value destruction'

But that's all old fashioned thinking so no worries

[Snoopy]

Deferred income tax is around 80-85M every year, would that have anything to do with the credits being retained by SKC?

My understanding is these credits can roll over and be used for future tax liabilities...


Hardt, I may have misinterpreted your point. The 'deferred tax' is money yet to be handed over to IRD. The lack of imputation credits represents tax not paid. So in this sense yes, the two may very well be connected.

SNOOPY

[Snoopy]

Snoops - look at the Cash Flow Statements for the last few years and see how much Income Tax has been paid (v the Taxation Expense)

Imputation credits are calculated from tax actually paid

Might make it a bit clearer

Good suggestion Winner



Prima Facie Income tax @ 28% {A}Actual Income Tax Expense {B}Cashflow Statement Tax paid Imputation Credits Paid: D1/D2


FY2016$55.235m$51.597m$13.062m33%/0%


FY2015$47.840m$42.114m$29.059m100%/0%


FY2014$35.994m$30.014m$40.017m0%/0%


FY2013$47.018m$40.538m$36.394m60%/50%


FY2012$50.073m$39.962m$49.325m60%/60%



I see that SKC had a combined tax bill over the FY2012 to FY2014 three year period of $110.514m and the actual tax paid was $125.733m. This looks like they have paid all their tax due. Yet dividends paid over the FY2014 year carried no imputation credits at all! So maybe as you suggested before Winner, not all of this tax was paid in New Zealand? I guess it is a fair assumption that the SKC imputation credit balance in NZ was zero by the end of FY2014, because shareholders were not given any imputation credits over FY2014.

The amount of tax paid from the cashflow statement during 1HY2015 was $9.757m (tax paid during 2HY2015 was $19.308m). The first half year payment was apparently enough to fully impute the dividend paid on 03-10-2014 which equated to approximately $58.74m (tax paid).

$9.757m /($58.74m + $9.757m) = 14.2%

14.2% tax paid does not equate to enough tax paid to enable a fully imputed dividend at the 28% tax rate to be paid to shareholders. Hmmmm?

SNOOPY

[traineeinvestor]

This may be a silly question coming from someone sitting by the pool in Da Nang with this second post-lunch beer in hand, but according to this MSD paper Casinos in NZ pay a 4% duty duty on gross profit in addition to income tax. Is this duty included in some of the tax numbers you are looking at but not others? If so, would that be enough to account for difference?


https://www.msd.govt.nz/documents/about-msd-and-our.../spj7-gaming-nz.doc

Additional query - does the gaming duty paid generate imputation credits (I don't know but would assume not) and, if so, would that,
together with Australian taxes paid (in all forms) be enough to account for the lack of imputation credits in SKC dividends?

P.S. Thanks for doing the hard work on this - I was having a look at SKC as a beneficiary of the continued growth in tourist arrivals
but was hesitating over the amount of planned capital expenditure + lack of credits on the dividends.

[winner69]

This may be a silly question coming from someone sitting by the pool in Da Nang with this second post-lunch beer in hand, but according to this MSD paper Casinos in NZ pay a 4% duty duty on gross profit in addition to income tax. Is this duty included in some of the tax numbers you are looking at but not others? If so, would that be enough to account for difference?


https://www.msd.govt.nz/documents/about-msd-and-our.../spj7-gaming-nz.doc

Additional query - does the gaming duty paid generate imputation credits (I don't know but would assume not) and, if so, would that,
together with Australian taxes paid (in all forms) be enough to account for the lack of imputation credits in SKC dividends?

P.S. Thanks for doing the hard work on this - I was having a look at SKC as a beneficiary of the continued growth in tourist arrivals
but was hesitating over the amount of planned capital expenditure + lack of credits on the dividends.




Gaming duty etc does not impact imputation credits .... tehy collect it for the government (a bit like GST)

Only income tax (on profits) go towards imputation credits

[traineeinvestor]

Okay - so it was a silly question.

I was curious enough to have a look at the annual report which discloses the gaming duty as a separate tax item from income tax. It also discloses a "weighted average applicable tax rate" for 2016 of 26.2% (2015 24.6%).

Further, the available NZ imputation credits in NZ were $15.5 million and the Australian franking credits $6.1 million which makes it hard to accept that the amount of income tax paid in Australia as a percentage of total income tax paid is enough to explain the low level of imputation credits on dividends.

[winner69]

Not a silly question

Maybe you and snoops should get together and ask the Sky City man what's the story about dividends and imputation credits instead of trying speculate

[traineeinvestor]

Maybe you and snoops should get together and ask the Sky City man what's the story about dividends and imputation credits instead of trying speculate

Where's the fun in that? :eek2:

I have e-mailed SKC's investor relations contact.

[winner69]

At least its non cash .....yes, we'll forgive for either paying far too much for Darwin in years gone by or failing to make it work

https://nzx.com/files/attachments/262233.pdf






(Snoops ...improves ROE next year for your analysis)

[bull....]

Mining boom over , darwin was always going to struggle

[winner69]

Spending heaps more in Adelaide

All this spending never seems to create any long term value - one reason why I can never bring myself to 'invest' in them

Has to be a compelling buy so I can shut my eyes and pretend its not a sin stock

[Balance]

At least its non cash .....yes, we'll forgive for either paying far too much for Darwin in years gone by or failing to make it work

https://nzx.com/files/attachments/262233.pdf

(Snoops ...improves ROE next year for your analysis)

The golden days of the BIL stooge and wannabe, Evan Davies, eh W69?

Golden days for the boys in the investment b**king world, especially CSFB and FNZC, advising Evan Davies and the old boys' Board of Directors to make acquisitions one after another - mega fees but mega looses for Sky City.

Golden days when SKC's balance sheet was leveraged to the hilt to acquire any manner of assets, Force Corp, CanBet, Adelaide, Darwin etc, until Auckland casino itself was ran down to such an extent that dealers had to wear flea collars on their legs to ward off fleas!

[Balance]

Spending heaps more in Adelaide

All this spending never seems to create any long term value - one reason why I can never bring myself to 'invest' in them

Has to be a compelling buy so I can shut my eyes and pretend its not a sin stock

I actually like the expansion of Adelaide casino myself - looks a very comprehensive upgrade to me and entrench Sky City as the premier city entertainment destination in this city of around Auckland size.

Better deal certainly than when Sky City first bought in and ended up with the Adelaide City Council stifling every expansion and upgrade plan - need to preserve the crumbling landmark heritage building, see?

[Snoopy]

I actually like the expansion of Adelaide casino myself - looks a very comprehensive upgrade to me and entrench Sky City as the premier city entertainment destination in this city of around Auckland size.

Better deal certainly than when Sky City first bought in and ended up with the Adelaide City Council stifling every expansion and upgrade plan - need to preserve the crumbling landmark heritage building, see?


A few years ago I was lucky enough top be able to spend a bit of time in Asia, (including Macau for a day) and also managed to look in on the Casinos in Melbourne and Sydney. Have called in on the way through Hamilton one day, and had a meal in the Hamilton Casino. Seemed OK for atmosphere. OK, I am not a gambler in the chip and card sense. But I really felt the 'feel' inside the Sky City Darwin and Adelaide casinos in particular were light years ahead of any of the others. I guess the 'crumbling heritage' of Adelaide was part of the appeal there. I haven't been into the Auckland casino for many years, and I know it has been refurbished since my visit. I didn't particularly like the feel inside Sky City Auckland at the time, but then I don't particularly like the feel of Auckland in general. So I may not be the best judge of where SKC is in Auckland today.

I am a bit worried this car park thing in Adelaide is a perpetual excuse for non-performance.

After a few good investment years in SKC, I was looking for a 'partner' investment in the casino industry to add to my portfolio. I didn't like what I saw in the alternative 'investments'. So my investment in SKC still sits 'out on it's own'. I am still reasonably happy with my SKC investment. I paid an average of $3.03 for my shares, with most of those being bought many years ago. I convinced myself back in 2016 that topping up at rights issue time at $4.40 was a good idea, because as a 'rule of thumb', topping up at rights issue time is a good idea. Maybe not one of my better 'top ups'!

I was aware that the payment of imputation credits has been 'up and down'. But it is only in the last week that I have been through my records and seen how irregular the imputation credit adjustment was. There ends my impression of the current state of SKC.

SNOOPY

[Snoopy]

At least its non cash .....yes, we'll forgive for either paying far too much for Darwin in years gone by or failing to make it work


From the press release:

"The proposal to write-off Darwin's goodwill is primarily attributable to increased competitive pressures in the gaming machine business. This stems from the unforeseen policy decision in December 2014 by the previous Northern Territory Government to remove the cap on gaming machines in the Territory. Since the implementation of that policy in July 2015 there has been a 75% increase in the number of gaming machines in Darwin (outside of the casino). This significant increase in competing gaming machines in the catchment area of the casino has consequently had an increasingly adverse impact on
revenue and earnings at SKYCITY Darwin since the beginning of 2016."

The casino in Darwin was bought in 2004. You could hardly expect Sky City casino management to know what was going to happen to Territory policy on gaming machines ten years later. I think your criticism of "paying too much for Darwin" is unfair. Darwin actually went quite well for twelve years.



(Snoops ...improves ROE next year for your analysis)


At least you recognize the write down is non-cash. It follows that lesser known accounting rule of any money spent over ten years ago being beyond 'current institutional memory' and so the spending was not real. I like to think of the write down as more like a 'spin of the wheel' going a little bit wrong ;-P

SNOOPY

[Snoopy]

The following is a record of all of the dividend payments over the last five years from a New Zealand perspective. 'From a New Zealand perspective' means that the investor concerned can take advantage of New Zealand imputation credits.



Payment DateDividend Imputation PercentageDeclared DividendGross Dividend (I/C adjusted)



17-03-20170%10.0cps10.0cps


16-09-201650%10.5cps12.54cps










16-03-20160%10.5cps10.5cps


02-10-201533%10.0cps11.0cps










02-04-20150%10.0cps10.0cps


03-10-2014100%10.0cps13.89cps











04-04-20140%10.0cps10.0cps


04-10-2013100%10.0cps13.89ps










05-04-201350%10.0cps11.94cps


05-10-201260%8.0cps9.87cps










Five Year Average19.8cps22.73cps



Assuming a required rate of return of 6.5%, this translates to a share price of:

$0.2273 / 0.065 = $3.50

This is a 'business cycle average' valuation. My rule of thumb is that under different market conditions, the share price is liable to fluctuate up to 20% above and down to 20% below 'fair value'. This implies an 'all the ducks lining up' top of the market valuation of $4.20 cum dividend. At a $4.25 close on the market on Friday, but with a dividend payment of some 10c due within a couple of months, SKC is looking very fully priced using this valuation technique. Perhaps reducing one's holding on any market strength from here is the way to go?


The following is a record of all of the dividend payments over the last five years from an Australian perspective. 'From an Australian perspective' means that the investor concerned can take advantage of Australian franking credits. Despite being from an Australian perspective, I have expressed all dollar values in NZ dollars to facilitate easier comparison with the NZ perspective case.



Payment DateDividend Franking PercentageDeclared DividendGross Dividend (F/C adjusted)



17-03-20170%10.0cps10.0cps


16-09-20160%10.5cps10.5cps










16-03-20160%10.5cps10.5cps


02-10-20150%10.0cps10.0cps










02-04-201525%10.0cps11.07cps


03-10-20140%10.0cps10.0cps











04-04-2014100%10.0cps14.29cps


04-10-20130%10.0cps10.0ps










05-04-201350%10.0cps12.14cps


05-10-201260%8.0cps10.06cps










Five Year Average19.8cps21.71cps



Assuming a required rate of return of 6.25%, this translates to a share price of:

$0.2171 / 0.0625 = $3.47

(Note that I have reduced the acceptable return to 6.25% -Aus perspective - from 6.5% (NZ Perspective). This takes into account the reserve bank cash rate being 1.5% in Australia, 0.25% less than the 1.75% in New Zealand.)

This is quite an interesting result, because it shows the value of SKC to the NZ or Aus dividend hound is more or less the same!

SNOOPY

[Snoopy]

This is quite an interesting result, because it shows the value of SKC to the NZ or Aus dividend hound is more or less the same!


Now that we have considered dividends from both the NZ and Oz perspective, it is time to combine the two.

A bit of background: Imputation Credits are an NZ Market creation to ensure that shareholders, the owners of the company, only pay tax on their share of company income once. An 'imputed dividend' means that an NZ shareholder can take credit for any company paid tax that the company in which they own shares has already paid on their behalf. An 'unimputed dividend' means the company has not paid tax on that dividend. So it is up to the shareholder to pay the tax on their 'dividend income' themselves.

There is an exactly analogous system operation in the Australian market called 'Franking Credits'. However, the NZ Inland Revenue does not recognize Australian franking credits and vica versa. This poses a bit of a dilemma for companies that operate with scale on both sides of the Tasman. They have to balance the interests of both NZ investors and Australian investors by doing some 'mixing and matching' as to where they declare their profits. By 'mixing and matching' I am referring to the the practice of transfer pricing. The location of some company costs are optional. And where the company chooses to incur these costs influences the relative profitability on each side of the Tasman.

One reflection of where a company allocates their costs can be seen in whether dividends are either 'imputed' or 'franked'. Income is never franked and imputed, because that would mean paying tax on the same income twice in both countries and no responsible management would allow that to happen. So the balance between franked and imputed income, as reflected through dividends paid from that income, is of interest to shareholders. The amount of imputing or franking for each dividend declared over the last five years I have listed in the table below.



Payment DateDividend Imputation PercentageDividend Franked PercentageImputed + Franked Percentage



05-10-201260%60%120%


05-04-201350%50%100%










04-10-2013100%0%100%


04-04-20140%100%100%












03-10-2014100%0%100%


02-04-20150%25%25%










02-10-201533%0%33%


16-03-20160%0%0%











16-09-201650%0%50%


17-03-20170%0%0%











A couple of 'discussion points' arise from this table.

SNOOPY

[Snoopy]

Payment DateDividend Imputation PercentageDividend Franked PercentageImputed + Franked Percentage



05-10-201260%60%120%



A couple of 'discussion points' arise from this table.


How is it possible to pay out 'credits' that amount to more than 100% of dividend income, as per the dividend declared on 05-10-2012? We have to remember that a company earns imputation credits on all of its income. If a company does not pay out all of their income as dividends, then imputation credits (and I presume franking credits), can accumulate inside the company. So it is likely this 'over payment of credits' was accomplished by using imputation stockpiled from previous years or even the current year (assuming 100% of earning were not paid out of dividends in the current period).

The other way a company can pay out imputation (and franking?) credits that they have not earned is to pay some income tax coming due in advance.

I am not sure which explanation applies here. But paying out more than 100% of income credits available on income is not as inexplicable as it seems at a casual glance.

SNOOPY

[Snoopy]

Payment DateDividend Imputation PercentageDividend Franked PercentageImputed + Franked Percentage



17-03-20170%0%0%


16-09-201650%0%50%










16-03-20160%0%0%


02-10-201533%0%33%



A couple of 'discussion points' arise from this table.






Prima Facie Income tax @ 28%Actual Legal Income Tax ExpenseCashflow Statement Tax paid Imputation Credits Paid: D1/D2


FY2016$55.235m$51.597m$13.062m33%/0%


FY2015$47.840m$42.114m$29.059m100%/0%




The 'actual legal income tax expense' is less than the 28% corporate rate, because certain expenses are not tax deductable.

'D1' refers to the first dividend paid in the financial year under scrutiny (actually the 'final dividend' from the previous year).
'D2' refers to the second dividend paid in the financial year under scrutiny (actually the 'interim dividend' for the current financial year).

For both FY2015: $29.059m / $47.840m = 61% and
FY2016: $13.062m / $55.235m = 24%

the actual cash paid over both FY2015 and FY2016 shows not enough tax credits have been paid during the year to pay, in combination at least, a fully imputed and/or a fully franked dividend over FY2016. (remember dividend policy is to pay out on only 80% of earnings).

Yet if we look at the actual dividends paid over FY2016, there were just 33% (higher than the 24% actually paid) dividend imputation credits or franking credits paid on the first dividend of that financial year (02-10-2015), and no imputation or franking credits paid at all on the second dividend paid on 16-03-2016.

Something very unusual is going on here.

So we are left with a real mystery. Why has a supposedly amply capitalised SKC, not handed over the cash to the respective Australian and New Zealand tax departments, certainly enough tax paid to 100% impute/frank those dividends declared over FY2016?

SNOOPY

[Balance]

Something very unusual is going on here.

'D1' refers to the first dividend paid in the financial year under scrutiny (actually the 'final dividend' from the previous year).
'D2' refers to the second dividend paid in the financial year under scrutiny (actually the 'interim dividend' for the current financial year).

For both FY2015: $42.114m / $47.840m = 88% and
FY2016: $51.597m / $55.235m = 93%

the actual cash paid over both FY2015 and FY2016 shows more than enough tax credits have been paid during the year to pay, in combination at least, a fully/partially imputed and a fully/partially franked dividend over FY2016. (remember dividend policy is to pay out on only 80% of earnings).

Yet if we look at the actual dividends paid over FY2016, there were just 33% (why not 100%?) dividend imputation credits or franking credits paid on the first dividend of that financial year (02-10-2015), and no imputation or franking credits paid at all on the second dividend paid on 16-03-2016.

So we are left will a real mystery. If the SKC had largely handed over the cash to the respective Australian and New Zealand tax departments, certainly enough tax paid to 100% impute/frank those dividends declared over FY2016, as documented in AR2016, where did the respective franking and imputation credits that should have been in the company accounts disappear to?

SNOOPY

NZ Shareholders get NZ imputation credits (not enough to fully impute) and Australian shareholders get Australian franking credits (not enough to be fully franked)?

[Snoopy]

Payment DateDividend Imputation PercentageDividend Franked PercentageImputed + Franked Percentage



05-10-201260%60%120%


05-04-201350%50%100%










04-10-2013100%0%100%


04-04-20140%100%100%












03-10-2014100%0%100%


02-04-20150%25%25%










02-10-201533%0%33%


16-03-20160%0%0%











16-09-201650%0%50%


17-03-20170%0%0%














Note that all dollar amounts in the following table, including those that form part of the Australian operations, are expressed in New Zealand dollars.

I have now taken imputation/franking information in the table above and used it to calculate the dollar amount of actual tax paid by Sky City, as represented by the imputation and franking account balances.



Financial YearPayment DateDividend (As declared)Implied Dividend Imputation PaidEOFY Imputation RemainingImplied Dividend Franking PaidEOFY Franking Remaining






2012$2.179m$28.244m



201305-10-2012$46.171m$10.752m$11.849m


05-04-2013$57.685m$11.217m$12.361m


Total Paid$21.969m$24.291m


$2.658m$28.244m











201404-10-2013$57.462m$22.346m$0m


04-04-2014$57.959m$0m$24.840m


Total Paid$22.346m$24.840m


$13.523m$8.054m











201503-10-2014$58.042m$22.572m$0m


02-04-2015$58.601m$0m$6.279m


Total Paid$22.572m$6.279m


$14.966m$3.915m











201602-10-2015$58.216m$7.471m$0m


16-03-2016$61.694m$0m$0m


Total Paid$7.471m$0m


$15.534m$6.106m











201716-09-2016$68.457m$13.311m$0m


17-03-2017$66.146m$0m$0m


Total Paid$13.311m$0m


$52.034m$3.870m












OK, it's a pretty big table. So what does it all mean? I have put the imputation information and franking information on the same time chronology. But really they are separate things to consider. So we will start by looking at just the first five columns of the table, 'the imputation credits'.

The imputation credits on the books at the end of the financial year are available to pay as imputation credits on any dividends declared over the following years. Additional imputation credits are obtained by the company when they hand over cash to settle their tax bill for the current year. At the end of FY2013 (30th June 2013) there were only $2.658m of income tax credits in the 'imputation account'. Yet for the first dividend paid in the FY2014 financial year, a 100% imputed dividend was paid. And $22.346m of imputation credits were attached. This means the 'imputation account' must have been topped up by at least $19.7m ( $22.346m - $2.658m = $19.688m ) before 4th October 2013 to allow a 'fully imputed dividend' to be paid.

With me so far? Great, let's carry on to the second half of FY2014.

The next dividend paid on 4th April 2014 carried no imputation credits. So we can safely assume that the previous 4th October 2013 dividend cleaned all (or nearly all?) the imputation credits out of the 'imputation credit account'. This time, the 'imputation account' was not topped up before the 4th April 2014 dividend was paid. Yet if we glance across to the franking column, we can see that 100% of tax was paid 'in Australia'. The 4th April 2014 dividend was fully franked for Australian shareholders. Why is that significant?

If the profit on each side of the Tasman was split according to the tax paid in FY2014, then we are looking at a roughly 50/50 profit split between Australia and New Zealand.

NZ Profit Estimate FY2014 (company tax rate 28%): $22.346m/0.28 = $79.807m (NPBT)
Aus Profit Estimate FY2014 (company tax rate 30%): $24.840m/0.30 = $82.800m (NPBT)

I did note that the NZ imputation credit balance had gone up by around $11.0m ($13.523m - $2.658m = $10.995m) over FY2014, whereas the Aus franking balance has gone down by $20.2m ($28.244m - $8.054m = $20.190m) over 2014. So bringing the change in imputation/franking 'credit balance(s)' into the equation (assuming constant exchange rates), we can see that the profit split between countries in FY2014 was not 50/50.

NZ Profit Estimate FY2014 (tax rate 28%): ($22.346m + $10.995m)/0.28 = $119.075m (NPBT)
Aus Profit Estimate FY2014 (tax rate 30%): ($24.840m - $20.190m) 0.30 = $15.500m (NPBT)

(For comparison the actual cumulative NPBT for the year FY2014, including exchange rate variations and non standard tax rate income items was $128.551m).

So you can see that the imputation/franking credits paid over FY2014 are not at all indicative of the relative profitability of Australian and New Zealand over FY2014.

Next we move into FY2015. Once again the first dividend paid out (03-10-2014) was fully imputed in NZ, and no franking credits are paid to Australian shareholders. However, once we get to the second half of the year, the approximately $22.547m tax payment (that figure lifted from what was paid in the first half) to fully impute the second dividend was not made. Actually 'payment not made' can't be true because by the end of the year there are $14.966m worth of credits sitting in the franking account. It is likely that there were actually no imputation credits available on the date of the dividend payment (2nd April 2015) yet by the end of the financial year $14.966m of tax payments were made. This begs the question, if that tax liability was known, why was it not paid earlier so that we shareholders could enjoy at least a partially (around 66%) imputed dividend?

Now things get very odd. There was $14.966m in the imputation credit account at the start of the FY2016. Yet when the first dividend from that financial year was paid on 02-10-2015, it was imputed to just 33% with $7.471m of imputation credits paid to shareholders. Clearly there was already enough money in that imputation account to impute the dividend to 66%! Why when the money was already in the imputation account, would Sky City not impute the dividend to 66%? One possible explanation was that they were 'holding back' some imputation credits so that the imputation credits could be 'evened out' between this dividend and the next one. Yet the next dividend on 16-03-2016 carried no imputation credits, despite there still being ($14.966m - $7.471m =) $7.495m of imputation credits ('at least') still in that 'imputation account'? (I say 'at least' because the actual imputation balance had grown to $15.534m by the end of the financial year.)

The actual tax consideration for FY2016 was $51.597m (p44, Note 11, AR2016). Yet the actual income tax handed over during FY2016 was a mere $13.062m (Cashflow Statement, p34, AR2016).

Combine the actual income tax paid with the pre-paid income tax sitting in the imputation and franking accounts and I get:

(($15.534m + $6.106m)+ $13.062 ) = $34.702m

This is well short of the actual tax consideration of $51.597m. Does this help explain why there were no imputation (nor franking) credits paid with the 16-03-2016 dividend? Yet by the end of FY2016 there were $15.534m of imputation credits sitting in the imputation account. If the 'imputation account' had contained that $15.534m balance on 16-03-2016, then that dividend could have been imputed to 65%. That would have been of great benefit to NZ shareholders, a benefit denied by the timing of the income tax payment by Sky City management

Roll forward into FY2017 and the effects of the 'end of year cash issue' in FY2016 can be seen. The dividend per share has not increased. But because the number of shares on issue has increased, the dollar value of the dividend to be paid has gone up by an amount in proportion to the number of new shares that have been issued. To 'fully impute' the 16-09-2016 dividend paid on all these new shares, an imputation balance of $26.622m would be required. The $15.534m in the imputation account at the start of the year is enough to 58% impute that dividend. So I guess you can't blame. management for 'half imputing' the dividend to a round figure of 50%. Yet the cash issue late in FY2016 should have provided plenty of liquidity to allow this dividend to be fully imputed. So why wasn't the income tax fully prepaid?

Generally a company does not fully impute their dividends because they are recovering from losses from previous years, or the profit generated does not generate imputation credits. This looks to be 'not the case' with Sky City. Perhaps there is an explanation? But to repeatedly (mis?-)time your tax payments to deny imputation credits to your shareholders is not in the best interest of those shareholders. I think there is a case to answer here for Sky City management.

SNOOPY

discl: hold SKC

[Snoopy]

With me so far?


I am conscious that some of my long posts are a bit of a challenge to maintain concentration through and follow. So I would like to reduce my findings to a series of 'bullet point' statements/questions.

1/ The imputation/franking credits paid over FY2014 are not at all indicative of the relative profitability of Australian and New Zealand over FY2014.

2/ It is likely that there were no imputation credits available on the date of the 2nd April 2015 dividend payment. Yet by the end of the financial year, $14.966m of tax payments were made. This begs the question, if that tax liability was known, why was it not paid earlier so that we shareholders could enjoy an at least a partially (around 66%) imputed dividend?

3/ There was $14.966m in the imputation credit account at the start of the FY2016. The 02-10-2015 (first dividend paid during FY2016) was imputed to just 33% with $7.471m of imputation credits paid to shareholders. It could have been imputed to 66%. Why was this not done?

4/ There were no imputation credits paid with the 16-03-2016 dividend. Yet by the end of FY2016 there were $15.534m of imputation credits sitting in the imputation account, enough for the dividend to have been imputed to 65%. Why was the tax paid after the dividend date, a practice which denied shareholders their due imputation credits?

5/ To 'fully impute' the 16-09-2016 dividend, an imputation credit account balance of $26.622m would have been be required. The $15.534m in the imputation account at the start of the year was enough to 58% impute that dividend. The management 'half imputed' the dividend to a round figure of 50%. Yet the cash issue late in FY2016 should have provided plenty of liquidity to allow this dividend to be imputed to 58% at least and maybe even fully imputed. So why wasn't the income tax fully prepaid?

Sky City are making good money each year and paying enough tax to include a lot more imputation credits that they could attach to their dividends, than actually do get attached to those dividends.
Income tax payments have been repeatedly (mis?-)timed in a way that is not in the best interest of shareholders. I think there is a case to answer here for Sky City management.

SNOOPY

discl: hold SKC

[Snoopy]

I am conscious that some of my long posts are a bit of a challenge to maintain concentration through and follow.


My summary post was still longer than most posts! So time to cut down my message to a size appreciated by the "Twitterazzi."

"SKC are diddling shareholders: killing imputation credits by mistiming tax paid."

Just squeezed in under the 70 character limit! The only problem is it comes across as a rant, and you can't tell if there is any substance there without reading the more expansive posts, 3B or 3. This is why Twitter is of no interest to me. But this post is for forum fans that don't agree with my views.

SNOOPY

[Arbroath]

Forgive me Snoopy if you've already commented on this but have you taken up the imputation/tax timing issue directly with SKC and if so what response did you recieve?

[winner69]

My summary post was still longer than most posts! So time to cut down my message to a size appreciated by the "Twitterazzi."

"SKC are diddling shareholders: killing imputation credits by mistiming tax paid."

Just squeezed in under the 70 character limit! The only problem is it comes across as a rant, and you can't tell if there is any substance there without reading the more expansive posts, 3B or 3. This is why Twitter is of no interest to me. But this post is for forum fans that don't agree with my views.

SNOOPY

Snoops me old mate - Twitter you can use 140 characters (including spaces)

Good discipline

Hope you selling your SKC shares if you believe they are 'diddling' you - the only principled way to go

Wonder whoever it was got a reply from SKC on this matter

[Snoopy]

Forgive me Snoopy if you've already commented on this but have you taken up the imputation/tax timing issue directly with SKC and if so what response did you receive?


No I haven't taken anything up with SKC yet Arbroath. I wanted to take a bit of time to pin down exactly what the problem was first (that's where that big table, my post 412, which I printed comes in). I think it was 'traineeinvestor' who was firing an inquiry through.

The problem with putting through enquiries like this at this time is that all the accounts staff are flat out preparing the accounts for the year ended 30th June. So I will probably wait until the results are released before firing off my enquiry.


Snoops me old mate - Twitter you can use 140 characters (including spaces)

Good discipline

Hope you selling your SKC shares if you believe they are 'diddling' you - the only principled way to go


As the holder of a 'sin' stock Winner69, I guess it must be obvious to you that I have no principles ;-P. No I haven't sold because it looks like an easy fix. Just pay your tax on time! Most of us seem to be able to do that. It doesn't seem too much of a stretch to think that Sky City management might be able to do the same. Result: underlying value of the share goes up by 73c per share. Sounds like easy money to me!

SNOOPY

[winner69]

Snoops - isn't there a sentence in the Notes to the Accounts .... (Sometimes) .tax is paid in advance

Isn't advance before you have to ....better than on time

[Snoopy]

Snoops - isn't there a sentence in the Notes to the Accounts .... (Sometimes) .tax is paid in advance

Isn't advance before you have to ....better than on time.


I think the key for SKC is to have paid their tax before they pay shareholders the dividends that come from the period profits. Whether that means 'paying tax on time' or 'paying tax in advance' are moot options for the IRD (as long as they get their money, the IRD aren't worried if you pay early). However, the two options of 'paying early' or 'paying on time' might make a significant difference to the shareholder, if the imputation and/or franking balance on the SKC books is low. If the imputation and/or franking balance is low, and the profits are real, then 'paying in advance' is the same as 'paying on time' from the shareholder perspective.

Most companies that make a profit on the NZX have a positive imputation credit balance before a dividend is paid, or even maintain a healthy imputed credit balance on the books all year round. An all year round positive imputation credit balance should happen naturally if the policy is not to pay out 100% of earnings as dividends. Not all of Sky City's earnings carry imputation or franking credits, that I grant you. But if you look at my post 516, you will see that there should have been enough imputation and/or franking credits on the books to fully frank and/or impute all dividends, assuming an 80% payout ratio as per SKC policy) in each of the last five years, except FY2013. (Although I do grant you that shareholders are likely to be able to use 'imputation credits' OR 'franking credits' but never both on the same dividend payout.)

SNOOPY

[peat]

Darwin Awards?

[winner69]

Results out - dividend of 10 cents with imputation credits ......yippee

[percy]

Results out - dividend of 10 cents with imputation credits ......yippee

Yippee..?????
The share price is down a dollar from a year ago.?

[winner69]

Yippee..?????
The share price is down a dollar from a year ago.?

Only 78 cents (NZX) including today's 15 cent fall

But somebody will be happy as dividend imputed

[winner69]

Wonder if Metiria has been to Sky City - many of those she's standing up for are regulars I believe

One quick visit to this den of iniquity was enough for me.

[percy]

Only 78 cents (NZX) including today's 15 cent fall

But somebody will be happy as dividend imputed

Yippee indeed.???????????????????

[winner69]

Yippee..?????
The share price is down a dollar from a year ago.?

Share price seems to follow the form of the Warriors and the Blues - proud to be sponsors they say

Good at supporting losers both on and off the field aren't they

[JoeGrogan]

Wonder if Metiria has been to Sky City - many of those she's standing up for are regulars I believe

One quick visit to this den of iniquity was enough for me.

So you can make that claim after only visiting the casino once? seems fair lol

[Snoopy]

Only 78 cents (NZX) including today's 15 cent fall


I made the call that things were looking fully valued a few weeks ago but didn't sell. Foolish? Now we are back under $4-, my $3.50 target price is looking more realistic.



But somebody will be happy as dividend imputed


Yes very happy to see $52.034m in the imputation account at the 30th June balance date. That means Sky City can pay a fully imputed dividend of:

$52.034m /0.28 = $185.836m

$185.836m / 667.377m =27.8cps

So why is the dividend going to be only a measly 10.0cps on 15th September 2017?

Too much? Too little? What a fussy dividend hound I am.

SNOOPY

[percy]

Share price seems to follow the form of the Warriors and the Blues - proud to be sponsors they say

Good at supporting losers both on and off the field aren't they

Luckily I don't share that sort of problem,being a Crusaders fan.

[Beagle]

I made the call that things were looking fully valued a few weeks ago but didn't sell. Foolish? Now we are back under $4-, my $3.50 target price is looking more realistic.



Yes very happy to see $52.034m in the imputation account at the 30th June balance date. That means Sky City can pay a fully imputed dividend of:

$52.034m /0.28 = $185.836m

$185.836m / 667.377m =27.8cps

So why is the dividend going to be only a measly 10.0cps on 15th September 2017?

Too much? Too little? What a fussy dividend hound I am.

SNOOPY

Its not what's in the ICA, (Imputation credit account) that matters its what this sin company can pay out of its slightly reduced EPS winnings.
Disc: This hound finds eating food off the plate of addicted gamblers to be a distasteful experience

[Biscuit]

Disc: This hound finds eating food off the plate of addicted gamblers to be a distasteful experience

It's a fairly reliable trading stock though: buy in the 300's sell in the 400's, then you can eat the food off a different group of addicted gamblers

[sb9]

Share price seems to follow the form of the Warriors and the Blues - proud to be sponsors they say

Good at supporting losers both on and off the field aren't they

Took a small punt couple of months back when there was big sell down by a fund, however got rid of it on the day of announcement last month relating to Darwin write off...good riddens!!!

[Beagle]

It's a fairly reliable trading stock though: buy in the 300's sell in the 400's, then you can eat the food off a different group of addicted gamblers

LOL fair comment but I'm not game on sin stocks..you see what I did there with the pun :)

[Snoopy]

YearNormalised Net Profit {A}No. Shares EOFY {B}eps {A}/{B}


FY2012$138.870m+0.72($4.274m-$1.756m-$0.582m)= $140.264m576.958m24.3c


FY2013$127.382m+0.72($3.235m-$0.947m+$0.249m)= $129.209m
576.958m22.4c


FY2014$98.537m+0.72($9.170m-$0.995m-$2.125m)-0.72($0.934m)= $102.221m582.088m17.6c


FY2015$128.744m+0.72($4.316m-$1.348m-$1.077m)= $130.106m
587.473m22.1c


FY2016$145.672m+0.72($1.553m-$0.944m-$0.709m) +0.72($2.7m+7.6m)= $152.319m656.987m23.2c


FY2017$44.862m+0.72($0m-$0.762m-$0.534m) +($99.486m)= $143.415m667.376m21.5c



Notes:

1/ Each year’s profit is adjusted for ‘restructuring costs’, ‘property plant and equipment sales’ and ‘exchange rate contract losses/gains’.
2/ FY2014 result adjusted for sale of the Christchurch Casino shareholding.
3/ FY2016 result is adjusted for $2.7m of planning expenses from the abandoned Hamilton hotel project and $7.6, representing the book value of a now demolished car park on the Auckland Convention Centre site.
4/ These are all 'actual profits'. I do not subscribe to using the 'normalised profits' that management seem to favour.

We see a steady drop in 'eps' over three year before two years of recovery.

Conclusion: Fail test




YearNormalised Net Profit {A}No. Shares EOFY {B}eps {A}/{B}


FY2013$127.382m+0.72($3.235m-$0.947m+$0.249m)= $129.209m
576.958m22.4c


FY2014$98.537m+0.72($9.170m-$0.995m-$2.125m)-0.72($0.934m)= $102.221m582.088m17.6c


FY2015$128.744m+0.72($4.316m-$1.348m-$1.077m)= $130.106m
587.473m22.1c


FY2016$145.672m+0.72($1.553m-$0.944m-$0.709m) +0.72($2.7m+7.6m)= $152.319m656.987m23.2c


FY2017$44.862m+0.72($0m-$0.762m-$0.534m) +($99.486m)= $143.415m667.376m21.5c



Notes:

1/ Each year’s profit is adjusted for ‘restructuring costs’, ‘property plant and equipment sales’ and ‘exchange rate contract losses/gains’.
2/ FY2014 result adjusted for sale of the Christchurch Casino shareholding.
3/ FY2016 result is adjusted for $2.7m of planning expenses from the abandoned Hamilton hotel project and $7.6, representing the book value of a now demolished car park on the Auckland Convention Centre site.
4/ FY2017 result is adjusted for the write off of Darwin goodwill ($99.486m).
5/ These are all 'actual profits'. I do not subscribe to using the 'normalised profits' that management seem to favour.

There is no clear pattern of rising earnings per share here..

Conclusion: Fail test

SNOOPY

[Snoopy]

YearNormalised Net Profit {A}S/h Equity EOFY {B}td]ROE {A}/{B}[/td]


FY2012 $140.264m$809.1m17.3%


FY2013$129.209m$812.9m15.9%


FY2014$102.221m$773.8m13.2%


FY2015$130.106m$816.9m15.9%


FY2016$152.319m$1,113.0m13.7%



The FY2016 result is a little unfair. The end of the financial year is 30th June. So the $263m of new capital raised from shareholders in June 2016 was only on the books for a month. If I remove this new shareholder equity from my calculation I get an ROE for FY2016 of:

$152.319m/ ($1,113m - $263m) = 17.9%

On this basis I am prepared to overlook the failure for FY2016.

Conclusion: Pass Test



YearNormalised Net Profit {A}S/h Equity EOFY {B}td]ROE {A}/{B}[/td]


FY2013$129.209m$812.9m15.9%


FY2014$102.221m$773.8m13.2%


FY2015$130.106m$816.9m15.9%


FY2016$152.319m$1,113.0m13.7%


FY2017$143.415m$1,070.9m13.4%



Despite the doubtful FY2016 result, this year saw a marked deterioration in high roller lending and NPAT losses in Darwin. The end of year write down of Darwin assets was not enough to offset the lower profits so ROE deteriorated.

Conclusion: Fail Test

SNOOPY

[Snoopy]

YearNormalised Net Profit {A}Revenues {B}td]Net Profit Margin {A}/{B}[/td]


FY2012$140.264m$960.2m14.6%


FY2013$129.209m$970.7m13.3%


FY2014$102.221m$928.2m11.0%


FY2015$130.106m$1,037.0m12.5%


FY2016$152.319m$1,131.5m13.5%



Despite the net profit margin being less than five years ago, the turnaround trend over the last three years shows that margin improvement is still possible.

Conclusion: Pass Test




YearNormalised Net Profit {A}Revenues {B}td]Net Profit Margin {A}/{B}[/td]


FY2013$129.209m$970.7m13.3%


FY2014$102.221m$928.2m11.0%


FY2015$130.106m$1,037.0m12.5%


FY2016$152.319m$1,131.5m13.5%


FY2017$143.415m$1,052.1m13.6%



FY2015, FY2016 and FY2017 shows a small but discernible that margin improvement.

Conclusion: Pass Test

SNOOPY

[Snoopy]

SKC is not a suitable company to apply the Buffett growth model to right now, because the the 'earnings per share' increasing trend that is required is not there. This doesn't mean that SKC is necessarily a poor investment though. It just means that we need a different method to analyse the likely investment potential from here. And that means rolling out the 'Capitalised Dividend Model' method (!). Stay tuned.


One year on and with the FY2017 results declared, it is time to resummarize our test results:

BT1/ Strong position (top three) in chosen market (my post 506): Pass Test
BT2/ Increasing 'eps' trend (my post 564): Fail Test
BT3/ ROE > 15% consistently (my post 565): Fail Test
BT4/ Ability to Increase Net profit margin (my post 566): Pass Test

SKC is in the midst of two large development programs in Auckland and Adelaide. The capitalised interest payments will add to the final capitalised costs of these projects. This on top of the expected capital spend will make it hard for SKC to earn a good return on equity into the future. The setback in earnings at Darwin is permanent. The real bright spark in the portfolio is Hamilton which on some metrics now outperforms the flagship Auckland property. And all this with, I would imagine, mainly on the proposition of entertaining local customers. The Auckland property nevertheless performed well. Who knows how well it will perform when the Convention Centre is finished? But I do believe that some of the benefits of the Convention Centre (a licence for more gaming machines and gaming tables) have already been 'booked', before the full 'cost stream' of running that International Convention Centre has not yet been paid by shareholders.

This Buffett type analysis relies on actual 'runs on the board' from the recent past. A pass of all four tests is required. On this basis neither the earnings per share trends, nor the returns on shareholder funds have a 'premium investment look'.

Conclusion: SKC is not a suitable company to apply the Buffett growth model. An alternative method of valuation will be sought.

SNOOPY

[Snoopy]

The following is a record of all of the dividend payments over the last five years from a New Zealand perspective. 'From a New Zealand perspective' means that the investor concerned can take advantage of New Zealand imputation credits.



Payment DateDividend Imputation PercentageDeclared DividendGross Dividend (I/C adjusted)



17-03-20170%10.0cps10.0cps


16-09-201650%10.5cps12.54cps










16-03-20160%10.5cps10.5cps


02-10-201533%10.0cps11.0cps










02-04-20150%10.0cps10.0cps


03-10-2014100%10.0cps13.89cps











04-04-20140%10.0cps10.0cps


04-10-2013100%10.0cps13.89ps










05-04-201350%10.0cps11.94cps


05-10-201260%8.0cps9.87cps










Five Year Average19.8cps22.73cps



Assuming a required rate of return of 6.5%, this translates to a share price of:

$0.2273 / 0.065 = $3.50

This is a 'business cycle average' valuation. My rule of thumb is that under different market conditions, the share price is liable to fluctuate up to 20% above and down to 20% below 'fair value'. This implies an 'all the ducks lining up' top of the market valuation of $4.20 cum dividend. At a $4.25 close on the market on Friday, but with a dividend payment of some 10c due within a couple of months, SKC is looking very fully priced using this valuation technique. Perhaps reducing one's holding on any market strength from here is the way to go?



The following is a record of all of the dividend payments over the last five years from a New Zealand perspective. 'From a New Zealand perspective' means that the investor concerned can take advantage of New Zealand imputation credits.



Payment DateDividend Imputation PercentageDeclared DividendGross Dividend (I/C adjusted)




1x-03-2018 (*)0%10.0cps13.89cps


15-09-201750%10.0cps13.89cps










17-03-20170%10.0cps10.0cps


16-09-201650%10.5cps12.54cps










16-03-20160%10.5cps10.5cps


02-10-201533%10.0cps11.0cps










02-04-20150%10.0cps10.0cps


03-10-2014100%10.0cps13.89cps











04-04-20140%10.0cps10.0cps


04-10-2013100%10.0cps13.89ps

















Five Year Average20.2cps23.92cps



(*) This dividend is a forecast. and in line with the company stated dividend policy. The very strong imputation credit balance (note 13, AR2017) indicates the final dividend ought to be fully imputed this year.

Assuming a required rate of return of 6.5%, this translates to a share price of:

$0.2392 / 0.065 = $3.68

This is a 'business cycle average' valuation. My rule of thumb is that under different market conditions, the share price is liable to fluctuate up to 20% above and down to 20% below 'fair value'. This implies an 'all the ducks lining up' top of the market valuation of $4.42 cum dividend. At a $3.97 close on the market on Friday, but with a dividend payment of some 10c due within a couple of days, SKC is trading at a modest 5% premium to 'fair value' using this valuation technique. I already hold this share, and may look to buy more if the price slips below that $3.70 level.

SNOOPY

[Biscuit]

Where does the required rate of return of 6.5% come from? The Buffet criteria seems a better way to evaluate a company overall, although you would struggle to find anything in NZ to buy. Do you really want to buy a company that is not growing its earnings? A 6.5% dividend return might seem ok in this low interest rate environment, but what happens when interest rates rise? Presumably the yield won't look so flash and the share price will likely drop, so you would want to keep a sharp eye on where interest rates are heading if you buy into this now.

Having said that, I've held this for many years with a bit of buying in the mid-low 300s and selling in the mid 400s along the way. It seems like quite a stable company with a fairly decent moat (I thought, but there has to be some question over that now).

[Snoopy]

Where does the required rate of return of 6.5% come from?


I made the figure of 6.5% up. This is a return I personally would be happy with, considering the underlying nature of the Sky City business.

Sky City casinos operate in markets where they are the sole casino player. These de-facto monopolies are mandated by government legislation. So in Buffett terms, this provides a very strong 'moat' for Sky City earnings. A strong moat, generally implies higher certainty of return. And that certainty is something that I am willing to pay a good price for. A good price, in this instance, refers to the fact that I am prepared to bid up the share price to the extent that I get a 6.5% yield over the business cycle.

Of course, if you disagree that 6.5% is acceptable - and that different people may have different opinions on this - then you can plug in the gross return rate that you are happy with and a different valuation will come out. A 6.5% return is a reflection of my own opinion, forged by the ups and downs of many years of investing. But I do consider that others could form an alternative 'acceptable interest return' view based on their own experiences that may not equate to my own.



The Buffet criteria seems a better way to evaluate a company overall, although you would struggle to find anything in NZ to buy.


Buffett has a policy of buying few investments out of the investment pool that is available to him. So yes, the Buffett growth criteria do provide a high investment hurdle.



Do you really want to buy a company that is not growing its earnings?


It all depends on the price the shares are offered to you. If the yield is good enough on a no growth share, then you should buy it.

The other way of looking at this is that if you can buy a share at a good price based on 'no growth', and the share does end up growing then you get the growth for free. Getting something for nothing is generally a good investment strategy.



A 6.5% dividend return might seem ok in this low interest rate environment, but what happens when interest rates rise? Presumably the yield won't look so flash and the share price will likely drop, so you would want to keep a sharp eye on where interest rates are heading if you buy into this now.


I have selected 6.5% on the assumption that interest rates will rise. I think if bank deposit rates increase to 4% or even 5%, then 6.5% on Sky City will still look attractive. However if enough shareholders do not find 6.5% attractive then you are quite right. The SKC share price may indeed fall.



Having said that, I've held this for many years with a bit of buying in the mid-low 300s and selling in the mid 400s along the way. It seems like quite a stable company with a fairly decent moat (I thought, but there has to be some question over that now).


What part of the moat do you feel is now in question? The Auckland casino licence pushed out to 2048 with a further 15 year right or renewal, makes the moat more secure than it has been in a long time, from my perspective.

SNOOPY

[Biscuit]

..... What part of the moat do you feel is now in question? The Auckland casino licence pushed out to 2048 with a further 15 year right or renewal, makes the moat more secure than it has been in a long time, from my perspective.

SNOOPY

Thanks for the detailed reply. Perhaps the experience with the Darwin Casino demonstrates that even casino licenses can be devalued to some extent by changes in Government policy.




I made the figure of 6.5% up. This is a return I personally would be happy with, considering the underlying nature of the Sky City business....
SNOOPY

Fair enough. It could be argued, though, that 6.5% is just one person's opinion of the appropriate return and a more "accurate" number would be obtained from the average historical return.

[Snoopy]

Thanks for the detailed reply. Perhaps the experience with the Darwin Casino demonstrates that even casino licenses can be devalued to some extent by changes in Government policy.


Fair point. The Darwin Casino licence was untouched. Yet by near doubling the number of pokies outside of the 'exclusive licence' Darwin Casino, the effective value of that exclusive casino licence was reduced. I would be fascinated to know the politics behind that move. I don't think an equivalent 'explosion of pub pokies' would be politically acceptable in NZ. So I still feel on fairly safe ground. You have to remember too that Darwin is only a very small part of the whole Sky City operation.



Fair enough. It could be argued, though, that 6.5% is just one person's opinion of the appropriate return and a more "accurate" number would be obtained from the average historical return.


I think the 'acceptable return' is related to current interest rates. But there is no point, IMO, in saying you would accept an even lower return when it seems inevitable that at some stage interest rates will go up again. You could say I have built in a buffer assuming some interest rate rise is coming.

Not so sure about picking an 'average historical return', if by 'history' you mean some time over the last twenty years. I think that even after the next series of interest rate rises, those bank term deposit rates are likely to struggle to get much over 5%, even at the top of the next boom. My feeling is that the next twenty years will prove to be a 'new normal'.

SNOOPY

[Snoopy]

Assuming a required rate of return of 6.5%, this translates to a share price of:

$0.2392 / 0.065 = $3.68

This is a 'business cycle average' valuation. My rule of thumb is that under different market conditions, the share price is liable to fluctuate up to 20% above and down to 20% below 'fair value'. This implies an 'all the ducks lining up' top of the market valuation of $4.42 cum dividend. At a $3.97 close on the market on Friday, but with a dividend payment of some 10c due within a couple of days, SKC is trading at a modest 5% premium to 'fair value' using this valuation technique. I already hold this share, and may look to buy more if the price slips below that $3.70 level.


SKC went ex-dividend today (10c) and is now trading at $3.84. With my fair valuation of $3.68, I am watching.

SNOOPY

[Balance]

SKC went ex-dividend today (10c) and is now trading at $3.84. With my fair valuation of $3.68, I am watching.

SNOOPY


https://www.nzx.com/files/attachments/263571.pdf

Reason why I bought in and am happy to add to my holding.

Been right to follow Rob into the companies he is chairman and/or director in - THL, PCT, SUM - and he has always shown his confidence by buying shares in the companies.

[percy]

https://www.nzx.com/files/attachments/263571.pdf

Reason why I bought in and am happy to add to my holding.

Been right to follow Rob into the companies he is chairman and/or director in - THL, PCT, SUM - and he has always shown his confidence by buying shares in the companies.
Well he certainly did not time his purchase using charts.

[Biscuit]

SKC went ex-dividend today (10c) and is now trading at $3.84. With my fair valuation of $3.68, I am watching.

SNOOPY

Now $3.69 ..... Seems Mr Market agrees with your valuation (for now)

[limmy]

Starting to rise as the AGM approaches, on October 20th ?

[Snoopy]

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.


I sent in my shareholder voting form the other day and have decided to vote against the appointment of Rob Campbell as Chairman elect. There is nothing personal in this 'no' vote. As Balance has pointed out, Campbell has a directorial record of success. What tipped the balance was all the excuses made in the voting form explanatory information about Campbell's existing workload, and the hints about how he might lighten his workload my moving out of other directorships in due course. Excuse me. Given the issues that the company faces, SKC will require the full attention of the new Chairman of the Board right now. If Campbell was really serious about this Chairman's job, he should have resigned his superfluous directorships already. In some circumstances these divided loyalties, for a while, might not matter. But SKC has also recently appointed a new externally recruited CEO, parachuted in from overseas. I think having 'company newbies' in what are arguably the two most important jobs in the company within such a short space of time is not on.

Mention is made about director Brent Harman being valued for his continuity of knowledge. Why wasn't Harman made Chairman, even if it was only for an interim period while Rob Campbell got his feet under the table? I think that all this reflects poorly on retiring Chairman Chris Moller, who should have been more on the ball with his succession planning.

I need not remind shareholders that IMO Moller should have been more 'on the ball' with the payment of company tax as well. Shareholders were left to pay income tax on real income, because the company was late in paying what in previous years were legitimate tax bills that should have enabled shareholders to book imputation credits. Paradoxically this year, SKC appears to have paid way too much tax in advance. IOW, the tax payments look all over the place. Is disorganization endemic to the executive culture of SKC?

SNOOPY

[Snoopy]

Now $3.69 ..... Seems Mr Market agrees with your valuation (for now)


Despite SKC not closing at 'not quite' my $3.68 fair valuation, I added to my holding with a small parcel bought at $3.70 last week. This raises my average buy price to $3.08, which isn't fantastic given how long I have owned the shares. Yet SKC have always been good dividend payers, and they now have a plan and funding in place to go forwards with the construction projects in both Auckland and Adelaide.

The Sky City share price has gone nowhere over the last couple of years. Yet the small delay in the timing of the Auckland Convention Centre, counter-weighted by the cost control on the project being so favourable to SKC shareholders under the soon to be knighted Sir Mark Adamson (what a public service his tenure at Fletchers has proven to be) will see this world class expanded casino facility ready for the upcoming America's Cup, and countless conferences before that. Yet, my purchase last week was made purely on the consideration of dividend yield. I think that at $3.70, SKC is worth buying even if there is no earnings growth at all going forwards. IOW, 'buy the yield' and any growth you do get is free.

Part of the reason for the struggling share price has been the profitability problems in the Australian casinos of Darwin and Adelaide, and the higher construction costs for the Adelaide extension. Yet overall, the number of shares held by named Australian institutional shareholders has increased over the past year.


[
Percentage Shareholding 2016Percentage Shareholding 2017

[
JB Morgan Nominees Australia7.99%9.47%


HSBC Custody Nominees (Australia) Limited 6.02%15.40%


RBC Investor Services Australia Nominees Pty Limited 3.23%< 0.65%



It looks like 'National Nominees' in New Zealand have been the big sellers, with ACC down a bit.


[
Percentage Shareholding 2016Percentage Shareholding 2017

[
National Nominees New Zealand Limited - NZCSD4.94%< 0.65%


National Nominees Limited 4.77%3.56%


Accident Compensation Corporation – NZCSD 2.84%2.66%



I think the Aussies have got this one right. They realise that what goes on in Australia is really a side issue and it is the Auckland Casino site that will drive earnings going forwards. Hence no real reason to sell and every reason to buy.

SNOOPY

discl: hold SKC

[macduffy]

Is disorganization endemic to the executive culture of SKC?

Possibly, although whether a chairman should check to ensure that tax is paid on time is an interesting question.

FWIW, Snoopy, I'm another who didn't let this get in the way of adding a few more SKC recently!

[carrom74]

There was some heavy trading in the last 30 minutes today.Sudden spurt of more than 2 million shares traded. 15 Cents gain(roughly 4%).Surely something is up...or just bargain hunting...

[limmy]

Regained the $4 mark today. Any good reasons ?

[carrom74]

Regained the $4 mark today. Any good reasons ?

I was there last Friday at the Auckland site and all i can say is that every restaurant/bar in Federal Street was pumping money....it was packed and bustling!...Not sure whether that can be a reason??

[limmy]

Lots of tourists too, plus a notable increase in gamblers?

[JeremyALD]

I was keen to buy back at 3.60 but after being at the casino a few times I'd feel to guilty making money out of people spending all their money gambling instead of feeding the kids

[winner69]

Pretty solid result from SKC with 8% increase in earnings

SKC could be a litmus test for how much the anticipated contraction PE could be (if it ever happens)

Currently a forward PE of about 14 (my calcs)

Wonder how low it could contract to? at 10 shareprice less than $3

Market 'corrections' / 'reratings' are brutal ...but fun

But no worries eh ....the turmoil is just big mistake

[Beagle]

Pretty solid result from SKC with 8% increase in earnings

SKC could be a litmus test for how much the anticipated contraction PE could be (if it ever happens)

Currently a forward PE of about 14 (my calcs)

Wonder how low it could contract to? at 10 shareprice less than $3

Market 'corrections' / 'reratings' are brutal ...but fun

But no worries eh ....the turmoil is just big mistake

LOL you're in good form today mate.

[winner69]

LOL you're in good form today mate.

What you reckon about even SKC PE contracting even though most would say at 14 on 8% growth is pretty reasonable

Stocks with good fundamentals can go down in a bear market just as stocks with bad fundamentals go up in the good times

[Beagle]

Almost all boats sink lower on an outgoing tide. That said I think their business model is fairly defensive although this hound is unlikely to partake in any of their buffet's anytime soon due to expansion of the waist line over the holidays :ohmy: Thing is mate you can't look at a one off 8% and say that's pretty good. Their track record in recent years has been anything but stellar and they have issues in Australia.

[flyer]

Anyone know what happened to this this avro, down 4% after 3.00pm? Someone selling to buy ATM?

[Balance]

Anyone know what happened to this this avro, down 4% after 3.00pm? Someone selling to buy ATM?

To cover losses on ATM shorts? :D

[see weed]

Three days left to buy for the divie hunters. Sky City Casino is paying 10c:). Ex div= 1/3/18 and p day 16/3/18.

[Sideshow Bob]

Too many cappuccino's with A2 milk there See Weed!

[carrom74]

Three days left to buy for the divie hunters. Cky Kitty Sacino is paying 10c:). Ex div= 1/3/18 and p day 16/3/18. Now say Sky City Casino 10..... as fast as you can 10 times and see what you get;).

Looks like not many are keen for the dividend... has been down, down and down after the results...Fletcher's ghost is catching up on this one...I suppose... (a big gap of $300m on NZICC's budget will drive both FBU and SKC all the way to the courts and may be that is also a factor on the downtrend).

[see weed]

Looks like not many are keen for the dividend... has been down, down and down after the results...Fletcher's ghost is catching up on this one...I suppose... (a big gap of $300m on NZICC's budget will drive both FBU and SKC all the way to the courts and may be that is also a factor on the downtrend).
I hear what you are saying, but am divi hungry and want to lock in 10c div even if it means losing a little or bigger sp drop. Will let you know at end of financial year of the divi chasing results. Would like to buy a few more before ex div.

[JayRiggs]

hmmm not looking good heading into ex-div, down to mid 3.80s.
I bought some SKC in late 2010 at around $3 and have held till today. A bit over 7yrs later, they haven't really gotten anywhere, currently in the 3.80s.
I've visited most of the casinos. Auckland, the ones in Queenstown, Hamilton and Adelaide. The Auckland one is the busiest of the lot by a fair margin. Other ones are pretty quiet, even in the evening. Impressive casinos, hotels and restaurants, but despite all this talk of growth in every interim and annual report, hardly any actual earnings growth. Still, a decent dividend earner over the years.

I'm holding on for a temporary 2021 America's Cup earnings boost, which might push it up to $5+ and I'll flick em away, unless my patience runs out between now and then.

[MauroNZ]

hmmm not looking good heading into ex-div, down to mid 3.80s.
I bought some SKC in late 2010 at around $3 and have held till today. A bit over 7yrs later, they haven't really gotten anywhere, currently in the 3.80s.
I've visited most of the casinos. Auckland, the ones in Queenstown, Hamilton and Adelaide. The Auckland one is the busiest of the lot by a fair margin. Other ones are pretty quiet, even in the evening. Impressive casinos, hotels and restaurants, but despite all this talk of growth in every interim and annual report, hardly any actual earnings growth. Still, a decent dividend earner over the years.

I'm holding on for a temporary 2021 America's Cup earnings boost, which might push it up to $5+ and I'll flick em away, unless my patience runs out between now and then.


What about the peak reached in 2016? maybe wasn't it in your price target?. Just out of curiosity as I only hold from 2013.

[JayRiggs]

What about the peak reached in 2016? maybe wasn't it in your price target?. Just out of curiosity as I only hold from 2013.

I wasn't thinking of selling back then. It's about 1% of my portfolio so I'm not too fussed.
Back in 2016, I thought things were looking good when it was over $5. Then there was the whole fiasco where Crown Resort employees were arrested in China, combined with average trading updates, sending SKC shares down to $3.60 in the space of a few months.
7+ years holding this stock, share price and earnings growth average at best.
But I'm willing to hold on till America's Cup 2021 and completion of the National Convention Center, which will bring in the big bucks :t_up:

[JayRiggs]

I hear what you are saying, but am divi hungry and want to lock in 10c div even if it means losing a little or bigger sp drop. Will let you know at end of financial year of the divi chasing results. Would like to buy a few more before ex div.

hey see weed did you manage to scoop up some SKC for the divvy?
Look forward to seeing your divi chasing results :)

[see weed]

hey see weed did you manage to scoop up some SKC for the divvy?
Look forward to seeing your divi chasing results :)
Bought last block today for 3.88. Got a busy month this month chasing divs. But will update my results at end of financial year, and talk tax obligations.

[MauroNZ]

I wasn't thinking of selling back then. It's about 1% of my portfolio so I'm not too fussed.
Back in 2016, I thought things were looking good when it was over $5. Then there was the whole fiasco where Crown Resort employees were arrested in China, combined with average trading updates, sending SKC shares down to $3.60 in the space of a few months.
7+ years holding this stock, share price and earnings growth average at best.
But I'm willing to hold on till America's Cup 2021 and completion of the National Convention Center, which will bring in the big bucks :t_up:

Valid point and I think I missed to look at that. I'm also interested in seeing the results after the National Convention Center, is something that I haven't followed up the progress of it, is it Fletcher the contractor?.

I mainly hold it because they kept the dividends and I thought it was a good monopoly company but I guess I was a bit wrong with my observations.

[MauroNZ]

Bought last block today for 3.88. Got a busy month this month chasing divs. But will update my results at end of financial year, and talk tax obligations.

About tax obligations, do you hold in any particular entity?. Thanks.

[see weed]

About tax obligations, do you hold in any particular entity?. Thanks.
I am the cleaner come part time trader.....clean up unwanted shares and put them in the top draw for resale;).... and collect a div on the way through if possible.

[carrom74]

There are 6 buy orders @3.81 amounting to 760,000 shares... wonder why one of this is not an "as usual- off market trade"...??

[Balance]

There are 6 buy orders @3.81 amounting to 760,000 shares... wonder why one of this is not an "as usual- off market trade"...??


Join the queue - they are waiting for a massive crossing at $3.80.

[Snoopy]

The indebtedness of a company is one factor that influences 'investment risk'. 'Investment risk' influences the return a new investor into Sky City today might expect.
Sky City earned $146.847m in normalised profit over FY2016. When you stack this up against the corporate loans that the company must eventually repay:



Current Loans$38.028m


Non-Current Loans$389.032m


Total Loans$427.060m



then the 'minimum debt repayment period' (MDRP) is a mere:

$427.060m / $146.847m = 2.9 years

That is expectedly (given the cash issue a month before balance date) low. Yet there was a reason behind the cash issue. SKC has committed to spending $NZ700m at the Auckland site, the majority of that going towards the new Convention Centre. Furthermore, Sky City is committed to spending $A300m ($NZ333m assuming $A0.9 =$NZ1-) more on the Adelaide development. These are huge committed costs, largely not reflected on the books as at 30-06-2016.

We are told that during the year $8.674m of interest has been capitalised at an interest rate of 6.03%. This implies capital expenditure of:

$8.674m / 0.0603 = $143.8m

I believe that this money relates to capital already spent developing the Auckland site. So this leaves:

$700m - $144m = some $556m still to spend

If we add the Auckland and Adelaide expected development debts to the company debt as at 30th June 2016, a different picture of indebtedness emerges.



Current Loans$38m


Non-Current Loans$389m


Incremental Auckland Indebtedness$556m


Incremental Adelaide Indebtedness$333m


Total Loans$1,316m



The MDRT now blows out to:

$1,316m / $152.3m = 8.6 years

I would describe this as getting towards the high end of 'medium indebtedness'. This is not unusual for a company with a relatively secure recession resistant cashflow stream available. I haven't considered any reinvestment via the dividend reinvestment scheme which would reduce this figure. But it is clear to me that SKC does not have a lot of room to move on any other capital initiatives.


I tend not to worry much about the indebtedness of the larger cap companies. But I thought this comparative table from another thread is of interest.



Company & Financial YearMercury 2017 Sky City 2017 Spark 2017 AWF 2017 (AbsIT 12mnths)


[TD]EBITDA(F) {B}$523m$307m$1,016m$15.664m

Finance Cost {C}$95m$31.1m$48m$1.659m


Interest Coverage {B}/{C}5.59.821.29.4


Net Funding Debt {D}$1077m$889m$935m$32.383m


Leverage ratio {D}/{B}2.12.90.92.1



My calculation of SKC net debt was:

(Long term Debt) + (Short Term Debt) - (Cash) + (Deferred Licence Value Liability)

"The deferred licence value relating to Auckland $405m and Adelaide $150m will be transferred and offset against property plant and equipment when the New Zealand International Convention Centre and Adelaide redevelopment have been completed."

I make this post in the context of the just announced sale of the Federal Street parking building for $40m (vs book value of $22m) YAY! But then I noted that although a $4m deposit is banked immediately, the balance due and actual handover doesn't happen until a year later BOO!

Then I read about the potential sale of the Darwin Casino, and the fact that SKC are so keen to get cash out, they are prepared to consider a 'partial sale' of that business. It does look to me like SKC are headed towards some kind of 'debt crunch', so keen are they to accept divestment deals with 'interesting' terms attached.

SNOOPY

[peat]

hey snoopy
they sold the carpark!

[Snoopy]

hey snoopy
they sold the carpark!

That is what the headline of the press release said, but actually they haven't sold it yet if you read past the headline. The $36m Settlement of the balance doesn't happen for a year, because the first stage of the nearby Convention Centre car park isn't finished. If SKC actually had sold the Federal Street car park now, all those high paid SKC execs would have nowhere to park!

I am surprised that the buyers agreed to put down $4m as a deposit, with not a hint of any return on that money until ownership is actually transferred. Technically the buyer, ICD Property Investment Limited, has just made a $4m low (i.e. no) interest loan to SKC: All good for reducing SKC interest payments I am sure!

SNOOPY

[peat]

That is what the headline of the press release said, but actually they haven't sold it yet if you read past the headline.

Technically the buyer, ICD Property Investment Limited, has just made a $4m low (i.e. no) interest loan to SKC: All good for reducing SKC interest payments I am sure!

SNOOPY

well its a little bit semantic but if the deal is unconditional then they have sold it (with delayed settlement) and a deposit is quite usual :blush:

[winner69]

Plenty of cash coming out of sin city

At least they keep making more than expected from the international high rollers

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/321874/284080.pdf

[Ggcc]

Plenty of cash coming out of sin city

At least they keep making more than expected from the international high rollers

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/321874/284080.pdf
Loads of unofficial money becoming official helps with that

[winner69]

Loads of unofficial money becoming official helps with that

Even the $100m in gaming gst skc proudly proclaim as collecting wouldnt offset that unofficial money (from a governments pov)

[Ggcc]

Even the $100m in gaming gst skc proudly proclaim as collecting wouldnt offset that unofficial money (from a governments pov)
Last count New Zealand had about $7 billion unofficial money so you are very much correct.

A lot of cash is taken overseas, you just need to watch those programs like boarder patrol to see a certain group of people who carry wads of cash and who only deal in cash..... They also love to gamble.

[bull....]

decided to have a punt today , think things might be looking up under there strategy refresh

[carrom74]

Excellent Result IMO...some points to ponder...

Darwin casino sale is crucial as the proceeds may be used to buy more assets or cut down debt(Nigel Morrison-Ex CEO was focused on the latter
Impetus on building more hotels is a good sign as Auckland faces a huge shortage on rooms.
Online Gambling focus seems to me as a "Trump Card"
Also i see an increase on Non-Gaming revenue which sort of Cushions the NPAT... The flash restaurants on the federal street does do well.

Overall New Chair,CEO---looks to me as a refreshed team.

Interesting times...

[bull....]

Excellent Result IMO...some points to ponder...

Darwin casino sale is crucial as the proceeds may be used to buy more assets or cut down debt(Nigel Morrison-Ex CEO was focused on the latter
Impetus on building more hotels is a good sign as Auckland faces a huge shortage on rooms.
Online Gambling focus seems to me as a "Trump Card"
Also i see an increase on Non-Gaming revenue which sort of Cushions the NPAT... The flash restaurants on the federal street does do well.

Overall New Chair,CEO---looks to me as a refreshed team.

Interesting times...

like your points , might actually start to grow going forward with the non gaming add -ons

[bull....]

see crown resorts announced very good results today , vip up too whole sector looks good at the moment

[bull....]

read the ceo saying they are only investing in nz and aus and have up too 2- 3 new hotels either planned or investigating in nz

[bull....]

star ent just released there results , showed strong growth as well and stated 2019 yr has started strong. same for skc? would think so whole sector nz/aus seems to be doing well at the moment

[bull....]

bit of a laggard , wonder when we hear about perth sale?

[carrom74]

bit of a laggard , wonder when we hear about perth sale?

It’s not Perth sale bull.. it’s Darwin”a casino which is up for sale... it’s just a matter of time now

[Balance]

It’s not Perth sale bull.. it’s Darwin”a casino which is up for sale... it’s just a matter of time now

https://www.nzx.com/announcements/326531

Sold for A$188m - EBIT multiple of 14.8 times.

Pretty good outcome except Sky City had already written off A$97m of impaired goodwill on this dog casino. Ouch!

[peat]

https://www.nzx.com/announcements/326531

Sold for A$188m - EBIT multiple of 14.8 times.

Pretty good outcome except Sky City had already written off A$97m of impaired goodwill on this dog casino. Ouch!

another NZ offshore venture failure.

[Snoopy]

Another NZ offshore venture failure.


I don't think that is a fair assessment of Sky City Darwin. IIRC for a long while it was one of the more successful Sky City business units. In fact if you add up the contribution that this property has made to the Sky City bottom line from normalised earnings, I think it has contributed more than any business unit - other than the downtown Auckland site - over the total period that Sky City owned it.

What 'did Darwin in' was the change in Northern Territory regulations that allowed pokie machines in any pub. Thus while Sky City Darwin retained their 'exclusive' casino licence, the practical value of that exclusive licence was seriously diminished. And kiwi ownership of Sky City Darwin had absolutely nothing to do with that regulatory change.

SNOOPY

[Balance]

I don't think that is a fair assessment of Sky City Darwin. IIRC for a long while it was one of the more successful Sky City business units. In fact if you add up the contribution that this property has made to the Sky City bottom line from normalised earnings, I think it has contributed more than any business unit - other than the downtown Auckland site - over the total period that Sky City owned it.

What 'did Darwin in' was the change in Northern Territory regulations that allowed pokie machines in any pub. Thus while Sky City Darwin retained their 'exclusive' casino licence, the practical value of that exclusive licence was seriously diminished. And kiwi ownership of Sky City Darwin had absolutely nothing to do with that regulatory change.

SNOOPY

Yup, just like allowing Virgin to enter the Oz market after Air NZ was forced to buy Ansett Airlines off Keating's mate, Rupert Murdoch's News Corp, had absolutely nothing to do with Ansett being in NZ ownership then!

Why do NZ companies wake up to the reality of the uneven playing field in Oz?

[Snoopy]

Yup, just like allowing Virgin to enter the Oz market after Air NZ was forced to buy Ansett Airlines off Keating's mate, Rupert Murdoch's News Corp, had absolutely nothing to do with Ansett being in NZ ownership then!

Why do NZ companies wake up to the reality of the uneven playing field in Oz?


Drawing a comparison between the Air NZ/Ansett 'merger' and the entry of Virgin Blue to the Oz market is drawing a long bow IMO. IIRC when Virgin, branded as 'Virgin Blue' first came into the airline market in Oz it was controlled by the UK parent 'Virgin Atlantic' anyway. So it wasn't true to say that the demise of 'foreign controlled' Ansett was accelerated because the competition at Virgin Blue was an Aussie controlled. Also this was a Federal government issue.

By contrast the pokie licence changes affecting Sky City were an initiative of the Northern Territorial State administration. The Sky City Darwin casino is not in downtown Darwin central. It is still within walking distance, but it is a decent walk to get there (I have done it). So putting pokies 'downtown' in the pubs created a geographically slanted playing field. IIRC the pokie licence changes were introduced partly as the local mining businesses faced tough times - nothing to do with ownership of the casino. It was an initiative to boost the NT economy in tough times

SNOOPY

[carrom74]

https://www.nzx.com/announcements/326531

Sold for A$188m - EBIT multiple of 14.8 times.

Pretty good outcome except Sky City had already written off A$97m of impaired goodwill on this dog casino. Ouch!

I see a lot of "re-juggling" of assets of late from Skycity.

The residual equity from sold assets such as Darwin and Federal street car parks are to be pumped towards good performing assets in Auckland and Queens town.

I heard Queens town is getting a new Hotel.

Its a good move(though it was signalled during Nigel's(ex-CEO)'s time itself

[babymonster]

good update...

[Benny1]

Yeah not a bad update. I have picked up just a few of these, Like the direction the company is taking.

I like the fact they are looking at more hotels, up to four in Auckland as well as manoeuvring them selves for future opportunities in both Queenstown and Hamilton.

The ICC construction delays are still a little bit of a concern however with APEC and the america's in the next couple of years the Auckland hotel's should be pumping.

[hamish]

Another good solid update and upgrade - that's 2 now in a row. An co-relation to Moller out and Rob Campbell in since end 2017?

https://www.nzx.com/announcements/329901
SKYCITY currently expects normalised EBITDA in 1H19 to be around $189m (up around 10% on 1H18(1)) and normalised NPAT in 1H19 to be around $97 million (up around 11% on 1H18(1)).

This looks a solid prospect next 2 years.
- decent yield
- near 5 yr low
- uncertainty driven due ICC / Casino constructions and capex needs
- I like they have been selling down and recycling underperforming assets
- risk/reward - more upside than downside as they continue to execute
- still some concerns in the back pocket re possible cost overrun and/or litigation with Fletchers

One wonders, the win rate in international business down for the international punters.. what factors that.. loaded dice? earmarked cards for croupier :-)

Disc: Decided at start of year to start ditching some 2018 non performers and shifted into SKC with buying in 3.40-3.50s. Optimistic will see $4.10+ by end year

[winner69]

How to bambozzle people with a few sentences

The announcement says its going gangbuster with normalised npat likely to be up 11% on last year

But to me the likely reported NPAT is said to be $82m which seems a lot less than the $93.5m reported last year

All to do with these dastardly high rollers and the normalised expected win rates but seeing I don't really understand how that works even that doesn't seem to make sense to me - reads as if SKC have had the cards and dice fall in their favour but going to make less.


Never mind - all too complicated for me. As they say if you don't understand dont invest ...and Sky City being a den of iniquity is another reason to stay out as well.

[bull....]

i like the opportunities they have in hotels esp queenstown if they do something really good. hotel with attractions and entertainment within it or by it would be a real big success.

[winner69]

Another good solid update and upgrade - that's 2 now in a row. An co-relation to Moller out and Rob Campbell in since end 2017?

https://www.nzx.com/announcements/329901
SKYCITY currently expects normalised EBITDA in 1H19 to be around $189m (up around 10% on 1H18(1)) and normalised NPAT in 1H19 to be around $97 million (up around 11% on 1H18(1)).

This looks a solid prospect next 2 years.
- decent yield
- near 5 yr low
- uncertainty driven due ICC / Casino constructions and capex needs
- I like they have been selling down and recycling underperforming assets
- risk/reward - more upside than downside as they continue to execute
- still some concerns in the back pocket re possible cost overrun and/or litigation with Fletchers

One wonders, the win rate in international business down for the international punters.. what factors that.. loaded dice? earmarked cards for croupier :-)

Disc: Decided at start of year to start ditching some 2018 non performers and shifted into SKC with buying in 3.40-3.50s. Optimistic will see $4.10+ by end year

Doesn’t that win rate being down mean SKC made less than expected ...ie punters winning more (I might be completely wrong as I don’t really understand these things)

Is the $24m difference between normalised ebitda $189n and reported ebitda of $165m the excessive wins the high rollers took away over and above what they were meant to? Surely not?

Still amazes me they can tout a 10% increase in normalised ebitda when in reality it’s going to be $15m or 9% less than last year

Never mind .....as long as you make zillions on your SKC shares Hamish

[hamish]

Agree. I sometimes wonder if 10 different accountants on a set of books and you get 10 different results?!

Oh well, if its not zillions, then I guess I can 'put it all on black' come end of year.?

Am 30c up on average with current SP, so downside risk OK

Medijm term.. America Cup and new icc and hotel developments to look forward too, so maybe SkC can get some growth on the board ... Notwithstanding the ups and downs of the tourism sector and possible slowdown.

[NZSilver]

Good comments above, I really got confused with the announcement, to me it doesn't add up; win rate for punters was lower than theoretical, however actual results are Less than normalised. If punters have a lower win (approx 1% vs theoretical 1.4%) rate shouldn't SKC make more and shouldnt actual be greater than normalised. Or is it that the IB buisness would be contributing more to actual results but actual results are Not GREATER than normalised results and other segments of the buisness must be dragging down expected results below normalised. Anyway - some explanation would be much appreciated. A good question for the folks on sharetrader even if they are not interested in SKC. It will be greatly appreciated.

[winner69]

Good comments above, I really got confused with the announcement, to me it doesn't add up; win rate for punters was lower than theoretical, however actual results are Less than normalised. If punters have a lower win (approx 1% vs theoretical 1.4%) rate shouldn't SKC make more and shouldnt actual be greater than normalised. Or is it that the IB buisness would be contributing more to actual results but actual results are Not GREATER than normalised results and other segments of the buisness must be dragging down expected results below normalised. Anyway - some explanation would be much appreciated. A good question for the folks on sharetrader even if they are not interested in SKC. It will be greatly appreciated.

I think the win rate is what Sky expect to win ...this a 1% win rate means they didn’t win as much as expected (the 1.35%) ....you were looking at from a punters point of view. I might be wrong but it makes sense.

But I don’t think the $24m difference between reported and normalised ebitda can be put down to punters winning more than expected .....$24m is a lot eh

[carrom74]

All said and done,Morning star valued SKC at $4.20 as fair value.... Was on the news yesterday

[Balance]

All said and done,Morning star valued SKC at $4.20 as fair value.... Was on the news yesterday

Morningstar? SELL!

[Balance]

I think the win rate is what Sky expect to win ...this a 1% win rate means they didn’t win as much as expected (the 1.35%) ....you were looking at from a punters point of view. I might be wrong but it makes sense.

But I don’t think the $24m difference between reported and normalised ebitda can be put down to punters winning more than expected .....$24m is a lot eh

Read page 33 and I think it's clear what the 'normalisation' is about - it is an adjustment to show what Sky City's earnings would be if punters had won (or lost) at the theoretical rate, so analysts can assess the underlying profitability of the IB business.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/313951/274119.pdf

Purely an analytical assessment for those who fret over how the casino is performing in this highly volatile business area. Recall that Kerry Packer used to go to casinos and broke the casino's earnings for the next 2 years with his whale bets?

[Balance]

https://www.news.com.au/entertainment/books-magazines/books/kerry-packer-tall-tales-amp-true-stories/news-story/caad935685c8f6f6d5c1d84d7a7efa00

A great read of Kerry Packer, the casino gambling legend.

"Packer and the casinos both knew that he could, single-handedly, either bankrupt or buy them. As it was, Packer’s plays were significant enough that a casino company’s earnings could be clobbered, and its market capitalisation nudged by whole percentage points."

[Balance]

Good comments above, I really got confused with the announcement, to me it doesn't add up; win rate for punters was lower than theoretical, however actual results are Less than normalised. If punters have a lower win (approx 1% vs theoretical 1.4%) rate shouldn't SKC make more and shouldnt actual be greater than normalised. Or is it that the IB buisness would be contributing more to actual results but actual results are Not GREATER than normalised results and other segments of the buisness must be dragging down expected results below normalised. Anyway - some explanation would be much appreciated. A good question for the folks on sharetrader even if they are not interested in SKC. It will be greatly appreciated.

All makes sense now?

1H18 earnings were normalized down as actual win was higher for SKC than theoretical win rate.

1H19 earnings are normalized up as actual win rate is lower for SKC than theoretical win rate.

Share price went up on the earnings update which suggest that the institutional investors out there place more weight on the longer term win rate than the year to year actual win rate.

[peat]

.

Share price went up on the earnings update which suggest that the institutional investors out there place more weight on the longer term win rate than the year to year actual win rate.

Interesting! I prefer reality as a measure. Do the insti's check the maths behind the theoretical win rate - I wonder.

[carrom74]

I think the win rate is what Sky expect to win ...this a 1% win rate means they didn’t win as much as expected (the 1.35%) ....you were looking at from a punters point of view. I might be wrong but it makes sense.

But I don’t think the $24m difference between reported and normalised ebitda can be put down to punters winning more than expected .....$24m is a lot eh

Balance— How does SKC come up with a theorical rate? Past experience or assumptions? Because I am guessing skycity is also a punter somewhat??

[Balance]

Balance— How does SKC come up with a theorical rate? Past experience or assumptions? Because I am guessing skycity is also a punter somewhat??

Not at all.

https://gaming.unlv.edu/casinomath.html

"At its core the business of casino gaming is pretty simple. Casinos make money on their games because of the mathematics behind the games. As Nico Zographos, dealer-extraordinaire for the 'Greek Syndicate' in Deauville, Cannes, and Monte Carlo in the 1920s observed about casino gaming: "There is no such thing as luck. It is all mathematics."

With a few notable exceptions, the house always wins - in the long run - because of the mathematical advantage the casino enjoys over the player. That is what Mario Puzo was referring to in his famous novel Fools Die when his fictional casino boss character, Gronevelt, commented: "Percentages never lie. We built all these hotels on percentages. We stay rich on the percentage. You can lose faith in everything, religion and God, women and love, good and evil, war and peace. You name it. But the percentage will always stand fast."

[carrom74]

Not at all.

https://gaming.unlv.edu/casinomath.html

"At its core the business of casino gaming is pretty simple. Casinos make money on their games because of the mathematics behind the games. As Nico Zographos, dealer-extraordinaire for the 'Greek Syndicate' in Deauville, Cannes, and Monte Carlo in the 1920s observed about casino gaming: "There is no such thing as luck. It is all mathematics."

With a few notable exceptions, the house always wins - in the long run - because of the mathematical advantage the casino enjoys over the player. That is what Mario Puzo was referring to in his famous novel Fools Die when his fictional casino boss character, Gronevelt, commented: "Percentages never lie. We built all these hotels on percentages. We stay rich on the percentage. You can lose faith in everything, religion and God, women and love, good and evil, war and peace. You name it. But the percentage will always stand fast."

Thanks Balance for the info..

If it is all about percentages then the "bait" of NZICC has paid off...the extra gaming machines is making some impact though there has been a steady incremental growth of late in the IB and non-gaming businesses...(Americas cup--not far off)

The stock has been holding off well despite AIR's downgrade which has affected AIA and THL...

[Snoopy]

If it is all about percentages then the "bait" of NZICC has paid off...the extra gaming machines is making some impact though there has been a steady incremental growth of late in the IB and non-gaming businesses...(Americas cup--not far off)


I have never been in favour of counting theoretical wins. While I understand the mathematics behind it, the fact is, it is possible to have several years in a row where International High Rollers win more than they theoretically should: A black swan casino cluster of events. So if SKC did suffer significant or even crippling high roller gambling losses, I would not be comforted by Chairman Rob Campbell coming out with the line that "Theoretically, we shouldn't have lost that much money." Although rare, such a sequences of events can happen!



The stock has been holding off well despite AIR's downgrade which has affected AIA and THL...


SKC is as much a 'domestic share' story as a 'tourism share' story. When things aren't going so well, a night at the casino can be a cheaper substitute for a holiday weekend away. And no, I am not talking about the theoretical down and out gambling away their last buck. I am talking about responsible gamblers, only spending what they would otherwise spend on a more expensive leisure activity, and only spending money they can afford to lose. This 'domestic hedge effect' is primarily why SKC is my favourite and only investment in the tourism sector.

SNOOPY

[Balance]

I have never been in favour of counting theoretical wins. While I understand the mathematics behind it, the fact is, it is possible to have several years in a row where International High Rollers win more than they theoretically should: A black swan casino cluster of events. So if SKC did suffer significant or even crippling high roller gambling losses, I would not be comforted by Chairman Rob Campbell coming out with the line that "Theoretically, we shouldn't have lost that much money." Although rare, such a sequences of events can happen!



SKC is as much a 'domestic share' story as a 'tourism share' story. When things aren't going so well, a night at the casino can be a cheaper substitute for a holiday weekend away. And no, I am not talking about the theoretical down and out gambling away their last buck. I am talking about responsible gamblers, only spending what they would otherwise spend on a more expensive leisure activity, and only spending money they can afford to lose. This 'domestic hedge effect' is primarily why SKC is my favourite and only investment in the tourism sector.

SNOOPY

SKC has a pretty long runway (NZICC, Adelaide expansion, Queenstown & Hamilton hotel expansion plans) to be funded by the sale of its Darwin casino & potential sale of its carparking operations for earnings to take off from 2020.

Not that many stocks on SKC's multiples with that long runway.

[carrom74]

When we look at who are the patrons of Sky-city (just like the responsible gamblers)... it is just not them...The challenge is to get foot-traffic in.Once they are in they spend on Parking,food and beverage,may be stay a night or visit the tower.. Here we are looking at an incremental spend(just not gambling) and that is where Skycity Triumphs.I believe Federal street restaurants are a raging success and the average spend per table is between $150-$200(for a table of 2) or even more if you dine in MASU or The Grill.The potential is immense.

What about convention guests.... the assumption based on global convention centre revenue analysis is that daily delegate spend of $700 for global conference and thats "per day"

https://www.parliament.nz/resource/0000182534


I am in for long haul and with a decent dividend yield its a good company to hold.

[bull....]

nice increase in earnings , property secured in queenstown is good news and a buyback

[Benny1]

nice increase in earnings , property secured in queenstown is good news and a buyback

Read somewhere a little while ago about some land in Queenstown being acquired as a future hotel site and my first thought was Skycity!
Seem to be on track with Rob Campbell steering the ship.
Wasn't expecting a share buy back. Wish I had grabbed more of these at $3.46 not too long ago!

[bull....]

Read somewhere a little while ago about some land in Queenstown being acquired as a future hotel site and my first thought was Skycity!
Seem to be on track with Rob Campbell steering the ship.
Wasn't expecting a share buy back. Wish I had grabbed more of these at $3.46 not too long ago!

queenstown offers big opp to bring in ib customers should be a 5 star hotel i hope go for premium clients with big bucks offer them packages including tourist stuff etc

[Benny1]

queenstown offers big opp to bring in ib customers should be a 5 star hotel i hope go for premium clients with big bucks offer them packages including tourist stuff etc

They starting to do that in Auckland with the proposed All Blacks experience and a partnership with Weta workshop so can see that as a sign of where they are going in future developments. Queenstown would be a natural expansion of those type of projects in the future.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12203586

Rob Campbell and the board will get plenty of exercise for their minds with a huge fight shaping up between FBU and SKC. What's the bet some top QC lawyers are almost salivating at the thought of millions of dollars of billable hours !

[Balance]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12203586

Rob Campbell and the board will get plenty of exercise for their minds with a huge fight shaping up between FBU and SKC. What's the bet some top QC lawyers are almost salivating at the thought of millions of dollars of billable hours !

Indeed!

And the QCs will prolong as long as possible any settlement so they can keep milking this debacle.

Logic says that FBU will come out the big loser however in the end as NZICC is not the only project that FBU has stuffed up so spectacularly - too easy to prove that FBU has completely screwed up its project building and construction division. Admission of guilt is that FBU is phasing out and shutting that division down.

[Beagle]

Indeed!

And the QCs will prolong as long as possible any settlement so they can keep milking this debacle.

Logic says that FBU will come out the big loser however in the end as NZICC is not the only project that FBU has stuffed up so spectacularly - too easy to prove that FBU has completely screwed up its project building and construction division. Admission of guilt is that FBU is phasing out and shutting that division down.

Yeap, I couldn't agree more Balance. FBU look like they're on a hiding to nothing. This project was supposed to be open now and was originally quoted at just over $400m.
My money is on further write-down's for FBU, (I'd bet money the total cost including damages will run over $1b) and SKC's lawyers rubbing salt into the wound of what is arguably the biggest construction cost fiasco in N.Z. of all time. Interesting to see the size of the retentions SKC is already holding back. Possession is 90% of the law :)
Disc: Don't own SKC (sin stock and their Fortuna buffet is also evil for my waistline) or FBU, academic interest only.

[carrom74]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12203540

A buyback would spruce up the share price.Seems to be a knee jerk reaction yesterday. Read somewhere that they are selling car parks is worth $300M ! holy me... thats a lot of money...

[Balance]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12203540

A buyback would spruce up the share price.Seems to be a knee jerk reaction yesterday. Read somewhere that they are selling car parks is worth $300M ! holy me... thats a lot of money...

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12203775

$28m actually - or $14,000 per car-park which is ridiculously cheap for Auckland! Recent sales in some of the apartment buildings were for $100k!

[bull....]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12203775

$28m actually - or $14,000 per car-park which is ridiculously cheap for Auckland! Recent sales in some of the apartment buildings were for $100k!

agree 14k seems a low price per lot

[Balance]

https://www.stuff.co.nz/business/111085126/skycitys-big-money-online-pokie-plans-upset-minister

NZ laws on hold while government fiddles with all kinds of nonsense except progress.

[hogie]

https://www.stuff.co.nz/business/111085126/skycitys-big-money-online-pokie-plans-upset-minister

NZ laws on hold while government fiddles with all kinds of nonsense except progress.


I view this as pretty good news for SKC ... they've been totally open and transparent with the government and had been hinting at going their own way for a while now ... I hope it ends up being successful!

[Ggcc]

https://www.stuff.co.nz/business/111085126/skycitys-big-money-online-pokie-plans-upset-minister

NZ laws on hold while government fiddles with all kinds of nonsense except progress.

I think people who want to gamble online will find a way. I does not interest me in the slightest, but if it could benefit SKC and the government they should work together to work out a solution. SKC pay their fair share of tax and people always want to have fun (some people more than fun and no matter how much you try to help them they will not change).

[share4eva]

There has been talk for years of a possible takeover bid for Sky City. Anyone see this coming this year, and if so, who is the likely bidder?

Cheers

[Snoopy]

There has been talk for years of a possible takeover bid for Sky City. Anyone see this coming this year, and if so, who is the likely bidder?

Cheers

Bring back founder CEO Evan Davies and roll him out to create some new takeover rumours. IIRC Evan was not shy about Sky City being a takeover target any time the share price looked soft!

SNOOPY

P.S. (To answer the question). Perhaps you should look at the immediate previous CEO Nigel Morrison. IIRC he reckoned that SKC shares could get to ten bucks. Nigel must be salivating now the share price has seemingly retreated below $4 on a permanent basis!

[iceman]

The Herald reporting that SKC has sold its Auckland carparks for a cool $230M. Nice bit of cash for hotel developments.

[winner69]

Bring back founder CEO Evan Davies and roll him out to create some new takeover rumours. IIRC Evan was not shy about Sky City being a takeover target any time the share price looked soft!

SNOOPY

P.S. (To answer the question). Perhaps you should look at the immediate previous CEO Nigel Morrison. IIRC he reckoned that SKC shares could get to ten bucks. Nigel must be salivating now the share price has seemingly retreated below $4 on a permanent basis!

Does SKC have enough ‘strategic’ value for anybody to pay $4 billion for them .....and get $300m of Cash Flow (before capex) a year

[bull....]

re invest the proceeds in queenstown hopefully

[Balance]

Does SKC have enough ‘strategic’ value for anybody to pay $4 billion for them .....and get $300m of Cash Flow (before capex) a year

Why think of takeover to drive up value?

That may give a short term gain but after that, there is no opportunity to participate in what is actually a great monopolistic business.

Think of AIA - best thing that ever happened was Michael Cullen scuttling the Canadian takeover deal - $3.60 looked great at that time and there was much aggro about the government stopping the deal.

I believe SKC under Rob Campbell is doing all the right thing (getting rid of non-strategic assets, dead wood executives, putting funds into core businesses rather than peripheral assets/businesses) and it really is a matter of time when the strategic moves pay huge dividends in the future.

Happy to keep accumulating whenever the sp dips below $3.65 - great dividends and future growth potential.

[Balance]

https://www.nzx.com/announcements/333140

Share buyback kicks in.

34m more to buy.

:t_up:

[bull....]

https://www.nzx.com/announcements/333140

Share buyback kicks in.

34m more to buy.

:t_up:

nice , see in the afr today there was speculation crown resorts was subject takeover by wynn resorts

[Balance]

nice , see in the afr today there was speculation crown resorts was subject takeover by wynn resorts

https://www.smh.com.au/business/companies/james-packer-s-crown-resorts-confirms-it-s-in-takeover-talks-with-us-giant-wynn-resorts-20190409-p51c8q.html

A$10 billion takeover bid under negotiations - sp has soared 22% since market opened.

Guess a few $$$ of the money released will find its way into SKC shares.

Here's hoping that SKC will be like AIA, and not get taken over.

Enjoying the dividends and the steady capital growth from a monopolistic stock. :t_up:

[bull....]

https://edition.cnn.com/2019/04/08/business/wynn-crown-resorts-share-price/index.html

Wynn Resorts abandons $7 billion play for Australia's Crown Resorts
didnt last long lol maybe they realised skc looks better

[winner69]

https://edition.cnn.com/2019/04/08/business/wynn-crown-resorts-share-price/index.html

Wynn Resorts abandons $7 billion play for Australia's Crown Resorts
didnt last long lol maybe they realised skc looks better

Same multiples SKC about 430/440 ...hmmm

[share4eva]

why is Sky City's share price slowly going up?

[macduffy]

why is Sky City's share price slowly going up?

Market bursts through the "magic" 10,000 mark.

[bull....]

why is Sky City's share price slowly going up?

dealers wiped a whale out

[limmy]

why is Sky City's share price slowly going up?
Share Buy-back program

[Balance]

Share Buy-back program

665,111 shares bought so far out of 34m shares in the buyback program.

Good to see Sky City using its spare cash this way.

[bull....]

downgrade in results for current yr in presentation

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/333870/299043.pdf

sold out short time ago , so might have been fortunate move if conditions getting tougher

[Balance]

downgrade in results for current yr in presentation

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/333870/299043.pdf

sold out short time ago , so might have been fortunate move if conditions getting tougher

Yup - flat vs 5% increase in EBITDA

[sb9]

downgrade in results for current yr in presentation

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/333870/299043.pdf

sold out short time ago , so might have been fortunate move if conditions getting tougher

Only saviour is the current share buy back unfortunately.

[limmy]

The buy back has been good for the SP lately.

[carrom74]

Another Solid result...Reported NPAT down but normalised NPAT up...due to sale of Darwin and Carparks..

Stellar performance from the Auckland Casino.Rest of them flat.

http://www.scoop.co.nz/stories/BU1908/S00370/solid-financial-performance-for-skycity-in-fy19.htm (http://www.scoop.co.nz/stories/BU1908/S00370/solid-financial-performance-for-skycity-in-fy19.htm)

[NZSilver]

Another Solid result...Reported NPAT down but normalised NPAT up...due to sale of Darwin and Carparks..

Stellar performance from the Auckland Casino.Rest of them flat.

http://www.scoop.co.nz/stories/BU1908/S00370/solid-financial-performance-for-skycity-in-fy19.htm (http://www.scoop.co.nz/stories/BU1908/S00370/solid-financial-performance-for-skycity-in-fy19.htm)

Did I read correctly DRP is suspended for this DIV?

Yes solid result, but headwinds. EPS dropped/dropping further. Still happy with it at these prices.

[waikare]

Did I read correctly DRP is suspended for this DIV?

Yes solid result, but headwinds. EPS dropped/dropping further. Still happy with it at these prices.

Confirming cash payment this time Ex div 10 Sept. payday 2 Oct.

[carrom74]

Confirming cash payment this time Ex div 10 Sept. payday 2 Oct.

Payment date is 13th Sept and Ex-Div is 30th August... Distribution notice attached.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/339062/305257.pdf

[waikare]

Payment date is 13th Sept and Ex-Div is 30th August... Distribution notice attached.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKC/339062/305257.pdf

Sorry my mistake I gave out PGW dates...………..

[bull....]

Lucky baccarat gamblers cost SkyCity $26m

The Kiwi casino and entertainment company said the high stakes gamblers who bet $14.1 billion at SkyCity casinos had a good year, resulting in a house "win rate" of just 1.0 per cent and costing SkyCity $NZ27.8 million ($A26.4m) in profit over the year

https://www.news.com.au/finance/business/breaking-news/lucky-baccarat-gamblers-cost-skycity-26m/news-story/ee4aac024c109f8ff127353be29080ee

lucky punters

[RTM]

Lucky baccarat gamblers cost SkyCity $26m

The Kiwi casino and entertainment company said the high stakes gamblers who bet $14.1 billion at SkyCity casinos had a good year, resulting in a house "win rate" of just 1.0 per cent and costing SkyCity $NZ27.8 million ($A26.4m) in profit over the year

https://www.news.com.au/finance/business/breaking-news/lucky-baccarat-gamblers-cost-skycity-26m/news-story/ee4aac024c109f8ff127353be29080ee

lucky punters

Good advertising for 2020 !

[iceman]

Breaking news https://www.stuff.co.nz/national/116480357/fire-at-sky-city-convention-centre

[Ggcc]

Breaking news https://www.stuff.co.nz/national/116480357/fire-at-sky-city-convention-centre
That will affect the share price somewhat I feel

[Sideshow Bob]

That will affect the share price somewhat I feel

Sky City, Fletchers or both......

[Ggcc]

Sky City, Fletchers or both......

Skycity started going down roughly after 1pm coincidence I don’t know. I would not know how it will affect FBU. Are they insured for this sort of thing? We will all know that answer when we know more information.

[Beagle]

Just the other day apparently Sky City described progress on the convention centre as being "abysmal"
Its been reported that construction workers were using some sort of heating device on the roof to seal the weathertightness and that device is what started the fire.
Did they not think to have a decent quantity of fire extinguishers handy if using some device that could start a fire ? Probably there is construction insurance ? but what about
Loss of profits to SKC for even more delay's to the build ?...oh dear...I can see this heading to court. What a bloody mess in more ways than one.

Update : SKC shares getting smashed on the NZX, down 4% at the time of posting and falling very fast.
FBU down 2%.

[Balance]

https://www.nzx.com/announcements/343049

"SkyCity confirms that contract works and third party liability insurances are in place for the NZICC and Horizon Hotel projects."

[winner69]

Sky City (and other casinos) a den of iniquity


Even since John Key ‘offered’ that great deal to Sky City the project has been doomed


Maybe the fire is just karma

[couta1]

Sky City (and other casinos) a den of iniquity


Even since John Key ‘offered’ that great deal to Sky City the project has been doomed


Maybe the fire is just karma Modern day Sodom and Gomorrah aye.

[winner69]

Modern day Sodom and Gomorrah aye.

The Lord surely was angry that day eh

[Schrodinger]

Sky CEO was good and professional at the conference. There will be a war between SKC and FBU.

[winner69]

The new Convention Centre will always have something wrong with it and will be a problem to Sky for years to come

Once cursed always cursed

[macduffy]

Go easy on the superstition, winner. Not a good basis for investing!

;)

Disc: It's a while since I held SKC - or FBU!

[couta1]

Go easy on the superstition, winner. Not a good basis for investing!

;)

Disc: It's a while since I held SKC - or FBU! You normally come off 2nd best against fire and brimstone. Lol

[Beagle]

Sky City (and other casinos) a den of iniquity


Even since John Key ‘offered’ that great deal to Sky City the project has been doomed


Maybe the fire is just karma

My father always used to call them that. Even their buffet at Fortuna is no good for you and encourages gluttony. SKC also have been rorting customers with big increases in their car parking fees in recent years to such an extent that they sold off their car parks for a whopping $220m. It is Karma for both them and FBU.
The QC lawyers representing both companies are likely to engage in a titanic battle over who pays for the extra years of delay's with the construction and must be rubbing their hands with glee with the prospect of millions more in lawyers fees.

[Balance]

My father always used to call them that. Even their buffet at Fortuna is no good for you and encourages gluttony. SKC also have been rorting customers with big increases in their car parking fees in recent years to such an extent that they sold off their car parks for a whopping $220m. It is Karma for both them and FBU.
The QC lawyers representing both companies are likely to engage in a titanic battle over who pays for the extra years of delay's with the construction and must be rubbing their hands with glee with the prospect of millions more in lawyers fees.



It is good - shows you have avoided the den of iniquity a while ago.

[Beagle]

My bathroom scales unfortunately are testament that I am a recidivist sinner at Fortuna. Mrs Beagle also very naughty :lol:
I avoid the rest of the place though. I am safe for a while though https://skycityauckland.co.nz/restaurants/fortuna-buffet-restaurant/

[Balance]

My bathroom scales unfortunately are testament that I am a recidivist sinner at Fortuna :lol:
I avoid the rest of the place though.

:t_up: Value for money eh? :p

[Beagle]

:t_up: Value for money eh? :p

LOL Yes, guilty as charged :blush: Where else can you get an entrée, main, desert, coffee and cheeseboard and as many repeats of courses as you like for as little as $24.95 for lunch Monday to Thursday ? Of course they get you in the carpark for a minimum of about $11 so its not really $24.95...

[winner69]

LOL Yes, guilty as charged :blush: Where else can you get an entrée, main, desert, coffee and cheeseboard and as many repeats of courses as you like for as little as $24.95 for lunch Monday to Thursday ? Of course they get you in the carpark for a minimum of about $11 so its not really $24.95...

Smoked mussels pretty good I hear

[Balance]

LOL Yes, guilty as charged :blush: Where else can you get an entrée, main, desert, coffee and cheeseboard and as many repeats of courses as you like for as little as $24.95 for lunch Monday to Thursday ? Of course they get you in the carpark for a minimum of about $11 so its not really $24.95...

$11 minimum for car-parking?

Now that is outrageous!

[macduffy]

$11 minimum for car-parking?

Now that is outrageous!

You'd win that in one swipe of the bandit's arm, surely?

;)

[Jay]

It s even more if you do not get your card validated by them - that is been into the casino and actually eaten or gambled or to one of the eating establishments.
Back when the complex opened, use to park the car all day for $5 when working in the CBD.

[Beagle]

$11 minimum for car-parking?

Now that is outrageous!

$52 to park for one day in uncovered parking at Auckland airport is outrageous. $11 for 2 hours parking in Auckland central isn't unusual.
Sign of a very sick culture within the company https://www.msn.com/en-nz/news/national/appalling-skycity-workers-told-to-carry-on-working-despite-smoke-danger/ar-AAJcVvJ?ocid=spartandhp

[ratkin]

You'd win that in one swipe of the bandit's arm, surely?

;)

Good old one arm bandits, not quite the same since they all went electronic, at least pulling the handle was a bit of exercise, and stopped the cash disappearing so quickly.

[bull....]

SkyCity fire: Insurance cover may be refused if 'recklessness' proved
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12279333

[Beagle]

The insurance companies most senior loss adjusters will all over this with a super fine tooth comb.
Insurance company payout is far from certain.

[Beagle]

Smoked mussels pretty good I hear

LOL might be a little bit toxic https://www.msn.com/en-nz/news/national/its-ridiculous-more-skycity-workers-criticise-fire-response/ar-AAJgH7I?ocid=spartandhp

[emveha]

Shareholders too should demand answers: http://www.scoop.co.nz/stories/BU1910/S00525/skycity-union-wants-answers-from-ceo.htm

[Beagle]

Shareholders too should demand answers: http://www.scoop.co.nz/stories/BU1910/S00525/skycity-union-wants-answers-from-ceo.htm

WOW...its literally breathtaking ! I for one have no interest in visiting Sky City in the foreseeable future and feel really sorry for those stuck between a rock and a hard place with trying to eek out a living working there.

[winner69]

WOW...its literally breathtaking ! I for one have no interest in visiting Sky City in the foreseeable future and feel really sorry for those stuck between a rock and a hard place with trying to eek out a living working there.

Maximising shareholder returns - management stuck between a Rock and a hard place eh

[frostyboy]

These staff are the opposite to those in the movie Hotel Mumbai. Like they want to be the first ones out the building

[Ggcc]

Maximising shareholder returns - management stuck between a Rock and a hard place eh
I agree. Majority of Shareholders just want dividends and maximum returns. People who invest in this stock generally believe in personal choice and for some this is not a "personal choice"

[Beagle]

Maximising shareholder returns - management stuck between a Rock and a hard place eh

Wonder if management have ever heard of OSH ?

[Bobdn]

My two gambling stocks - TAH and SKC have generally been disappointing. Dividends are fine however just no share price appreciation. My Devon Alpha fund features Aristocrat, excellent choice and going really well.

Good to see that SkyCity went online with their pokie app - I blew a $100 for research purposes. It worked really well. I then "excluded" myself. As "investors" (ie gamblers) we've all got a love of risk so no need to tempt fate :)

[Bobdn]

Beagle, are you suggesting they may not complying with the law? What do you base that on if that's the case? I'd be surprised inf Sky isn't aware of it obligations.

[Balance]

Beagle, are you suggesting they may not complying with the law? What do you base that on if that's the case? I'd be surprised inf Sky isn't aware of it obligations.

Unions under this grubby u-turn government are on the resurgent and anything they can blow out of proportions, they will.

A few staff out of a few hundreds felt ill from smelling the smoke and therefore all staff should have had several days off?

Let OSH investigate and if indeed Sky has been negligent and irresponsible, fine the company several million dollars to teach them a lesson. But until then, it's simply union tactics.

Much as I dislike the politics of NZF and Winston, they are the only reason why the unions have not got everything this grubby government has been wanting to give them.

[Beagle]

I am curious Balance. Would you be happy to go and work 5 daily shifts a week at the Casino at present, week in week out for the next 6 months breathing in all that fresh "high quality" air ?
Residues and breathable particulates might not be at a level to be the cause of choric ill heath but how does anyone know if long hours of exposure to moderate level's of these toxins isn't going to cause long term health effects ? Work safe haven't signed off on conditions yet. https://www.msn.com/en-nz/news/national/skycity-fire-sludge-left-behind-after-millions-of-litres-of-water-removed-from-basement/ar-AAJyHGz?ocid=spartandhp
A den of iniquity now contaminated with toxin's and with management treating staff like a disposable commodity. What a marvellous corporate citizen...

[Balance]

I am curious Balance. Would you be happy to go and work 5 daily shifts a week at the Casino at present, week in week out for the next 6 months breathing in all that fresh "high quality" air ?
Residues and breathable particulates might not be at a level to be the cause of choric ill heath but how does anyone know if long hours of exposure to moderate level's of these toxins isn't going to cause long term health effects ? Work safe haven't signed off on conditions yet. https://www.msn.com/en-nz/news/national/skycity-fire-sludge-left-behind-after-millions-of-litres-of-water-removed-from-basement/ar-AAJyHGz?ocid=spartandhp
A den of iniquity now contaminated with toxin's and with management treating staff like a disposable commodity. What a marvellous corporate citizen...

An expert has signed off and it's now up to Worksafe to determine otherwise. What is Sky City supposed to do - ignore the expert's findings?

"...... a workplace hygiene expert called in to assess SkyCity's Auckland buildings says there were no major issues with air quality in the precincts' buildings during the week of the fire."

"He said there were no reports of acute ill health reported to his team during the clean up or after the buildings were reopened. WorkSafe said it has not signed off or approved of working conditions at the SkyCity precinct, and it is SkyCity's responsibility to ensure it was providing a safe workplace."

There are no doubts those who are susceptible to low levels of contaminants and pollutants in the air - like I know friends who are allergic to cigarette smoke - gives them headaches and nausea.

Fair enough that they take sick leave or if it is indeed such an ongoing issue, they need to leave employment with Sky City and employment anywhere near that area. Health comes first.

But to suggest that all staff must go on leave as the union is pushing????

BTW - there's a lot of employment options out there at present with employers having to import 235,000 workers on temporary work visas. I do wonder what the union representing Sky City workers are doing to further the welfare of the 'poor' workers as in skill upgrades, retraining etc - to get the poor souls out of working for the 'den of iniquity'! :confused:

[Beagle]

"The preliminary report by occupational hygienist Derek Miller - released by SkyCity today - found respirable particulates and volatile organic compounds did not reach a level that would be of chronic concern to health". Emphasis added. WOW that's so "reassuring", NOT !! I find the use of the word chronic very interesting. Below that would be serious concern to health, moderately serious, moderate, reasonably minor and minor.

Prolonged exposure to air quality that has for example moderately serious level's of toxin's cannot be good for people's long term health even if their immune system can cope with the immediate effects.

Just because one expert signs off on something its completely safe ? That's really reassuring. Remember how the expert auditors of all those finance companies told us their financial statements were a true and accurate reflection of the companies state of financial affairs....yeah...how did those expert opinions work out for people during the GFC !

How much was this guy paid to prepare this report to give SKC the answer they wanted ? How many reports did they commission before getting one they liked ? (Ouch that's pretty cynical eh) Big companies never do that surely not...or do they ? Was there any independent verification of the testing ?

I think the appalling way staff were treated during this emergency, (as previously articulated in links to press articles in this thread), is quite a worrying indicator of SKC's propensity towards disposable commoditisation of workers. Calling it as I see it. I think their culture is sick and I think staff should be extremely concerned for their long term welfare working there.

I'm staying well clear of the place for the foreseeable future.

[Balance]

Just because one expert signs off on something its completely safe ? That's really reassuring. Remember how the expert auditors of all those finance companies told us their financial statements were a true and accurate reflection of the companies state of financial affairs....yeah...how did those expert opinions work out for people during the GFC !

How much was this guy paid to prepare this report to give SKC the answer they wanted ? How many reports did they commission before getting one they liked ? (Ouch that's pretty cynical eh) Big companies never do that surely not...or do they ? Was there any independent verification of the testing ?



So what are experts for?

Might as well disregard all expert opinions out there then if the reference point of all expert opinions is that of the dodgy ones out there!

Remember the experts' testing of 'P' contaminated houses and how it was such a huge gigantic problem? And it turned out that everybody was taken for a multi-mega-million dollar ride by the experts and their testers? Guess on that basis we should ignore ALL drug testing expert opinions.

You are right however to be cynical of expert opinions - just as I am cynical of anything that unions do.

I have actually worked with unions in the manufacturing industry - making mountains out of molehills is what they are very good at, especially to justify their existence.

Workers' welfare? Pike River tragedy (and Andrew Little's role) gives you the best example of how much union bosses really care about the welfare of workers.

As I wrote, 235,000 migrant workers here on temporary work visas - what and how are the unions doing for their members like the poor souls in Sky City so the poor exploited souls, having to work in unsafe degrading conditions, can seek alternative and life rewarding employment? Answer - zilch, nothing, zero.

[Jay]

From an interview I heard on the radio a few days ago with the Union person, he went off on a tangent about wanting to get weekends back for their workers - this just before the long weekend and you could take out from what he said that was the real issue and not the air quality -kept referencing getting weekends back.

[Balance]

From an interview I heard on the radio a few days ago with the Union person, he went off on a tangent about wanting to get weekends back for their workers - this just before the long weekend and you could take out from what he said that was the real issue and not the air quality -kept referencing getting weekends back.

And but for Winston Peters and NZF, this government led by the grubby one would be bending backwards to give the unions all they want.

[Beagle]

So what are experts for?

Might as well disregard all expert opinions out there then if the reference point of all expert opinions is that of the dodgy ones out there!

Remember the experts' testing of 'P' contaminated houses and how it was such a huge gigantic problem? And it turned out that everybody was taken for a multi-mega-million dollar ride by the experts and their testers? Guess on that basis we should ignore ALL drug testing expert opinions.

You are right however to be cynical of expert opinions - just as I am cynical of anything that unions do.

I have actually worked with unions in the manufacturing industry - making mountains out of molehills is what they are very good at, especially to justify their existence.

Workers' welfare? Pike River tragedy (and Andrew Little's role) gives you the best example of how much union bosses really care about the welfare of workers.

As I wrote, 235,000 migrant workers here on temporary work visas - what and how are the unions doing for their members like the poor souls in Sky City so the poor exploited souls, having to work in unsafe degrading conditions, can seek alternative and life rewarding employment? Answer - zilch, nothing, zero.

https://www.msn.com/en-nz/news/national/forty-cases-of-skycity-employees-feeling-unwell-union/ar-AAJHcHG?ocid=spartandhp I'm not the only one that doesn't trust this so called expert "preliminary" report. About 40 people reporting "immediate" health effects from the toxic contamination. How many more might be just coping but will suffer long term health effects ?
From an ESG perspective this incident is an absolute shocker.

[Balance]

https://www.msn.com/en-nz/news/national/forty-cases-of-skycity-employees-feeling-unwell-union/ar-AAJHcHG?ocid=spartandhp I'm not the only one that doesn't trust this so called expert "preliminary" report. About 40 people reporting "immediate" health effects from the toxic contamination. How many more might be just coping but will suffer long term health effects ?
From an ESG perspective this incident is an absolute shocker.

The union is of course busy shxt-stirring.

There is actually proper due process (proper medical examinations, grievances complaints to the company, complaints to OSH if company does not respond etc) but the union is taking the opportunity with the opportunistic 'workers' to protest before due process?

Yawn - clear that every worker there who had a cold or cough are now lining up - wanting days off and compensation.

What is the union doing about helping these poor souls (if genuine) find alternative employment so they do not need to 'suffer' anymore working under such 'distressing' conditions?:t_down:

The union must be taking lessons from Andrew Little of Pike River fame?

[Beagle]

At the risk of stating the completely obvious, its not the unions job to find workers alternative employment...that's actually SKC's job if people are unwell and cannot stand the new toxic environment.
SKC if they were a good corporate citizen should be providing medical assistance and assistance with transition to other work.
The unions job is to protect workers rights including ensuring their OSH rights are not being abused.

Fainting and dizziness brought on by toxicity is pretty serious stuff. Must people get cancer or die before you would accept that something very untoward is going on ?
How much was their so called expert paid to prepare the preliminary report that SKC wanted ? Why are the union not being consulted with in terms of the hard data on toxicity ?
Could it be that SKC really don't give a **** about the occupational safety and health of their workers ?

[Balance]

At the risk of stating the completely obvious, its not the unions job to find workers alternative employment...that's actually SKC's job if people are unwell and cannot stand the new toxic environment.
SKC if they were a good corporate citizen should be providing medical assistance and assistance with transition to other work.
The unions job is to protect workers rights including ensuring their OSH rights are not being abused.

Fainting and dizziness brought on by toxicity is pretty serious stuff. Must people get cancer or die before you would accept that something very untoward is going on ?
How much was their so called expert paid to prepare the preliminary report that SKC wanted ? Why are the union not being consulted with in terms of the hard data on toxicity ?
Could it be that SKC really don't give a **** about the occupational safety and health of their workers ?

Rather strange and telling you are so very eager, ready and willing to accept the words of the union and the agitators?

Due process - why is the union not following due process?

Every sympathy and assistance should be rendered to any worker genuinely affected but the union is more pre-occupied with grandstanding - why?

Enuf said about how much then they really care about their ‘workers’!

[Beagle]

I don't have any agenda here Balance. I don't own SKC shares and I am not short them either. I just think they've been a very poor example of an employer and that deserves some oxygen. We're going to have to agree to disagree on this one.

[Balance]

I don't have any agenda here Balance. I don't own SKC shares and I am not short them either. I just think they've been a very poor example of an employer and that deserves some oxygen. We're going to have to agree to disagree on this one.

Due process.

[Beagle]

Firefighters union now backing SKC employees after independent testing shows employees exposed to 3 years worth of cancer causing toxin's
https://www.msn.com/en-nz/news/other/firefighters-back-suffering-skycity-employees/ar-BBWPaVp?ocid=spartandhp
SKC in complete denial. I'm not sure how the board sleep at night...

[hogie]

Firefighters union now backing SKC employees after independent testing shows employees exposed to 3 years worth of cancer causing toxin's
https://www.msn.com/en-nz/news/other/firefighters-back-suffering-skycity-employees/ar-BBWPaVp?ocid=spartandhp
SKC in complete denial. I'm not sure how the board sleep at night...

A union backing another union .. surprise surprise ...

In the meantime the rest of us keep working :)

[Balance]

Firefighters union now backing SKC employees after independent testing shows employees exposed to 3 years worth of cancer causing toxin's
https://www.msn.com/en-nz/news/other/firefighters-back-suffering-skycity-employees/ar-BBWPaVp?ocid=spartandhp
SKC in complete denial. I'm not sure how the board sleep at night...

https://www.stuff.co.nz/national/117385360/skycity-fire-elevated-airborne-arsenic-no-major-health-risk-says-auckland-council

Relax, Beagle - I know you have sincere deep concerns for the welfare of the casino workers so here's good news :

Only those directly breathing in the plume were exposed and not one single casino worker was.

"This only occurred inside the smoke plume, and when public alerts were in place advising people to avoid exposure to the smoke," the council said in a statement."

Unless of course they were having a nosey and taking a smoko break in the plume - which will not surprise me!

[Beagle]

"Those experts said the spike in particulate levels in Queen St air – to more than five times national air quality standards – could increase the risk of stroke, lung cancer and cardiovascular disease".
You're right Balance, nothing to worry about whatsoever.

I did sin this week and having promised to avoid the place for ages Mrs Beagle took me to Fortuna as it was some dog's birthday and my goodness, how much do I like a good feed :D... so much so that I was prepared to back my own nose for sniffing out trouble. I had my hound sniffer turned right up to maximum sensitivity for even the remotest smell of toxin's or residual fumes and I would have been out of there quicker than a Bishop in a brothel raid if I had of smelt even the faintest trace of anything untoward. I noted new carpet and not even the faintest hint of any funny smell. Even the smoked fish tasted like it had been smoked the normal way, (Mrs B thought I was pretty game to try that lol).

Pleased I wasn't around in town to do any air quality sniffing at the time of the fire. Fortuna looks directly out onto the convention centre. I didn't spot even one tradesman working there, (scores of them last time we were there). Not sure how long it will take them to get go forward with that project again but I would think the fire is best described as a major setback.

[NZSilver]

About time....

[MauroNZ]

Announcement should be these days, right?

[NZSilver]

Getting priced accordingly for yield and potential growth prospects (even though they have to be demolished and rebuilt)

[kiora]

Ooch opening a few years away
https://www.newshub.co.nz/home/new-zealand/2020/01/skycity-convention-centre-demolition-begins-in-auckland.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+23 +January+2020

[hogie]

Ooch opening a few years away
https://www.newshub.co.nz/home/new-zealand/2020/01/skycity-convention-centre-demolition-begins-in-auckland.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+23 +January+2020

Another clickbait article, the media interviewing "expert" professors and asking for their opinion :t_down:
Must've been a slow news day ... nothing new has been learnt ...

[Balance]

Another clickbait article, the media interviewing "expert" professors and asking for their opinion :t_down:
Must've been a slow news day ... nothing new has been learnt ...

Bad bad news for the insurers.

As they say, the insurers have been collecting big premiums over the decades - payments received for exactly such an eventuality.

[Snoopy]

Getting priced accordingly for yield and potential growth prospects (even though they have to be demolished and rebuilt)


A 10% drop in share price from the recent highs of $4.10 odd to $3.70 in just a couple of weeks! Maybe with this Corona thing, fewer high rollers from China will be coming down to Sky City Auckland? Although with 'abnormal' losses from this side of the business still in my memory, I would have expected the SKC share price to go up on this news!

SNOOPY

discl: holder

[iceman]

A 10% drop in share price from the recent highs of $4.10 odd to $3.70 in just a couple of weeks! Maybe with this Corona thing, fewer high rollers from China will be coming down to Sky City Auckland? Although with 'abnormal' losses from this side of the business still in my memory, I would have expected the SKC share price to go up on this news!

SNOOPY

discl: holder

Yes I think SKC will be hard hit by the virus. It was the first share I sold when the virus hit.

[bull....]

star , crown and skc all down from 7 - 11% last 2 weeks so directly related to corona

[Balance]

star , crown and skc all down from 7 - 11% last 2 weeks so directly related to corona

Casinos are crowded places with mostly Asian/Chinese clientele - entirely logical.

Places to avoid so guess shares too! :eek2: