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D_Pick
18-09-2010, 02:01 PM
Anyone follow Skyline Enterprises?

If you do what valuation would you give these shares?

Since their lows in April 2009 SKYLINE has risen by circa 50%, plus paid dividends on top. Not a bad return.

Have had a go on their Rotorua luge which was good fun.

percy
19-09-2010, 08:25 PM
Anyone follow Skyline Enterprises?

If you do what valuation would you give these shares?

Since their lows in April 2009 SKYLINE has risen by circa 50%, plus paid dividends on top. Not a bad return.

Have had a go on their Rotorua luge which was good fun.
I have never owned any Skyline shares as they have a minimum holding of 4,000 shares,and each time I have looked at they I have not been prepared to start off with that much money in them.The company is very well run and has allways positioned itself very well in Queenstown commercial property.The main driving force is Barry Thomas who is very astute.The market cap is $203mil,the PE ratio is 8.1 with div yield of 4.7%.They last traded at $6.02 with year low of $4.95 and year high of $6.11,so are trading at near the year high.

Gonzo
19-09-2010, 08:27 PM
I've had some of these for 20+ years, they cost $1. You get free gondola use and discounted accomodation as well as the dividends. The tourism industry can be a bit fickle but the gondola and restaurant in Qn are good earners. Also owns about 40% of the Chch casino

airedale
20-09-2010, 12:46 PM
I have heard that the shareholders function after the AGM at QN is a lavish spread at the Skyline restaurant.

D_Pick
20-09-2010, 07:33 PM
Percy you make a good point about the minimum shareholding (4000 shares which is circa $24k at todays price). Wonder when this min holding size rule was initiated, assume it may have been back when Gonzo first purchased shares for $1. Skyline could probably increase their liquidity quite a bit if they reduced this down to around the 500-1000 holding size.

They also have a couple of international luges in Singapore and Canada. Wonder how scalable the luge product is globally?

percy
20-09-2010, 08:05 PM
Percy you make a good point about the minimum shareholding (4000 shares which is circa $24k at todays price). Wonder when this min holding size rule was initiated, assume it may have been back when Gonzo first purchased shares for $1. Skyline could probably increase their liquidity quite a bit if they reduced this down to around the 500-1000 holding size.

They also have a couple of international luges in Singapore and Canada. Wonder how scalable the luge product is globally?

I think they are always on the look out for other sites.D Pick may I susgest you write or email the company to see if you can get the history of the company.Like I posted I have followed it off and on for years.They once owed a milk bar/cafe in Dunedin.One of the original guys was a chap by the name {I think] Hilton Hessley {yes I got it wrong] who built a house out of bottles.Thomas is a character,was at war with other owners of ChCh casino,but he always held the aces.A lot of commercial property came up for sale in Queenstown a few years ago.Everyone thought Thomas would bid for a lot,so were surprised he was not at the auction.He had others bid for him as he knew if he showed and bidded that would put the price up.I hope Gonzo can tell us a bit more of the history.

Gonzo
20-09-2010, 09:24 PM
One of the original directors was Cliff Broad an entrepreneurial Invercargill accountant and as you say Hilton Hensman built the bottlestore and bulldozed the access track up the hill to the top of the gondola. I think Barry Thomas was a younger accountant in Cliff's Invercargill firm when he got involved. If ever there was a 'moat' around a company skyline has it in the form of the view from the top of the gondola, a licence to print money. Just like the parthenon in Athens etc. The shares are tightly held!

h2so4
21-09-2010, 07:33 AM
I have heard that the shareholders function after the AGM at QN is a lavish spread at the Skyline restaurant.

Always love a lavish spread. mmmmmm...Whats on offer?

airedale
21-09-2010, 09:13 AM
Don't know, perhaps Gonzo will tell us.

Sideshow Bob
21-09-2010, 06:29 PM
I have heard that the shareholders function after the AGM at QN is a lavish spread at the Skyline restaurant.



I think you just ramped up the share price........

airedale
22-09-2010, 11:41 AM
I think you just ramped up the share price........
Yeah,you are right ,Bob, I have just pushed it further out of reach. The rumour is that they serve a lot more than NZOG style sausage rolls. All in front of a roaring log fire with copious quantities of refreshing beverages.
Discl: not holding but wish that I was.

D_Pick
22-09-2010, 01:17 PM
Talking of spreads, the current Skyline share price spread is around 12% (buy 5.81, sell 6.50) which appears lavish

percy
22-09-2010, 01:54 PM
Talking of spreads, the current Skyline share price spread is around 12% (buy 5.81, sell 6.50) which appears lavish

I would not read too much in the width of quotes.Most trades in the last month have gone through at $6.02 and $6.05.So if you really wanted to buy ,bid $6.05.
I note there are 3157 shares on offer.With 4000 minimum what happens if you buy them.?

airedale
22-09-2010, 02:39 PM
That probably means that only existing holders can buy parcels of less than 4,000.

percy
23-09-2010, 10:51 AM
I note today there are 100,000 shares on offer at $6.02.

percy
23-09-2010, 11:36 AM
I note today there are 100,000 shares on offer at $6.02.

And 200,000 sold at $6.02. !!!!!

D_Pick
23-09-2010, 01:54 PM
200,000 traded at $6.02 today which provides a good market valuation reference point. Assuming this buyer has done their research?

percy
23-09-2010, 03:40 PM
200,000 traded at $6.02 today which provides a good market valuation reference point. Assuming this buyer has done their research?

I thought it was you.$1.2 mil is a fair bit to spend just to go to a lavish AGM.

D_Pick
23-09-2010, 03:45 PM
Another 153,000 gone through at $6.02.

D_Pick
23-09-2010, 03:46 PM
Disc: I'm not the buyer Percy

Sideshow Bob
23-09-2010, 06:51 PM
OK OK it was me!! I thought with that many shares I might get a partners ticket to the shareholders aftermatch. She's got an extra large handbag for some takeaway sausage rolls.

Armillary Private Capital
08-10-2010, 09:06 AM
Share Registry Services
As of Monday 11 October 2010 the share registry function will be administered by Computershare.

http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=1771

Sideshow Bob
14-10-2010, 09:17 PM
I recently went up to Queenstown, and went up for dinner at the buffet. We were a little late in getting there (just getting dark) so essentially missed alot of the view. At that time I estimate that there were about 50-60 for the buffet at $74/head. The buffet was only OK, as they invariably are, but given middle of the week, in between ski and summer season, and the number of people around the rest of town. $25 for just the ride up and $48 with the 5 rides of luge. There must be a huge portion of visitors to Queenstown that must go up the gondola.

It is really a quality asset, and something that can't be replicated. Imagine trying to get that through these days with the RMA!!

percy
15-10-2010, 08:18 AM
I recently went up to Queenstown, and went up for dinner at the buffet. We were a little late in getting there (just getting dark) so essentially missed alot of the view. At that time I estimate that there were about 50-60 for the buffet at $74/head. The buffet was only OK, as they invariably are, but given middle of the week, in between ski and summer season, and the number of people around the rest of town. $25 for just the ride up and $48 with the 5 rides of luge. There must be a huge portion of visitors to Queenstown that must go up the gondola.

It is really a quality asset, and something that can't be replicated. Imagine trying to get that through these days with the RMA!!

You will be pleased you brought up all those shares and will be able to enjoy the buffet for free when you attend the AGM.!!! You are right,they would never get it though RMA today.

JayPe
10-11-2010, 04:29 PM
http://www.stuff.co.nz/business/industries/4328610/SkyCity-offer-for-Christchurch-Casino-rejected

Skyline was offered $100-110m for its 50% stake in the Christchurch casino by SkyCity, but rejected it. I didn't realise Skyline owned this in the first place - but it looks like they want to keep the casino stake long term.

Armillary Private Capital
29-11-2010, 09:20 AM
Six Month Review to Shareholders to September 2010

http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=1797

D_Pick
07-12-2010, 06:35 PM
The Casino is dangling the jackpot carrot again...


SkyCity jafas vs the Queenstown mob
http://www.stuff.co.nz/business/blogs/the-bottom-line/4430489/SkyCity-jafas-vs-the-Queenstown-mob

percy
07-12-2010, 07:07 PM
The Casino is dangling the jackpot carrot again...


SkyCity jafas vs the Queenstown mob
http://www.stuff.co.nz/business/blogs/the-bottom-line/4430489/SkyCity-jafas-vs-the-Queenstown-mob

What a great article.As a SKC shareholder I would like to see SKC owning it 100%.However as someone with a sense of fun,I am sure Skyline will make them pay dearly.

Armillary Private Capital
04-12-2012, 09:14 AM
Six monthly review to shareholders

http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2141

Armillary Private Capital
09-01-2013, 03:27 PM
Skyline acquired SkyCity Entertainment Group shares in Christchurch Casinos Ltd.

http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2149

Armillary Private Capital
11-07-2013, 09:59 AM
Skyline has made a preliminary profit announcement for the year ended 31 March 2013.

http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2236

ratkin
13-07-2013, 05:21 AM
See in latest announcement there been a fall in the patronage of chch casino

They need to stop blaming the earthquake. Reason they doing so poorly is because they ditched the all you can eat buffet.
That along with free meals on birthdays bought the punters in the hundreds. Nearly everyone i speak to cites this as the main reson they no longer go to the casino
Since the earthquake there been much less competition for the entertainment dollar , yet the casino has gone backwards,they have imo gone down the wrong path in the last couple of years.
Bring back the buffet !!

percy
13-07-2013, 07:04 AM
See in latest announcement there been a fall in the patronage of chch casino

They need to stop blaming the earthquake. Reason they doing so poorly is because they ditched the all you can eat buffet.
That along with free meals on birthdays bought the punters in the hundreds. Nearly everyone i speak to cites this as the main reson they no longer go to the casino
Since the earthquake there been much less competition for the entertainment dollar , yet the casino has gone backwards,they have imo gone down the wrong path in the last couple of years.
Bring back the buffet !!

Would be funny if the Queenstown boys could not make it pay and had to sell the casino to former part owner SKC.
Be good to see SKC make Queenstown casinos work.
Nite club in Chch casino basement will attract the wrong type of people.
As a result of the quakes they should be flat out.Upsetting your buffet customers is foolish.

janner
13-07-2013, 09:55 PM
Would be funny if the Queenstown boys could not make it pay and had to sell the casino to former part owner SKC.
Be good to see SKC make Queenstown casinos work.
Nite club in Chch casino basement will attract the wrong type of people.

" As a result of the quakes they should be flat out.Upsetting your buffet customers is foolish. "

It is not better to be flat out when CH-Ch is having earthquakes Percy !!..

Armillary Private Capital
23-08-2013, 10:18 AM
Annual report posted:

http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2259

Armillary Private Capital
04-12-2013, 03:29 PM
6 monthly review to shareholders:
http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2334

Armillary Private Capital
10-07-2014, 02:23 PM
Preliminary profit announcement (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2405).

Armillary Private Capital
13-08-2014, 11:01 AM
Annual report for FY 2014 has been posted (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2419).

Armillary Private Capital
18-08-2014, 01:24 PM
New issuer profile posted (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2421).

Armillary Private Capital
15-12-2014, 03:35 PM
Six month review to shareholders (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2464).

Armillary Private Capital
15-04-2015, 03:02 PM
New director appointed (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2501).

Armillary Private Capital
10-07-2015, 04:50 PM
Preliminary profit announcement (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2557)for the year ending 31 March 2015.

Armillary Private Capital
03-08-2015, 09:16 AM
Annual report posted. (http://www.unlisted.co.nz/uPublic/unlisted.mt_announcement.showannouncement?p_announ cement_id=2580)

whatsup
12-10-2016, 04:00 PM
magnificent company $25.00 / share +++WOW !

whatsup
12-10-2016, 04:01 PM
magnificent company $25.00 / share +++WOW ! owned them when they were $4.00 a looooooong time ago, should have hung on to them one of the better ones that got away!

Out to lunch
07-01-2017, 10:02 PM
Looking at this compared to Tourism Holdings Ltd valuation, NZ's tourism story, Qtwn's story, their growth capex plans; I am gna have to pool some money in order to meet the minimum shareholding of $80k plus.
Doubt the currently un-consented remarkables gondola will give much competition. Some capacity issues but what a good problem to have.

Beagle
10-01-2017, 10:44 AM
magnificent company $25.00 / share +++WOW !


Looking at this compared to Tourism Holdings Ltd valuation, NZ's tourism story, Qtwn's story, their growth capex plans; I am gna have to pool some money in order to meet the minimum shareholding of $80k plus.
Doubt the currently un-consented remarkables gondola will give much competition. Some capacity issues but what a good problem to have.

Thanks for posting. I decided to run the ruler over them and had a good read of the last two annual reports. Stripping out property revaluations I have Skyline of a 2016 historical PE of 17.1, very close to where THL were trading the other day when I compared them, at $3.75 THL were on a historical PE of 17.5 then, forward 2017 forecast normalized PE, (extracting one-off costs and losses from new American acquisition) of 14.7.

Things I really like about Skyline.

1. Their moat. Even if there is another gondala eventually in Qtown I thinks this adds to the attractions at Qtown rather than stealing share from Skyline.
1.a. Many of their other subsidiaries also have very good moats.
2. Governance - They appear to be well governed with well respected long standing directors with huge experience in their field.
3. I think the forward PE is very reasonable considering the moats and the rate on inbound tourism growth, currently growing at 12% per annum, up from 11% last year10% the year before...spot the trend :)

Things I am ambivalent about
1. The cost of the expansion at the gondola, yes they need to do it, (I was there twice last year and the gondola and restaurant is absolutely at max capacity) and this will be good for long term growth but in the short term the major cost and interruptions through the works programs will be bad for business. Early years return on investment of this new capex will be poor, it will take quite a few years for growth to catch up to more properly utilizing the expanded infrastructure. Great long term move though.
2. Proposed Franz Joseph gondola - I really don't think many tourists have the time to travel there and the level of capex required is inconsistent in my view with the likely demand

Things I am not keen on
1. The whole unlisted thing. Volumes of transactions are very low, I always prefer a liquid market and would have a strong preference to see these on the NZX. Why aren't they, they're certainly big enough now.
2. They are presently without a CEO who stepped down in October after serving since 2009. Why did he step down ? It wasn't explained by the company release, is there some conflict and serious debate about the future strategic direction ?
3. From the limited information available on the unlisted website it would appear based on observation only that the stock would be in correction territory, (down more than 10% from its high of $25 since the CEO resigned / was pushed ?).
4. I am not overtly keen on a minimum investment of 4,000 shares, although this sized investment is certainly well within my means and not an entirely unusual size for me in any one stock but in conjunction with liquidity concerns above I find this somewhat unattractive.

Summing up - I would be very keen to invest a slightly more modest level that the current $88K requirement if they were listed on the NZX and had a good caliber new CEO on board and weren't in a downtrend, (trading below their 100 day MA). If these concerns change I would absolutely love the opportunity to be an investor as I am a true believer in the south island tourism growth story.
If they get a quality new CEO and they stay unlisted and the downtrend reverses I might get on board anyway as I think this is a wonderful long term growth opportunity.

Out to lunch
10-01-2017, 11:10 AM
Solid post Roger, I can't think of many risk mitigants arising from the liquidity issue or the CEO's abrupt exit.
As a business, I would have viewed the PE for Skyline to be higher than THL (given the moats) however perhaps there is a valuation adjustment due to the liquidity issues? No idea how to put a value on that.
Also for my valuation I did price:EBIT comparisons rather than EBITDA given the DA being a big part of a rental motor vehicle's operations.

Beagle
10-01-2017, 03:20 PM
Thanks Out to Lunch. For what its worth now the valuation models I used in investment analysis in University, (albeit that was a long time ago) used a risk premium of 2% for lack of liquidity. Brokers valuation models I have seen in recent years use 2-3% extra required rate of return for lack of liquidity. The unlisted thing does mitigate this to some extent but the lack of volume and infrequency of trading does render them as pretty illiquid in my view

I think the moat aspect of Skyline's business is very attractive and substantially offsets the risk premium required from lack of liquidity, (at least from my point of view) so they deserve to trade on very similar multiples in my view, (which they are in a historical sense although its impossible to get a handle of Skyline's forward guidance as they don't say anything meaningful other than all business's trading above previous comparable period in their 13 December half yearly shareholder update). No half year accounts available ? CEO left / was pushed, why ?

The other concern is the $100m capex for the major expansion of facilities at Queenstown. They admit return on investment won't be great at the start. One to hold for long term growth perhaps ?, but I'd love to see them listed on the NZX...get an instant PE boost of about two I reckon. Agree DA a big factor in rental motorhomes but also with helicopters in Skylines aviation subsidiaries.

To the directors of Skyline, please list this on the NZX....access to cheap bond issue finance to fund future capex would be just one advantage. 50 years in business...surely its time to man-up and get into the big league with your company listing ! I'm going to keep an eye on this business as I do like it and believe the tourism growth story to N.Z. will only get stronger and stronger as there are fewer and fewer safe, clean and green countries in the world to visit.

Out to lunch
17-02-2017, 01:03 PM
THL's multiple has improved and well SKYLINE's price is trending down! Now under $80k to get in on the minimum.
News out today on retail spending - spending on tourism up and SI excl ChCh is up 6%.
Went down to Qtwn recently, their mall is a bit dilapidated but a lot of activity at the gondola+luge.
Back on tourism - AirNZ and Akl Airport reporting is robust, MCK price is going nuts, THL becoming a darling of the NZX, would love to see why SKYLINE is being pushed down, is it just on Roger's risks/threats noted above?

Beagle
20-02-2017, 10:59 AM
In the absence of any other replies I will weigh in again as I am definitely interested in the possibility of taking a stake this company.
I really wonder why they don't list it on the NZX ? Market cap is well over $500m so would potentially go into the NZX50. The $100m expansion of the Queenstown gondola is a classic case in point as to one of the benefits. They could do a bond issue to fund this at say 6%. An instant 2-3 expansion in PE would reward all shareholders and improve liquidity for any of the large stakeholders who might be considering diversifying some of their investment elsewhere. I don't think maintaining the low cost listing on unlisted is really in shareholders best overall interests.

I must do some further research on this when time allows as its getting closer to my buy price.

Company has released a five year summary which is useful. Shows that historically the company has traded on a trailing PE of just 10, long run over many years. I presume this figure is based on the earnings inclusive of property revaluations but I will need to do some more work on older annual reports to validate this.

Other than that what we have here is a clear downtrend as alluded to in my previous post. Perhaps shareholders are really worried about the huge expansion at the Queenstown gondola happening around the same time as a proposed new gondola that may come to fruition in the years ahead ? Have they found a new CEO yet ?

macduffy
20-02-2017, 12:23 PM
Do they have the necessary spread of shareholdings to meet NZX listing requirements?

blackcap
20-02-2017, 12:48 PM
Do they have the necessary spread of shareholdings to meet NZX listing requirements?

From the 2016 Annual:
SHAREHOLDING STATISTICS
Distribution of Shareholders and Shareholdings
Size of Holding Holders Shares %
0 – 19,999 595 4,318,224 12.65%
20,000 – 69,999 120 4,199,610 12.30%
70,000 – 199,999 33 3,549,765 10.40%
200,000 – 499,999 18 4,758,082 13.94%
500,000 + 16 17,311,698 50.71%
___ _________ _____
Total 782 34,137,379 100%

Beagle
20-02-2017, 02:48 PM
Easy enough to attract lots of new shareholders to this growth company on a listing to the NZX.
I think the minimum shareholding of 4,000 shares is definitely an impediment for many investors. I for one am reluctant to have circa $80K tied up in a company that is only semi liquid.
Had a dig around to see if there's anything more current on the proposed other Gondola in Queenstown. Can't see anything more current than this
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11548441
$100m a fair bit for Skyline to spend on redevelopment of their gondola and related facilities when there's another proposed gondola in the wings.
Maybe a less ambitious project along with a price rise for customers is a better way to cope with foreseeable growth ?
I guess the question is could that $100m generate superior returns invested elsewhere ? For instance their latest $20m luge seems to be off to a flying start.
http://www.unlisted.co.nz/uPublic/docs/skyline/Skyline%20Luge%20Tongyeong%20opens%20140217_FINAL% 20with%20logo.pdf

alistar_mid
21-02-2017, 08:43 PM
In the absence of any other replies I will weigh in again as I am definitely interested in the possibility of taking a stake this company.
I really wonder why they don't list it on the NZX ? Market cap is well over $500m so would potentially go into the NZX50. The $100m expansion of the Queenstown gondola is a classic case in point as to one of the benefits. They could do a bond issue to fund this at say 6%. An instant 2-3 expansion in PE would reward all shareholders and improve liquidity for any of the large stakeholders who might be considering diversifying some of their investment elsewhere. I don't think maintaining the low cost listing on unlisted is really in shareholders best overall interests.

I must do some further research on this when time allows as its getting closer to my buy price.

Company has released a five year summary which is useful. Shows that historically the company has traded on a trailing PE of just 10, long run over many years. I presume this figure is based on the earnings inclusive of property revaluations but I will need to do some more work on older annual reports to validate this.

Other than that what we have here is a clear downtrend as alluded to in my previous post. Perhaps shareholders are really worried about the huge expansion at the Queenstown gondola happening around the same time as a proposed new gondola that may come to fruition in the years ahead ? Have they found a new CEO yet ?

yeah same

I'm at the financial position where I can take a on a few alternate type investments, i would be keen to either invest in skyline or christchurch adventure park (they are doing a 2nd phase of capital raising), so that my mountain bike trips will be (partially at least) tax deductible...I'm doing site visits of my investments!

Beagle
23-02-2017, 03:33 PM
Hounds been digging some more. Interestingly the decline in share price from about $25 late last year began about the time the CEO resigned, (was pushed ?) but also coincided with another significant event.
In the August 2016 press release regarding the proposed redevelopment of facilities at Queenstown the cost was estimated at $60m.
In the October 2016 update the cost was revised to $100m without any explanation of the 67% increase ?
I would suggest my concerns expressed above about the level of capex for this redevelopment is also a serious concern the market holds. I think its poor form to put an estimate of the development cost into the market and then revise it up that much just two months later ! I doubt that impressed many shareholders.

Out to lunch
18-08-2017, 12:30 PM
March 17 annual report is out - lots of positives in there - no debt
An nzme article released about how Qtwn expansion consent is likely.
CEO replaced
MBIE have come out showing holiday spend in NZ is up 4% yoy 30 June - would be good to understand the demograph of Skyline customers so MBIE's analysis could be more helpful
Korea development has shown its worth getting another site in there - I've heard that area of Korea gets a crazy amount of domestic tourism.
From my last post the THL PE ratio (as a very rough comparison) has increased significantly, similar impact for SKYLINE?

Just got to admire from a distance due to the ~$100k minimum shareholding. You can't margin lend, and I can't find any managed funds with significant exposure to this sexy company.

Beagle
18-08-2017, 04:59 PM
EPS stripping out property revaluations was $1.49 which at $24 puts them on a PE of 16.1. Annual report contains strongly worded warning regarding potential for disruption during the lengthy construction phase of the expanded facility at Queenstown and warns profit for the next five years may not be the same as for the last five years, Ouch !
THL currently trading on a historical PE of 18.5 at $4.45 but due to report shortly.
I think once THL report they'll be back on a similar PE and taking into account the profit warning and intense capex for Skyline including the need for a new multi story car park (not costed but I assume this is additional to the $100M estimated capex which might have gone up even more again ?)
The whole slow disclosure and sort of old boys network thing at Skyline and lack of being listed on the NZX which is frankly quite absurd for a company with a market cap of ~ $800m leaves me pretty cold now having pontificated over it for a while now. No idea how good the new CEO is, not much about him in the annual report...I suppose if you were one of the elite insiders you would have got a more thorough run-down on his credentials. Too much about how this company is run is opaque. No longer interested and PE isn't cheap considering the profit warning.
http://www.unlisted.co.nz/uPublic/docs/skyline/Skyline%20Enterprises%20Financial%20Report%202017. pdf

kiora
18-08-2017, 06:44 PM
EPS stripping out property revaluations was $1.49 which at $24 puts them on a PE of 16.1. Annual report contains strongly worded warning regarding potential for disruption during the lengthy construction phase of the expanded facility at Queenstown and warns profit for the next five years may not be the same as for the last five years, Ouch !
THL currently trading on a historical PE of 18.5 at $4.45 but due to report shortly.
I think once THL report they'll be back on a similar PE and taking into account the profit warning and intense capex for Skyline including the need for a new multi story car park (not costed but I assume this is additional to the $100M estimated capex which might have gone up even more again ?)
The whole slow disclosure and sort of old boys network thing at Skyline and lack of being listed on the NZX which is frankly quite absurd for a company with a market cap of ~ $800m leaves me pretty cold now having pontificated over it for a while now. No idea how good the new CEO is, not much about him in the annual report...I suppose if you were one of the elite insiders you would have got a more thorough run-down on his credentials. Too much about how this company is run is opaque. No longer interested and PE isn't cheap considering the profit warning.

Thanks Beagle.Could be worth putting on the watch list over the next few years.Maybe some weakness coming up similar to SKC :)

Beagle
19-08-2017, 10:14 AM
Thanks Beagle.Could be worth putting on the watch list over the next few years.Maybe some weakness coming up similar to SKC :)

You're welcome and yes that's pretty much how I see it too. Anyone's guess what the true cost of the major expansion at Queenstown including the Environment court mandated multi story carpark will eventually cost and the disruptive impact on the business but keep in mind in terms of the latter their Queenstown operation is very much like Sky City's Auckland operation, its the real breadwinner of the company results so my risk radar suggests the costs will be a lot higher than the $60m originally touted, very, very quickly changed to $100m and obviously now considerably north of that and the disruptive impact could be very significant.
P.S. I think the Environment court were spot on to insist they build a substantial new carpark, car parking around the Gondola base is a real nightmare now and downstream car parking nightmare spreads right through Queenstown so its been long overdue that this company shoulders its fair share of the cost of this infrastructure.
Long term I expect this will be another profit center for the company as I'm sure they'll be asking patrons to pay for parking.

Beagle
22-08-2017, 09:22 AM
EPS stripping out property revaluations was $1.49 which at $24 puts them on a PE of 16.1. Annual report contains strongly worded warning regarding potential for disruption during the lengthy construction phase of the expanded facility at Queenstown and warns profit for the next five years may not be the same as for the last five years, Ouch !
THL currently trading on a historical PE of 18.5 at $4.45 but due to report shortly.
I think once THL report they'll be back on a similar PE and taking into account the profit warning and intense capex for Skyline including the need for a new multi story car park (not costed but I assume this is additional to the $100M estimated capex which might have gone up even more again ?)
The whole slow disclosure and sort of old boys network thing at Skyline and lack of being listed on the NZX which is frankly quite absurd for a company with a market cap of ~ $800m leaves me pretty cold now having pontificated over it for a while now. No idea how good the new CEO is, not much about him in the annual report...I suppose if you were one of the elite insiders you would have got a more thorough run-down on his credentials. Too much about how this company is run is opaque. No longer interested and PE isn't cheap considering the profit warning.
http://www.unlisted.co.nz/uPublic/docs/skyline/Skyline%20Enterprises%20Financial%20Report%202017. pdf

THL's result out this morning and substantially upgraded guidance makes them look very cheap relative to Skyline, (most especially when you factor in the caution about Skyline's profit outlook but robust profit growth outlook at THL)
No reason to follow Skyline any more for the foreseeable future, will watch from a distance and good luck to anyone holding.

Out to lunch
30-08-2017, 03:32 PM
I think you're pretty much right SKYLINE should be on a similar P/E multiple to THL. The greyness of unlisted, minimum holding etc offsets much of the benefit from SKYLINE's wide moats and international presence (well for me anyway).

I wouldn't view the Queenstown execution being a key risk. Just like how the SKC AKL casino is getting disturbed due to the CRL, NZICC, etc, no doubt the Queenstown luge operations will be affected in the short-mid term due to their expansion but that's wheremost of the similarity ends. The Queenstown operation doesn't have the same sort revenue concentration as SKC AKL I think its like 30-40%. And the disturbance is going to directly increase long term revenues. I wonder if Skyline can lock in a fixed price contract from Fletchers for the work too.

Waiting for lotto tonight to get a minimum shareholding.

Beagle
30-08-2017, 05:16 PM
LOL on the Fletchers comment...they'll never build it cheaper any other way :) Opps No, now the CEO has been fired and new projects need board approval maybe its well and truly north of $100m now !

Snoopy
16-11-2017, 02:03 PM
See in latest announcement there been a fall in the patronage of chch casino

They need to stop blaming the earthquake. Reason they doing so poorly is because they ditched the all you can eat buffet.
That along with free meals on birthdays bought the punters in the hundreds. Nearly everyone i speak to cites this as the main reson they no longer go to the casino
Since the earthquake there been much less competition for the entertainment dollar , yet the casino has gone backwards,they have imo gone down the wrong path in the last couple of years.
Bring back the buffet !!


I see as at 31st March 2017 (the last reporting date) the Christchurch casino licence expires in 2.63 years (2 years and 8 months). That means the date of expiry of the casino licence is November 2019. There was a note in AR2017 about feverishly working on the renegotiation of the licence. But why are they going so close to the wire on what is a pivotal part of the SKE business? Competitor operator Sky City in Auckland tied up a new deal some five years before the old one expired. If the Christchurch City Council play hard ball, the terms of a new licence could be bad news for SKE. The original licence was granted for 20 years, so this is the first time the licence is up for renegotiation. Do I catch a sniff of naivety in the Casino licence renewal process from an SKE perspective?

SNOOPY

Beagle
16-11-2017, 03:08 PM
Beagle's are renowned for their ability to sniff out trouble coming from a long distance away so your snout could be detecting a problem in the making but this hound reckons the board are stupid not to list this on the NZX...extra liquidity would command a PE premium to what it trades on now. Old boys network can't be bothered with the extra disclosure and reporting requirements actually disadvantaging existing shareholders ?

Snoopy
19-11-2017, 09:34 PM
Beagle's are renowned for their ability to sniff out trouble coming from a long distance away so your snout could be detecting a problem in the making but this hound reckons the board are stupid not to list this on the NZX...extra liquidity would command a PE premium to what it trades on now. Old boys network can't be bothered with the extra disclosure and reporting requirements actually disadvantaging existing shareholders ?

I don't think there would be many SKE shareholders given the underlying business and actual share price growth to add to their juicy dividends that would see themselves as disadvantaged. However I do agree that the minimum 4000 shareholding for 'outsiders' (at $24.50 as last traded, that translates to a minimum investment of nearly $100k) would make most 'Mom and Dad' investors balk!

SKE have been strengthening their balance sheet with 'thin air capital' derived from their property investment portfolio over the years. p41 of AR2017 shows that the yield used to value the downtown Queenstown properties has dropped to a range of 4.07% to 4.69%. Can such yields really be sustained if interest rates in general start rising? Might some of that 'thin air capital' disappear to where it came from if the tide on interest rates turns?

SNOOPY

Out to lunch
20-11-2017, 10:48 AM
Have to respect that it is Queenstown CBD, recent sales for Queesntown prime CBD is 4-5%. High population+tourism growth, limited/no supply. My view is that a change in these factors would have more influence than interest rates - which have a steady outlook for the next few years. It sucks that they don't do any sensitising on the cap/yield rates in their risk management note.
Excluding property fair value movement, the business is still growing its revenue/profits/cash generation. Retaining their growing earnings has been the main way that they have strengthened their balance sheet.
... perhaps one thing to consider is whether the property is "prime" and if not, how much capex to get it to "prime".

And agreed, the minimum shareholding of 4,000 makes me more sad than NZ's poor tourism infrastructure.

Anyone hazard a guess to how much money SKYLINE will make of the forest they are cutting down? #wallofwood

Beagle
20-11-2017, 06:04 PM
Had lunch at Sky City's excellent Fortuna buffet today, almost as good as the buffet at the top of the gondala where Mr and Mrs hound "celebrated" Mr hounds aging process last year but I got to looking across at the giant convention center construct right opposite and pondering, (as you do between glutinous courses of endless food). If this convention center construction blowout went from low $400m to low $600m and Fletchers are widely rumored to be losing ~ $200m on that project one wonders if Skyline's $100m gondola redevelopment might blow out by a similar percentage ?
Add in the fact that the council have forced them to build a multi story carpark as par t of the Environment hearing and could we see the real cost of that redevelopment close to $200m ?
One wonders how are they going to fund that ? In their last annual report they warned of significant business interruption during the redevelopment phase too.
Business interruption and getting a return on all that extra capex and funding all that capex = interesting times ahead in my opinion.
Disc: Too nervous in the circumstances to give them $100 Kilos of my investment freight.

Snoopy
25-11-2017, 10:10 AM
Had lunch at Sky City's excellent Fortuna buffet today, almost as good as the buffet at the top of the gondola where Mr and Mrs hound "celebrated" Mr hounds aging process last year but I got to looking across at the giant convention center construct right opposite and pondering, (as you do between glutinous courses of endless food).


Beagle, I am glad that your dining experience has contributed to the dividend of my SKC shares being less sinful. Although, after rereading the glutinous bit, it sounds like the Beagle snout licked the dish dry, with little if any profit left for we poor shareholders who dished it up! So maybe I should be thanking Mrs Beagle?



If this convention center construction blowout went from low $400m to low $600m and Fletchers are widely rumored to be losing ~ $200m on that project one wonders if Skyline's $100m gondola redevelopment might blow out by a similar percentage ?
Add in the fact that the council have forced them to build a multi story carpark as par t of the Environment hearing and could we see the real cost of that redevelopment close to $200m ?
One wonders how are they going to fund that ?


A really good question that I have been contemplating as well.

Section 5.1 of AR2017 outlines Skyline's EOFY2017 borrowings:

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

Secured Bank Loans



m


Short Term Loans$18.000


Long Term Loans$10.000


Total Term Loans$28.000



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

SKE has had its balance sheet greatly strengthened by property gains in the past. But I wouldn't bank on any more windfall gains like this going forwards. So if we normalise the FY2017 profit by taking these gains (amongst other possibly unrepeatable gains) out, this is how I see the year FY2017 just past has stacked up:



m


Net Profit Before Tax and Finance Costs$85.941


less Investment Property Revaluation$20.255


less Insurance Proceeds Received$1.962


less Foreign Currency Translation Gains$0.068


less Net Finance Cost$0.941


less Total Tax Expense$17.568


add Share of Profit from Equity Accounted Associates$0.672


equals Underlying Net Profit After Tax$45.799



Now let's say the cost of the gondola redevelopment blows out to $200m, so total bank debt becomes $228m

My measure of a company's ability to repay debt is the MDRT (Minimum Debt Repayment Time), calculated by taking the underlying bank debt and dividing by this year's profit:

$228m / $45.799 = 5 years

This is what I would call a 'medium' debt load (2-5 year repayment time is medium), and well sustainable by the kind of profits that SKE are currently generating from their high quality 'moat protected' assets. Of course the new gondola should theoretically double the profits from the Queenstown Gondola operation in the end. So my MDRT assessment, assuming no profit growth, looks a little conservative.

So the answer to teh question 'how to fund all this?' looks easy Beagle. Just ask a bank for a loan!



In their last annual report they warned of significant business interruption during the redevelopment phase too.
Business interruption and getting a return on all that extra capex and funding all that capex = interesting times ahead in my opinion.


I think there won't be an issue with scaling up the core asset of this organization in the end. Profits will look better than cashflow as the all the construction costs are capitalised. I would think the hotel assets in Dunedin and Queenstown could be readily sold if SKE wanted more cash on the books. I do agree there is uncertainty here though. I wonder how much CCC will seek to renew the Christchurch Casino Licence? How much capital will SKE need to stump up to further their luge operations overseas?



Disc: Too nervous in the circumstances to give them $100 Kilos of my investment freight.


I agree that committing $100k is a step too far for the average share punter. But maybe if Skyline stumbles over the next year or two, the entry price for that minimum 4000 share holding might be a little less?

SNOOPY

discl: sniffing, not holding.

Snoopy
26-11-2017, 11:16 AM
Have to respect that it is Queenstown CBD, recent sales for Queesntown prime CBD is 4-5%. High population+tourism growth, limited/no supply. My view is that a change in these factors would have more influence than interest rates - which have a steady outlook for the next few years.


Yes downtown Queenstown is pretty small if the truth be told. In AR2017 note 5.1a I see that term debt has been negotiated down to 3.99%. The capitalised interest rates used for valuation are 4.07 % to 4.69% (AR2017 note 3.3). So even at those very low capitalised valuation rates SKE can still borrow and make a cash profit on their investment property - amazing!



It sucks that they don't do any sensitising on the cap/yield rates in their risk management note.


The balance sheet looks pretty strong, with only $28m of bank debt backed by $371m of shareholder equity. Maybe management don't see it as an issue?



Excluding property fair value movement, the business is still growing its revenue/profits/cash generation. Retaining their growing earnings has been the main way that they have strengthened their balance sheet.


Retaining profits has certainly worked in the past to fund the business. Retaining $100m out of $45m profit to fund the redevelopment of the Queenstown Gondola is an equation that doesn't work. But it looks like SKE should have plenty of borrowing capacity left on the existing balance sheet to fund this kind of expenditure. But will the existing shareholders be comfortable with these higher debt levels?



... perhaps one thing to consider is whether the property is "prime" and if not, how much capex to get it to "prime".


You are referring to the proposed redevelopment of the downtown Queenstown shopping mall (O’Connell’s Pavilion) owned by Skyline? Reading the annual report, it looks like the spending on the contract run 'Eichardt’s Hotel' on the lakefront and the adjacent ‘New Eichardt’s Building’ has been done.

SNOOPY

Snoopy
26-11-2017, 11:29 AM
discl: sniffing, not holding.


Skyline Enterprises mission statement is to provide world class leisure and enertainment experiences that appeal to a wide range of guests that are positioned as quality products command a premium price and provide a high return on investment for our shareholders.

Gondola Operations: External Turnover $131.4m (includes $15.2m from Singapore and $5.7m from other overseas)

Skyline Enterprises was formed by a group of Queenstown tourism business enthusiasts. They were driving tourists up a rough metal road in a VW Combi to ‘Bob’s Peak’, to enjoy a mountain vista of Queenstown township and the Remarkables Mountain range over a cup of tea. There had to be a better way. And following a 1966 capital raising, the original ‘Skyline Gondola’ at Queenstown, opening in 1967, was the result.

Roll forwards 50 years and ‘Gondola Queenstown’, already upgraded to four seaters (1987), is on the cusp of being upgraded again to ten seat gondola cars. ‘Gondola Rotorua’ provides a similar experience in the North Island. Both Gondolas support Luge runs. Unlike the Olympic Luge, the Skyline interpretation puts plastic karts with haul brakes on a contoured asphalt track. Thus overtaking is allowed and bottlenecks are avoided. This ‘luge technology’ incorporates Intellectual Property that has since been partnered internationally: Canada ( Mt Tremblent {2003}, Calgary Winsport Olympic Park {2013}), Singapore ( Sentosa Island {2004}), South Korea ( Tongyeong {2016) , Busan {pending 2019}). The UK and Europe are on the development horizon. Hospitality developments crown each hilltop station.

My ‘Gondola Operations’ heading incoporates the fully owned non-Gondola domestic ‘Totally Tourism’ operations. Totally Tourism’s focus is on two major areas; South Island helicopter operations and Milford Sound (Milford Sound Flights and Mitre Peak Cruises) with the related heliski, helihike and Combo operations supporting these areas. These are iconic tourism operations in their own right.

With world leading technology and a proven international growth path, the core business of SKE ticks the ‘significant market player’ box.

Christchurch Casino: (External Turnover $62.030m )

Skyline Enerprises is the only licenced casino operator in Christchurch. They have fully owned the Christchurch Casino from 24 December 2012, after buying out former partner ‘Sky City Entertainment’. Casino revenue includes the net aggregate of Casino wins and losses. The Casino includes entertainment and dining venues. Skyline also owns a 33% share of the Dunedin casino. But this is accounted for under the ‘All Other Segments’ segment. As the sole Casino licence holder in Christchurch, the significant market player box is ticked.

Property Investment: (External Turnover $5.403m)

The company owns Queenstown’s largest retail complex O’Connell’s Pavilion, Eichardt’s Hotel on the lakefront and the adjacent ‘New Eichardt’s Building’ offering a mix of accommodation, office, restaurant and retail spaces. Skyline is the landlord, not the operator of these properties. Prime property space is in short supply ln Queenstown and these assets are highly prized.

(Largely) Accommodation: (External Turnover $6.797m)

The two principal hotels/accommodation ‘owner run’ are the ‘Mercure Leisure Lodge’ in Duke Street Dunedin, and ‘Blue Peaks Apartments’ in Coronation drive in Queenstown.

Overall View

There is plenty of competition in the hotel/accommodation market. But all of the other business units are very strong or unique entertainment propositions.

Conclusion: Pass Test

Snoopy
26-11-2017, 11:36 AM
For this table the 'normalised net profit' excludes:

a/ property revaluations,
b/ insurance payouts ( FY2014 and FY2017)
c/ the gains on sales of Property Plant and Equipment (FY2015) and
d/ other non-operating adjustments such as exchange rate gains or losses.



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


FY2013$31.245m34.094m$0.92


FY2014$22.656m34.137m$0.66


FY2015$34.137m34.137m$1.02


FY2016$41.718m34.137m$1.22


FY2017$45.799m34.137mm$1.34



The FY2014 result was torpedoed by my removal of a $10.934m insurance payout from the Skyline declared result. The Skyline declared result masked the decline in profit of the gondola division of which the profit dived from $22.862m to $16.959m. This decrease was related to business interruption caused the construction off new top and bottom terminals at Sentosa Singapore and construction problems of the new luge in Calgery Canada. These issues were resolved by FY2014 year end,

Take FY2014 out and there is a very pleasant eps growth trend apparent.

Conclusion: Pass test

SNOOPY

Snoopy
26-11-2017, 02:40 PM
YearNormalised Net Profit {A}S/h Equity EOFY {B}ROE {A}/{B}


FY2013$31.247m$215.925m14.5%


FY2014$22.656m$243.316m9.3%


FY2015$34.809m$282.854m12.3%


FY2016$41.718m$321.356m13.2%


FY2017$45.799m$370.666m12.4%



Ostensibly this looks like a clear cut fail. But wait. The asset values on the books include assets that have been revalued upwards. This increase in underlying asset value is due to the fact that this business has performed well, yet the increased valuation has cost shareholders nothing. It would be wrong to assess the return on equity when some of that equity has been created out of 'thin air'. So how much 'thin air capital' has appeared on the books since FY2013?



Investment Property RevaluationChristchurch Casino RevaluationSince FY2013 Cumulative Revaluation


FY2013$0.704706m$45.127614m$45.832317m


FY2014$7.881456m$0m$53.713773m


FY2015$16.709649m$0m$70.423422m


FY2016$10.114310m$0m$80.537741m


FY2017$20.254664m$0m$100.792405m



Next we take the ‘accumulated thin air capital’ away from the declared sharehokdes funds so that we are only considering a return on capital earned on shareholders real money



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


FY2013$31.247m$170.093m18.4%


FY2014$22.656m$189.603m9.3%


FY2015$34.809m$212..431m16.4%


FY2016$41.718m$240.819m17.3%


FY2017$45.799m$269.874m17.0%



Suddenly the results look very different! There may be more equity revaluations prior to FY2013 that will increase the underlying ROE further. But I haven't bothered to look, because for the purpose of this exercise I don't need to. A pass is a pass.

Conclusion: Pass Test

SNOOPY

Snoopy
26-11-2017, 02:48 PM
YearNormalised Net Profit {A}Revenues {B}td]Net Profit Margin {A}/{B}[/td]



FY2013$31.247m$96.862m32.3%


FY2014$22.656m$150.634m15.0%


FY2015$34.809m$162.945m21.0%


FY2016$41.798m$180.504m23.1%


FY2017$45.799m$198.309m23.1%



Despite the net profit margin being significantly 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
26-11-2017, 02:54 PM
All four tests have been passed, so this means we can apply the Buffett growth model with some confidence. There is one more hurdle to pass before we do that though. It is possible for a company to produce very high Return on Equity figures by borrowing to the hilt. This would be an unacceptable risk in this investment context. So time to evaluate the debt profile of SKE

SNOOPY

Snoopy
26-11-2017, 03:06 PM
The question I wish to pose is this. If SKE wanted to direct all of their underlying earnings into paying off debt, how long would that take?



Bank Debt$28m {A}


Underlying Net Profit After Tax$45.799m / year {B}


Minimum Debt Repayment Time0.61 years {A}/{B}



Being able to pay off all your company debt within 8 months is an enviable position to be in. So we can now proceed to the 'Buffett Growth Model' and see what kind of numbers pop out. Don't take this post as an endorsement to buy SKE yet though. All I have looked at so far is what you get, and what you get looks very good. From an investment perspective though, the most critical thing is what you pay. And I haven't made any assessment at all about market value yet. Paying too much for something good is not good investment practice. So how much would be too much to pay for SKE? Let's see.

SNOOPY

Beagle
26-11-2017, 03:57 PM
Hi Snoopy,
Unfortunately for your SKC investment Mrs Beagle needs no help from me in making sure she gets her snout into a very fulsome array of dishes at the Fortuna Buffet. I am not too sure the hound house with our $27.90 x 2 contribution for the festive season banquet lunch contributed anything or was indeed a possible negative contribution towards your next sin stock dividend feed, however I am pretty sure they made a profit on the carparking so all is well :)

No need to delve too deep into is this value question in my opinion, see post #61 and others. Trading on ostensibly the same PE as THL but whilst THL's outlook and long term profit growth looks robust, to this hound this extract from the 2017 annual report looks suspiciously like a profit warning that any astute food loving beagle should be very wary of.
Looking Forward We need to be mindful the next five years may not mirror the past five. During this period, it is anticipated the Skyline Queenstown Development and several other major projects will impact Skyline Enterprises trading profit. The capital cost of the Skyline Queenstown project and disruption during construction to the business should not be underestimated. This project will provide future capacity and maintain long term profitability of our flagship business. During this five year period the downside will be offset to some degree by additional earnings as International Luge projects come onstream.

Comparing that warning with THL's long term profit growth on the face of it, at least to this hounds keen nose, smells like the difference between chalk and cheese.

Snoopy
27-11-2017, 12:10 PM
Time to apply the Buffett growth model. The key pieces of data are:

1/ The business cycle return on shareholder equity,



FY2013FY2014FY2015FY2016FY2017Average


ROE14.5%9.3%12.3%13.0%12.4%12.3%



We use this figure to work out the projected earnings from the start of the financial year shareholder equity.




2/ The proportion of equity retained each year to grow the business.



FY2013FY2014FY2015FY2016FY2017Average


dps/eps35%56%36%34%41%
40.4%



We use this figure to derive: (a) the proportion of earnings retained for future growth and (b) paid out as dividends.




3/ The multiple the market has applied to future earnings.



FY2013FY2014FY2015FY2016FY2017Average


Share Price @ 31st March {A}$8.45$10.80$12.75$17.10$20.55NM


eps {B}$0.92$0.66$1.02$1.22$1.34NM


PE Multiple @ 31st March {A}/{B}9.216.412.514.015.313.4



We use this figure to determine the value of the company in ten years time, based on teh expected earnings in ten years time.



Now we have the key pieces of data, we can proceed to create the earnings projection spreadsheet

SNOOPY

Snoopy
27-11-2017, 12:26 PM
Now we have the key pieces of data, we can proceed to create the earninhgs projection spreadsheet



YearEquity SOFYEarningsDividend PaidRetained for Reinvestment


2018$10.86$1.34$0.54$0.80


2019$11.66$1.43$0.58$0.85


2020$12.51$1.54$0.62$0.92


2021$13.43$1.65$0.67$0.98


2022$14.41$1.77$0.72$1.06


2023$15.47$1.90$0.77$1.13


2024$16.60$2.04$0.83$1.22


2025$17.82$2.19$0.89$1.31


2026$19.13$2.35$0.95$1.40


2027$20.53$2.52$1.02$1.50


2028$22.03$2.71


Ten Year Dividend Total$7.57



We now answer the question: What return can we expect, compounding annually for ten years, if we buy shares in Skyline at $24.60 today?

p(1+i)^10=(13.4*2.71 + 7.57), p= $24.60 (today's share price)

<=> (1+i)=[(13.4*2.71 + 7.57)/24.60]^0.1

=> i = 5.96%

So the net average compounding return we can expect by investing in Skyline today at $24.60 over ten years is 6% per year. With tax at 30% this is equivalent to a gross return average of 8.5%. Not bad, but given the development risk ahead, not a good enough return for me. Warren Buffett looks for a 15% compounding return. What share price would he have to buy at to get this?

Buffett Price

p(1.15)^10=(13.4*2.71 + 7.57) => p= $10.85

If the share price ever got down to $10.85, I would be backing up the truck myself. But such a low share price in the future seems very unlikely. Considering the quality of the underlying assets I would consider a 12% compounding return over 10 years acceptable. What purchase share price does that imply?

Snoopy Growth Price

p(1.12)^10=(13.4*2.71 + 7.57) => p=$14.13

What we have here are some price points at which the purchase of Skyline Enterprises shares looks good depending on what return you the investor sees as acceptable. For me a 6% net return is not high enough. SKE is a fantastic company. But it is very fully priced by Mr Market when stacked up against historical metrics. I would not recommend buying any at $24.60. But I do recommend watching and waiting for a better entry price!

SNOOPY

Snoopy
27-11-2017, 01:20 PM
No need to delve too deep into is this value question in my opinion, see post #61 and others. Trading on ostensibly the same PE as THL but whilst THL's outlook and long term profit growth looks robust, to this hound this extract from the 2017 annual report looks suspiciously like a profit warning that any astute food loving beagle should be very wary of.

Comparing that warning with THL's long term profit growth on the face of it, at least to this hounds keen nose, smells like the difference between chalk and cheese.

I hear the 'warning' Beagle. But I also recognise that good businesses that operate flagship tourist sites do need to be able to spend before they can earn. So I still have a positive 'spin' on the site reinvestment proposals.

Like you I was researching SKE as a 'measuring stick', but putting it up against that other great tourism operation: SKC. SKC, like SKE are also in the midst of a large capital spend. But SKC Auckland, and the convention centre, will be fully on line soon. Furthermore I am happy with my projected SKC gross return of 6.5% (My valuation 'Capitalised Dividend valuation: FY2018 NZ Perspective' SKC thread post 568). The other advantage of SKC is that you don't need $100k of capital to get a starter position!

Nevertheless I would be keen to join the SKE club if I can get in at the right price. It sounds 'vulture like' but I think now is the time to watch and wait and be ready to pick up some SKE scraps should things go wrong!

SNOOPY

Beagle
27-11-2017, 05:16 PM
Plenty of potential for things to go wrong Snoopy. The initial capex projection for the Gondola was $60m quickly revised two months later to $100m without any explanation..yes that's not a typo, the estimated cost in 2016 went up 67% in two months without a word. We all know constructions costs have ballooned badly since then, (what other plausible explanation is there for FBU losing close to ~ $200m on a the ~ $400m fixed price construction of the convention center ?) Factor into the recent environment court ruling that they must supply a multi level carpark to meet the extra demand for car parking caused by the expansion, I could not find a car park for love nor money when down there twice in the last 12 months) and its fair to say that I would pay good money to be a fly on the wall when the directors get their quotes for the construction of this revamp. Won't surprise me in the slightest to see the final cost well north of $200m when its finally completed...and then there's the disruption to this key business during the very lengthy redevelopment process.

I can't help wondering if a far more modest expansion would have been more appropriate and stick the price northwards quite a LOT to dampen down rampant demand.
A superb buffet lunch and gondola ride is $65 is very cheap for what you get in my opinion, (considering other Queenstown pricing for tourism activities).
By comparison a far more modest buffet lunch and trip on the Earnslaw across to the Walter Peak farm is $105, still a very good experience and one I would highly recommend even at that price. I would think Skyline could match that $105 price and few if any tourists would bat a single eyelid.
Skyline gondola ride and buffet lunch $65 https://www.bookme.co.nz/things-to-do/queenstown/activity/skyline-queenstown-buffet-lunch-at-stratosfare-restaurant/984
Earnslaw Walter peak cruise and buffet lunch $105 https://www.realjourneys.co.nz/en/experiences/dining/walter-peak-gourmet-bbq-lunch/

My conclusion is there is plenty of risk in the business in the near future and the shares are priced as though everything is going to work out just fine and dandy...but what if it doesn't ?
Not listing on the NZX and pricing disparities like the one illustrated above make me wonder how commercial the directors really are ?
Old boys club who are very wealthy and don't need to make much more money ?

Tell you what Snoops, that Real Journeys is a company going places with a brilliant moat. If they were to ever list at a reasonable PE I'd be very keen to put a paw or three up for some :drool:

Snoopy
28-11-2017, 11:01 AM
Plenty of potential for things to go wrong Snoopy. The initial capex projection for the Gondola was $60m quickly revised two months later to $100m without any explanation..yes that's not a typo, the estimated cost in 2016 went up 67% in two months without a word. We all know constructions costs have ballooned badly since then, (what other plausible explanation is there for FBU losing close to ~ $200m on a the ~ $400m fixed price construction of the convention center ?) Factor into the recent environment court ruling that they must supply a multi level carpark to meet the extra demand for car parking caused by the expansion, I could not find a car park for love nor money when down there twice in the last 12 months) and its fair to say that I would pay good money to be a fly on the wall when the directors get their quotes for the construction of this revamp. Won't surprise me in the slightest to see the final cost well north of $200m when its finally completed...and then there's the disruption to this key business during the very lengthy redevelopment process.

I can't help wondering if a far more modest expansion would have been more appropriate and stick the price northwards quite a LOT to dampen down rampant demand.
A superb buffet lunch and gondola ride is $65 is very cheap for what you get in my opinion, (considering other Queenstown pricing for tourism activities).


I did the Skyline Buffet at Rotorua a couple of years ago Beagle. Rode the gondola on the way up and down rode the luge too at the top and had a good outing. The experience is remembered long after the price is forgotten and I had a good 'morning plus lunch'. I did recall the lunch was a 'good middle class effort' rather than a top class effort though. With a buffet this is almost inevitable. So I would balk at paying a top price for such a lunch. I would say that part of the reason for the experience being 'relatively cheap', is that Skyline must also cater for the local market. Overseas tourists come once, but locals can and should be enticed back every year if they don't feel like they are being ripped off. That plus the fact that the cost to run the gondola would be the same whether it is carrying one person or 200 people. An empty car going up the mountainside represents a loss of cash for whatever activities are at the top, while there is no cost saving for Skyline in having that empty gondola car.

I am not sure what a more modest expansion at Queenstown would look like. If they were to put a six person gondola car in instead of a 10 seater, I doubt it would be 60% of the cost. They may not need a 10 seater car immediately. But it does future proof the business.

As for the existing gondola experience, I am not saying there is no room for improvement. But IMO Skyline have their price point about right. YMMV.

SNOOPY

Beagle
28-11-2017, 11:18 AM
I think they are very different markets mate, Queenstown and Rotorua. Mrs Hound and I would rate the buffet at Skyline Queenstown as the best we've ever got our snouts into in our lifetime. Case of a premier resort attracting some of the best chef's and workers ? I haven't been to the Rotorua one for many years, (never eaten at their buffet so can't be sure on the comparison front) but the gondola ride is in a different category to the Queenstown ride in terms of its spectacular nature at the latter in my opinion too.

Queenstown pricing is different from Rotorua and deserves to be too. Just look at the potential redevelopment cost of the Queenstown gondola and you arrive at the inevitable answer that for Skyline to get an acceptable return on capital the price is currently too cheap.

I do agree with your assessment on the SP however, and see a fair amount of risk to the downside with very limited near term upside potential. Risks appear to well outweigh possible returns to my view for the foreseeable future.

Snoopy
02-03-2019, 02:58 AM
Plenty of potential for things to go wrong Snoopy. The initial capex projection for the Gondola was $60m quickly revised two months later to $100m without any explanation..yes that's not a typo, the estimated cost in 2016 went up 67% in two months without a word. We all know constructions costs have ballooned badly since then, (what other plausible explanation is there for FBU losing close to ~ $200m on a the ~ $400m fixed price construction of the convention center ?) Factor into the recent environment court ruling that they must supply a multi level carpark to meet the extra demand for car parking caused by the expansion, I could not find a car park for love nor money when down there twice in the last 12 months) and its fair to say that I would pay good money to be a fly on the wall when the directors get their quotes for the construction of this revamp. Won't surprise me in the slightest to see the final cost well north of $200m when its finally completed...and then there's the disruption to this key business during the very lengthy redevelopment process.

I can't help wondering if a far more modest expansion would have been more appropriate and stick the price northwards quite a LOT to dampen down rampant demand.

My conclusion is there is plenty of risk in the business in the near future and the shares are priced as though everything is going to work out just fine and dandy...but what if it doesn't ?


Skyline revamp in Queenstown has got the go ahead. Environment Court has given this the 'big tick'.

http://www.sharechat.co.nz/article/7eec1823/skyline-to-spend-north-of-100m-upgrading-queenstown-s-iconic-gondola.html

Interesting to see the price for the upgrade is now quoted at "north of $100m". Also interesting to see that Skyline shares last traded on the unlisted market at 25c - LOL Shows how far the standard of business journalism has fallen. Only out by a factor of 100!

SNOOPY

Beagle
04-03-2019, 05:51 PM
Skyline revamp in Queenstown has got the go ahead. Environment Court has given this the 'big tick'.

http://www.sharechat.co.nz/article/7eec1823/skyline-to-spend-north-of-100m-upgrading-queenstown-s-iconic-gondola.html

Interesting to see the price for the upgrade is now quoted at "north of $100m". Also interesting to see that Skyline shares last traded on the unlisted market at 25c - LOL Shows how far the standard of business journalism has fallen. Only out by a factor of 100!

SNOOPY

LOL Classic. North of $100m is such a vague statement and might just qualify for the understatement of the year as they were talking $100m years ago and now have to build a major multi level car park as part of the resource consent and of course we all know construction cost inflation has been really rampant in recent years. I think this project will give their balance sheet gearing a pretty good stretch for quite some time and this might be closer to $200m than $100m by the time its all done. Will have another look when this whole project has been completed and the company de-risked. Still looks expensive to me.

jg8512
05-03-2019, 03:29 PM
I've not seen the plans etc but might the rebuild prove very disruptive of skyline gondola. there is no zero car-parking in that area, and if you start putting in builders etc cars, all the building equipment and access needs, surely it will affect patronage. It might also be disruptive to the experience up the top - views affected, noise, etc. Given the length of the proposed project - up to 2022 IIRC - this could be quite long-lasting.

I get the SKYLINE is increasingly diversified, but suspect Skyline Gondola Qtwn is a pretty chunky contributor. Segments results don't break it down.

As you can tell, I'm hoping for - and weakly expecting - a cheaper entry point! GLAH

GTM 3442
24-09-2019, 03:40 PM
Interesting. . .

https://www.stuff.co.nz/business/industries/116054156/skylines-sale-of-totally-tourism-stopped-in-queenstown

Beagle
21-02-2020, 07:53 PM
LOL Classic. North of $100m is such a vague statement and might just qualify for the understatement of the year as they were talking $100m years ago and now have to build a major multi level car park as part of the resource consent and of course we all know construction cost inflation has been really rampant in recent years. I think this project will give their balance sheet gearing a pretty good stretch for quite some time and this might be closer to $200m than $100m by the time its all done. Will have another look when this whole project has been completed and the company de-risked. Still looks expensive to me.

Posted 4/3/2019.
So how have they done ?
Queenstown development was originally scheduled to cost $60m in 2016 and works were to be undertaken in 2018. See here https://www.usx.co.nz/uploads/paperclip/documents/1159/original/Skyline%20Queenstown_Development%20Project_Stakeho lder%20Information.pdf?1464904694
This was very quickly revised to ~ $100m a few months later, see post #81 above.
North of $100m was talked about as recently as last year when they finally got the Environment Court approval in early 2019.
So how about this announcement yesterday...what an absolute "clanger" !! Now forecast to cost circa $250m over 5 years, more than 4 times the original estimate and this massive capex hit could not have come at a worse time !!!!! https://www.usx.co.nz/uploads/paperclip/documents/1953/original/Skyline_Enterprise_20.02.20_Shareholders_Announcem ent.pdf?1582161250

I am so happy I am not a shareholder ! The cost blowout on this project in percentage terms is actually worse than the ill fated International convention Centre.
One wonders what tourists will have to pay to enjoy these new facilities in due course when they are finally finished.
Maybe they would have just been better to put the price up on the existing gondola quite significantly to dampen demand and shareholders would have been far better off ! Even before this virus growth had substantially slowed. Shareholders look like they in for an interesting time of it going forward.

audiav
21-02-2020, 08:15 PM
Well done Beagle on your skepticism. I was contemplating investing around the time but fortuitously you were wondering out loud.

Beagle
21-02-2020, 09:02 PM
Thanks. My original thinking back in Nov 2017 was actually bang on the money, see below. I know the board are visionaries and think very long term but that capex bill at a time like this and with all the disruption to come with the construction over the next few years, seems like a very good time NOT to be a shareholder. How are they funding this massive capex ?

P.S. I think Real Journeys are really "pushing it" with their $129 price for a ride on the Earnslaw with BBQ Lunch at Walter Peak, up a whopping $24 since Nov 2017. They own Walter Peak too and it is an iconic experience with no real substitute at Queenstown so they can get away with milking tourists for all they're worth.
Makes you wonder when Skyline Directors will ever wake up and smell the coffee and realise what they have is an iconic unmatched experience at Queenstown too.
I would rate the directors at Real Journey's as much smarter and more commercially minded that Skyline enterprises.


Plenty of potential for things to go wrong Snoopy. The initial capex projection for the Gondola was $60m quickly revised two months later to $100m without any explanation..yes that's not a typo, the estimated cost in 2016 went up 67% in two months without a word. We all know constructions costs have ballooned badly since then, (what other plausible explanation is there for FBU losing close to ~ $200m on a the ~ $400m fixed price construction of the convention center ?) Factor into the recent environment court ruling that they must supply a multi level carpark to meet the extra demand for car parking caused by the expansion, I could not find a car park for love nor money when down there twice in the last 12 months) and its fair to say that I would pay good money to be a fly on the wall when the directors get their quotes for the construction of this revamp. Won't surprise me in the slightest to see the final cost well north of $200m when its finally completed...and then there's the disruption to this key business during the very lengthy redevelopment process.

I can't help wondering if a far more modest expansion would have been more appropriate and stick the price northwards quite a LOT to dampen down rampant demand.
A superb buffet lunch and gondola ride is $65 is very cheap for what you get in my opinion, (considering other Queenstown pricing for tourism activities).
By comparison a far more modest buffet lunch and trip on the Earnslaw across to the Walter Peak farm is $105, still a very good experience and one I would highly recommend even at that price. I would think Skyline could match that $105 price and few if any tourists would bat a single eyelid.
Skyline gondola ride and buffet lunch $65 https://www.bookme.co.nz/things-to-do/queenstown/activity/skyline-queenstown-buffet-lunch-at-stratosfare-restaurant/984 Current price Feb 2020 $79
Earnslaw Walter peak cruise and buffet lunch $105 https://www.realjourneys.co.nz/en/experiences/dining/walter-peak-gourmet-bbq-lunch/ Current price Feb 2020 $129

My conclusion is there is plenty of risk in the business in the near future and the shares are priced as though everything is going to work out just fine and dandy...but what if it doesn't ?
Not listing on the NZX and pricing disparities like the one illustrated above make me wonder how commercial the directors really are ?
Old boys club who are very wealthy and don't need to make much more money ?

Tell you what Snoops, that Real Journeys is a company going places with a brilliant moat. If they were to ever list at a reasonable PE I'd be very keen to put a paw or three up for some :drool:

Mr Slothbear
24-02-2020, 10:48 AM
Some good posts Beagle. Looked into Real Journeys and they look like a really attractive company, shame they’re not public, I’d be really interested in their shares.

J see they’re making the very smart move of building staffing accomodation to attract better quality long term workers. More business especially Queenstown ones would benefit from that kind of longer term thinking.

Sideshow Bob
25-02-2020, 11:36 AM
Some good posts Beagle. Looked into Real Journeys and they look like a really attractive company, shame they’re not public, I’d be really interested in their shares.

J see they’re making the very smart move of building staffing accomodation to attract better quality long term workers. More business especially Queenstown ones would benefit from that kind of longer term thinking.

Real Journeys also have Cardrona, and not longed picked up Treble Cone pretty cheap. They have plenty of investment to be made in both, TC to get back up to speed of where it should be, and Cardrona with Soho lease to almost triple the size of their field. Cardies at their peak have over 5,000 people on field....weather and snow dependent, but get those right and it must crank.....

Spreads their risk over various tourism operations, and also have the Go Orange brand - targeting a different market.

Albeit all in tourism....interesting times currently. Would be good to have the opportunity for a slice. Great lunch at Walter Peak last time I went there.....Earnslaw was considerably lower in the water on the way back.

Having said that, Skyline have some amazing assets - but pretty capital hungry projects....hmmmm…...

Beagle
25-02-2020, 02:19 PM
Companies office search shows the Wafare Group own 100% of the shares of Real Journeys Limited, formerly known as Fiordland Travel.
The fortunate shareholders of the Wafare Group are as follows https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/7068963/shareholdings
Some good old Southland families there and many enjoy some of their fine southern hospitality at the likes of Walter Peak Farm.
https://www.youtube.com/watch?v=Qd5lpOqQ3Xo

Beagle
28-02-2020, 08:14 PM
Maybe those Skyline shareholders are not so fortunate. Touching fresh multi year lows today, down 27% in the last year. Market not silly is it and thinks $250m for the refurbished Queenstown facility is too much. I predict it will head substantially lower.

iceman
06-03-2020, 09:04 AM
Have to feel sorry for them. Being hit hard with things totally out of their control https://www.stuff.co.nz/business/120020780/coronavirus-skyline-enterprises-says-asian-operations-still-running-but-numbers-are-down

whatsup
06-03-2020, 09:15 AM
Have to feel sorry for them. Being hit hard with things totally out of their control https://www.stuff.co.nz/business/120020780/coronavirus-skyline-enterprises-says-asian-operations-still-running-but-numbers-are-down

Yes double or triple wammy , cost over runs, tourist drop off and constant increasing over heads, not a good mix !!

Beagle
09-03-2020, 03:21 PM
Yes double or triple wammy , cost over runs, tourist drop off and constant increasing over heads, not a good mix !!

Last trade $18 with no buyers left.
Down from $23.50 as recently as late January 2020 !
$250m capex for Queenstown...looks like it will REALLY stretch their balance sheet. I think they should simply put those approved plans "On Ice"
Interesting times coming for tourism operations, especially those with lots of debt.

Arthur
09-03-2020, 08:07 PM
Minimum holding is 4000 shares, that is a pretty limited buying market.

whatsup
16-03-2020, 11:40 AM
+ + + WOW Skyline down 44% today @ $10-00 albeit on very small volume ( 687 shares ) !!

Arthur
16-04-2020, 03:47 PM
May be a beneficiary of having a shovel ready "infrastructure" product. The gondola is definitely a NZ icon that employs lots of people. There will be plenty of builders in Queenstown twiddling their thumbs. There are plenty of other projects that would not be as good for the economy as this one.

Beagle
16-04-2020, 08:07 PM
They might as well put their ultra expensive ~ $250m Queenstown development on ice. Its going to be many years before tourism is back to anything like what it was in my opinion. If they stretch themselves too much with massive debt at present they run the very real risk of going broke. This is not a time for bravery in the tourism industry, its a time to batten down the hatches and concentrating on surviving the greatest worldwide recession since the great depression of 1929-late 1930's.

If the directors don't understand this and proceed, good luck to them and the company, they're going to need it. Disc: No stake and no interest in buying one.

kiora
16-04-2020, 08:56 PM
A flood of Auzies on ski packages this year?

Arthur
17-04-2020, 10:14 AM
I think that if they pull the right strings they would get a very sweet debt package. Domestic tourism is about 57% of the market, add in Aussie and a few places like South Korea and we could be back to 2015 numbers. Skyline made a profit every year I could research, they sailed through the GFC (I do not expect them to make a profit this year). Disclosure, just bought some.

Beagle
17-04-2020, 04:39 PM
I think you've underestimated how many Kiwi's will return this year, (I won't be for one). $250m is truckload of debt given the size of their balance sheet. Amazing how that project blew out from initial estimate of $60m just a few years ago ! I can't help wondering what it really costs to complete when its finally built ?

Hope you're not counting on any profit in FY21 either...and good luck, I think you'll need it !

kiora
17-04-2020, 08:06 PM
I don't need luck as I don't own any :)

whatsup
17-04-2020, 09:03 PM
I think you've underestimated how many Kiwi's will return this year, (I won't be for one). $250m is truckload of debt given the size of their balance sheet. Amazing how that project blew out from initial estimate of $60m just a few years ago ! I can't help wondering what it really costs to complete when its finally built ?

Hope you're not counting on any profit in FY21 either...and good luck, I think you'll need it !

Not as bad as the Auck harbour bridge from the initial $50,000,000 to a now estimated $350,000,000 and they haven't even confirmed on the plans.

Sideshow Bob
19-04-2020, 01:32 PM
I was a bit interested in seeing what the segment revenue was, and where they made their money. $71m operating profit 2019.

Thought the Chch Casino would be a bit more profitable, but only about 1/4 of revenue ($60m) and operating profit was only $10m. Hmmmm Not really going to carry them through. Accounts for around 1/3 of their staff. Obviously shutdown now, but not really reliant on tourists so much. Are casion's recession resilient to a degree?

Tourism is about 2/3rd of their incoming (rest is property investment and all other segments). Accounts for the lions share of their operating profit - $57m last year. About 75% of their tourism revenue in NZ, rest off-shore.

Total Equity approx. $430m with no long term debt. Would be a (very) gutsy call to do an expansion in Qtown now - but possibility to save money while construction on a downer and not doing work when busy with tourists.

Some of those assets are very strong assets and effectively irreplaceable, generating good returns ordinarily. But would be a throw in the bottom draw share for the moment. Still even at a price target of say $10, minimum shareholding of 4,000 means $40k.....

kiora
19-04-2020, 01:56 PM
NZ tourism spending
https://en.wikipedia.org/wiki/Tourism_in_New_Zealand
" International and domestic tourism contributes, in total, NZ$34 billion to New Zealand's economy every year.[2]
Domestic tourist spending of NZ$20.2 billion a year still[when?] exceeds that of international visitors (NZ$11.8 billion).
By far the highest number of New Zealand's tourists (about 45%) come from Australia due to close proximity and relations.(NZ$6.3m)"

Sideshow Bob
19-04-2020, 05:29 PM
NZ tourism spending
https://en.wikipedia.org/wiki/Tourism_in_New_Zealand
" International and domestic tourism contributes, in total, NZ$34 billion to New Zealand's economy every year.[2]
Domestic tourist spending of NZ$20.2 billion a year still[when?] exceeds that of international visitors (NZ$11.8 billion).
By far the highest number of New Zealand's tourists (about 45%) come from Australia due to close proximity and relations.(NZ$6.3m)"

Tourism industry (and especially the ski industry) would be really keen to get a trans-tasman bubble going. But we need them more than what they need us....

Sideshow Bob
27-04-2020, 09:20 AM
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12327271

Beagle
27-04-2020, 09:53 AM
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12327271

Very pleased I decided to avoid this one back in 2017 in the $25 range. Some very difficult years ahead. They should just scrap their $250m Queenstown expansion plans. Tourism volumes are likely to stay low for many, many years.

Arthur
27-04-2020, 04:43 PM
Truth be told Beagle your analysis helped me pull the trigger when the price dropped 50%. I reckon taking a five year view it is a safer bet than Auckland Airport. Here is my guess - within six months Korea and Canada will be back to near normal. Their Queenstown, Singapore and Rotorua operations will be at about 75% of the recent peak. Christchurch Casino will be about 90%. The Queenstown hotel will be bundled with Gondola packages to keep up occupancy rates. Sheffield will go ahead but the NZ projects will be right sized (unless the Local and Central Governments view the upgrades as infrastructure and reduce the redtape)

Beagle
27-04-2020, 05:02 PM
To be clear, at no point have I considered this stock worth buying otherwise I would have actioned it myself. I see the rebulbing of tourism very differently to you Arthur but I wish you well and hope I am wrong. I wouldn't own AIA, AIR, SKC or THL either.

Snoopy
05-05-2020, 08:05 AM
To be clear, at no point have I considered this stock worth buying otherwise I would have actioned it myself. I see the rebulbing of tourism very differently to you Arthur but I wish you well and hope I am wrong.

Beagle's worst fears confirmed?

https://www.odt.co.nz/business/skyline-cutting-staff-half

Half of all staff gone. But pig headedly going ahead with the $200m gondola upgrade in Queenstown. I must say I was surprised to see the staff cuts extend to Korea where I thought a path out of the Covid crisis was becoming clearer.

SNOOPY

Sideshow Bob
05-05-2020, 08:57 AM
Beagle's worst fears confirmed?

https://www.odt.co.nz/business/skyline-cutting-staff-half

Half of all staff gone. But pig headedly going ahead with the $200m gondola upgrade in Queenstown. I must say I was surprised to see the staff cuts extend to Korea where I thought a path out of the Covid crisis was becoming clearer.

SNOOPY

But asking for Govt infrastructure funding to assist with their expansion...…!!

Probably a telling case in terms of jobs/employment. The 600+ staff are losing their jobs from when the wage subsidy runs out. So circa 6 weeks through, 6 weeks to go.

whatsup
05-05-2020, 09:53 AM
Yes double or triple wammy , cost over runs, tourist drop off and constant increasing over heads, not a good mix !!

Not surprised with todays only surprised that it took so long, " you cannot push water uphill with a rake " !

Sideshow Bob
06-05-2020, 08:07 PM
Ngai Tahu Tourism today announced they were cutting their staff from 348 to 39! Most finishing in June or July.

Most of their businesses are going into "hibernation", including the Shotover Jet. That will be a killer for Qtown, being so iconic.

JBmurc
06-05-2020, 08:51 PM
Ngai Tahu Tourism today announced they were cutting their staff from 348 to 39! Most finishing in June or July.

Most of their businesses are going into "hibernation", including the Shotover Jet. That will be a killer for Qtown, being so iconic.

Yes just brutal .... worse ever outcome pure nightmare for the likes of Qutown jobs

Joshuatree
06-05-2020, 09:17 PM
Truth be told Beagle your analysis helped me pull the trigger when the price dropped 50%. I reckon taking a five year view it is a safer bet than Auckland Airport. Here is my guess - within six months Korea and Canada will be back to near normal. Their Queenstown, Singapore and Rotorua operations will be at about 75% of the recent peak. Christchurch Casino will be about 90%. The Queenstown hotel will be bundled with Gondola packages to keep up occupancy rates. Sheffield will go ahead but the NZ projects will be right sized (unless the Local and Central Governments view the upgrades as infrastructure and reduce the redtape)

Like your contrarian longterm plan there Arthur which eliminates most of us who want results NOW!
Zigging while everyone else is zagging, hope it goes well and yes great money making assets there that cant be easily replicated.

Arthur
07-05-2020, 02:07 PM
Thanks Joshuatree. I'll credit Beagle and Snoopy if it goes right and put on my big boy pants if it does not work. The way I think about it investing is taking a long term view. I financed it by selling a chunk of my Blis (bought at an average of below one cent) also got into PAZ at less than 6 and Syft at diddly squat when they were in it donkey deep. I've had my share of failures, but they never loose more than 100%. I suspect my Skyline will be a hold forever. There is an irrational, but worthy feeling of owning a business that you can support. I'm hoping that Beagle will be lured back to the Skyline Buffet with a few mates (but eat the potatoes and not the prawns)

whatsup
07-05-2020, 03:53 PM
Not surprised with todays only surprised that it took so long, " you cannot push water uphill with a rake " !

I can only say its a surprise that these shares are selling for what they are, What are the asset backing of them ?

Beagle
08-05-2020, 02:16 PM
Thanks Joshuatree. I'll credit Beagle and Snoopy if it goes right and put on my big boy pants if it does not work. The way I think about it investing is taking a long term view. I financed it by selling a chunk of my Blis (bought at an average of below one cent) also got into PAZ at less than 6 and Syft at diddly squat when they were in it donkey deep. I've had my share of failures, but they never loose more than 100%. I suspect my Skyline will be a hold forever. There is an irrational, but worthy feeling of owning a business that you can support. I'm hoping that Beagle will be lured back to the Skyline Buffet with a few mates (but eat the potatoes and not the prawns)

LOL I've got to say its one of the best buffet's in N.Z. and then there's the view ! Good luck and well done on PAZ at 6 cents.

Southern Lad
11-06-2020, 09:49 PM
13,500 Skyline shares traded at $18.35 per share today - quite an uplift for the brave sole(s) who purchased at $10.00 and $12.00 per share in mid March.

Sideshow Bob
03-08-2020, 11:04 AM
Annual report for those interested:

https://www.usx.co.nz/uploads/paperclip/documents/2066/original/Skyline_Enterprises_2020_Annual_Report.pdf?1596398 719

Beagle
03-08-2020, 01:18 PM
An interesting read. I think those paying $17 a share are incredibly "brave". No question the earnings of this company will be dramatically affected in the years ahead and I seriously doubt the share price is properly accounting for that.

One wonders how many years the Queenstown gondola expansion will be put on hold for ? Worth noting this was originally proposed at a cost of $60m many years ago in an environment of rapid growth but has since blown out to more than four times that figure at circa $250m and the world seems to have dramatically changed....perhaps for many, many years to come.

Page 13 is pretty interesting. There's a glaring error in the 2019 comparative figures showing total equity at a completely erroneous figure, something I would be deeply embarrassed about for a small private client and yet the directors signed off on this statement of financial position for a public company...did they read it ? Maybe I should be gracious enough to suggest it was an error with the printers ?

At least their liquidity position looks sound, assuming its stated correctly and there's not more basic errors in there somewhere.

I'm not in any hurry to visit Queenstown again but do miss the buffet at the top of the Gondola :(

Happy to leave this opportunity to others and good luck !

Southern Lad
21-08-2020, 09:27 PM
Skyline has put its Queenstown Hill gondola rebuilt project on hold:

https://www.odt.co.nz/regions/queenstown/redevelopments-being-paused

Shows that Skyline has serious concerns on the tourism rebuild once the borders open/vaccine is available. Delaying misses the opportunity to close while there is little patronage and also runs the risk of further price escalation. Sounds like they have already committed to the Gondola system purchase given the talk of storing it in containers until a decision is made to restart the project.

O’Connells pavilion rebuilt carrying on, not that they had much choice given they had already gutted it.

Overseas luge new projects had previously been placed on hold.

blackcap
22-08-2020, 05:53 AM
An interesting read. I think those paying $17 a share are incredibly "brave". No question the earnings of this company will be dramatically affected in the years ahead and I seriously doubt the share price is properly accounting for that.

One wonders how many years the Queenstown gondola expansion will be put on hold for ? Worth noting this was originally proposed at a cost of $60m many years ago in an environment of rapid growth but has since blown out to more than four times that figure at circa $250m and the world seems to have dramatically changed....perhaps for many, many years to come.

Page 13 is pretty interesting. There's a glaring error in the 2019 comparative figures showing total equity at a completely erroneous figure, something I would be deeply embarrassed about for a small private client and yet the directors signed off on this statement of financial position for a public company...did they read it ? Maybe I should be gracious enough to suggest it was an error with the printers ?

At least their liquidity position looks sound, assuming its stated correctly and there's not more basic errors in there somewhere.

I'm not in any hurry to visit Queenstown again but do miss the buffet at the top of the Gondola :(

Happy to leave this opportunity to others and good luck !

I visited Queenstown last week. Interestingly for the middle of ski season it was very quiet. Restaurants were doing their utmost to undercut competitors and even had people trying to cajole you into their premises for lunch and dinner. Went out for a pub dinner on Friday night (during level2) and was astounded to see that there were tables free and no need to book etc. Every accommodation outlet had a "vacancy" sign up etc etc. To be fair I have not seen Queenstown during normal times so had little to compare but my partner did say it was quieter than normal. For a holiday it was quite nice. Traffic flowed extremely well and out accommodation was affordable.

Beagle
22-08-2020, 10:05 AM
Plenty of potential for things to go wrong Snoopy. The initial capex projection for the Gondola was $60m quickly revised two months later to $100m without any explanation..yes that's not a typo, the estimated cost in 2016 went up 67% in two months without a word. We all know constructions costs have ballooned badly since then, (what other plausible explanation is there for FBU losing close to ~ $200m on a the ~ $400m fixed price construction of the convention center ?) Factor into the recent environment court ruling that they must supply a multi level carpark to meet the extra demand for car parking caused by the expansion, I could not find a car park for love nor money when down there twice in the last 12 months) and its fair to say that I would pay good money to be a fly on the wall when the directors get their quotes for the construction of this revamp. Won't surprise me in the slightest to see the final cost well north of $200m when its finally completed...and then there's the disruption to this key business during the very lengthy redevelopment process.

I can't help wondering if a far more modest expansion would have been more appropriate and stick the price northwards quite a LOT to dampen down rampant demand. ...

Thanks for your feedback blackcap.
From November 2017. I gave the board this advice for free ;)

In my view the last traded price of $17 does not in any way accurately reflect the headwinds faced by this company that are likely to prevail for years.
I see fair value a very long way south of there.

Arthur
22-08-2020, 07:32 PM
Hi Beagle, I'm thinking about going to the AGM. Do you have any burning questions? I had also noticed the "equity" issue on page 13, but wondered if it was my lack of accounting skills and not a mistake. Should the auditor have picked that up?
It appears that they will continue with tree felling and rock work at the base, but I think they are going to delay most of their redevelopment. Cheers

Beagle
23-08-2020, 11:38 AM
Hi Arthur,

What are they going to do if Covid charges tourism forever ? If we eventually get a vaccine that's maybe 50% effective people will still be substaintially less inclined to travel, especially long haul, won't they ? How did a project that was going to cost $60m ever get to about four times that price at about $250m in just a few short years and what might the eventual total cost be if it ever goes ahead ? Is there some price point where its simply not worth proceeding with ? What if in 3-5 years when the project starts proper, the projected cost has doubled to $500m ? Those might be good conversation starters at the annual meeting. I'd love to be a fly on the wall if you drop those questions on them :D

Arthur
23-08-2020, 02:14 PM
Thanks Beagle, the expansion costs have certainly rocketed without any satisfactory explanation. I'll report back with any answers I can get. It looks like lunch is off, but there may be a few after match drinks (if only tea).

Southern Lad
14-09-2020, 11:37 AM
Nearly 45,000 Skyline shares traded so far today, nearly 40,000 of which have gone through at $16.80. These volumes are pretty high compared with normal trading, as the stock is historically tightly held.

Someone(s) with deep pockets has spent $573,500 betting that there is a bit of upside from here!

Maybe the lack of a AGM eat and drink up this year is bringing some shareholder loyalty into question and shaking a few sellers loose.

percy
14-09-2020, 11:41 AM
Nearly 45,000 Skyline shares traded so far today, nearly 40,000 of which have gone through at $16.80. These volumes are pretty high compared with normal trading, as the stock is historically tightly held.

Someone(s) with deep pockets has spent $573,500 betting that there is a bit of upside from here!

Maybe the lack of a AGM eat and drink up this year is bringing some shareholder loyalty into question and shaking a few sellers loose.

A ChCh based investor's wife died recently.I wonder whether this selling is to tidy up her estate. Was also a large shareholder in PAZ and Syft.I note there has been selling in those too..

RTM
14-09-2020, 08:20 PM
A ChCh based investor's wife died recently.I wonder whether this selling is to tidy up her estate. Was also a large shareholder in PAZ and Syft.I note there has been selling in those too..

PAZ price has held up pretty well then.

percy
15-09-2020, 07:25 AM
PAZ price has held up pretty well then.

Has so far,but with no announcements due until next March it may drift a bit.
I have been pleasantly surprised that all my Unlisted shares have held up well. ie PAZ,SFF,and SYF .
Over the past year PAZ has bolted from 20 cents to 53 cents.Did hit 60 cents for a time.Yet I feel next year we will see the real fun.lol.

Beagle
15-09-2020, 01:10 PM
Has so far,but with no announcements due until next March it may drift a bit.
I have been pleasantly surprised that all my Unlisted shares have held up well. ie PAZ,SFF,and SYF .
Over the past year PAZ has bolted from 20 cents to 53 cents.Did hit 60 cents for a time.Yet I feel next year we will see the real fun.lol.

Yes I have settled in very comfortably for the long haul with PAZ. There is the possibility of upgraded guidance but I am content to go to sleep on that one for a while.
Rome wasn't built in a day but one thing I know for sure is that companies growing their eps at around 100% year on year normally attract a much higher forward PE than 23.

Arthur
28-09-2020, 09:52 PM
There was no in person AGM so question time was somewhat restricted.
They are budgeting for two years to return to normal.
The reasons that they gave for the gondola project blowout were increased seismic requirements and the requirement for a car-park. The car-park alone is budgeted at $50 million.
There was no comment on the accounting question Beagle mentioned.
LUGE
Busan is all go, Interestingly they had to completely build the hill that they are putting the luge on. They are confident it will be a good investment, it is expected to be in operation June 2021.
Korea is going well, but there are copycat operations. They opened some new tracks in July.
Canada and Rotorua are going ok, Queenstown down abit.
KL and Sheffield luges are on hold, but they have high expectations.

They are supporting their tenants in their commercial properties.

Christchurch casino is doing ok, they have scaled back hours.

The directors took a 20% pay cut for a few months, but are back to normal in October.

Sideshow Bob
10-11-2020, 07:32 AM
https://www.usx.co.nz/uploads/paperclip/documents/2150/original/6_month_update_to_shareholders_%28Sept%29_Nov20.pd f?1604892701

Better than expected, EBIT positive but down 70%. Still not for me....