SKC - Sky City

[Balance]

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

All makes sense now?

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

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

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

[peat]

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

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

[carrom74]

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

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

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

[Balance]

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

Not at all.

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

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

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

[carrom74]

Not at all.

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

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

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

Thanks Balance for the info..

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

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

[Snoopy]

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

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

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

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

SNOOPY

[Balance]

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



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

SNOOPY

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

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

[carrom74]

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

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

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


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

[bull....]

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

[Benny1]

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

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