SKC - Sky City

[carrom74]

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

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

[Balance]

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

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

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

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

[peat]

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

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

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

another NZ offshore venture failure.

[Snoopy]

Another NZ offshore venture failure.

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

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

SNOOPY

[Balance]

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

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

SNOOPY

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

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

[Snoopy]

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

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

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

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

SNOOPY

[carrom74]

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

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

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

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

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

I heard Queens town is getting a new Hotel.

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

[babymonster]

good update...

[Benny1]

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

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

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

[hamish]

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

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

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

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

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