SKC - Sky City

[winner69]

How to bambozzle people with a few sentences

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

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

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


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

[bull....]

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

[winner69]

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

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

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

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

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

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

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

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

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

[hamish]

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

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

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

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

[NZSilver]

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

[winner69]

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

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

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

[carrom74]

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

[Balance]

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

Morningstar? SELL!

[Balance]

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

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

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

http://nzx-prod-s7fsd7f98s.s3-websit...951/274119.pdf

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

[Balance]

https://www.news.com.au/entertainmen...c1d84d7a7efa00

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

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