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Thread: Skyline

  1. #81
    ShareTrader Legend Beagle's Avatar
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    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-d...restaurant/984
    Earnslaw Walter peak cruise and buffet lunch $105 https://www.realjourneys.co.nz/en/ex...met-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
    Last edited by Beagle; 27-11-2017 at 05:34 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  2. #82
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    Quote Originally Posted by Beagle View Post
    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
    Last edited by Snoopy; 28-11-2017 at 11:10 AM.
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  3. #83
    ShareTrader Legend Beagle's Avatar
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    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.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  4. #84
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    Quote Originally Posted by Beagle View Post
    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/7...c-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
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  5. #85
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by Snoopy View Post
    Skyline revamp in Queenstown has got the go ahead. Environment Court has given this the 'big tick'.

    http://www.sharechat.co.nz/article/7...c-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.
    Last edited by Beagle; 04-03-2019 at 05:53 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  6. #86
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    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

  7. #87
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  8. #88
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by Beagle View Post
    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/paperc...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/paperc...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.
    Last edited by Beagle; 21-02-2020 at 07:57 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  9. #89
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    Well done Beagle on your skepticism. I was contemplating investing around the time but fortuitously you were wondering out loud.

  10. #90
    ShareTrader Legend Beagle's Avatar
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    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.

    Quote Originally Posted by Beagle View Post
    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-d...restaurant/984 Current price Feb 2020 $79
    Earnslaw Walter peak cruise and buffet lunch $105 https://www.realjourneys.co.nz/en/ex...met-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
    Last edited by Beagle; 21-02-2020 at 09:13 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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