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SkyCity Entertainment Group’s shares are down

Fri, May 3, 8:34am by Staff Writer

New Zealand shares sank this week, as muted earnings guidance from SkyCity Entertainment Group among others didn’t meet investors’ expectations.

The NZ Herald is reporting that SkyCity was down 4.9 per cent at $3.88 on a volume of 1.4 million shares, more than twice its 617,000 three-month average.

The casino operator lowered its annual guidance on weaker-than-expected trading.

Head of private wealth research at Craigs Investment Partners Mark Lister said these prices are not unexpected when you get a few pieces of negative news.

Lister said SkyCity was a little softer than predicted though.

Land acquired for new development in Queenstown

The company did sprout some good news to investors in Sydney this week, applying to the New Zealand Overseas Investment Office for clearance to buy Queenstown land for a big new hotel development.

“Land acquired for future hotel development in Queenstown – OIO application being reviewed,” said the presentation to the Macquarie investment conference, recently posted on the NZX.

SkyCity owns Queenstown’s two casinos in the centre of town at Steamer Wharf and at Beach Street, but they contributed just one per cent of its nearly $1 billion turnover a year ago.

The site of the new hotel is understood to be about half way between the airport and the tourist town on Frankton Road.

Property records for the site show it is owned by a company called Passion Cove, whose directors and shareholders include real estate agent Kelvin Collins and businessman Bob Perriam.

A burgeoning number of hotel rooms are being planned and under construction in Queenstown by various developers.

They include a second Holiday Inn near the airport to be run by the world’s largest hotel operator IHG, and completed in two years.

SkyCity’s other main hotel developments include a Horizon hotel at its Auckland convention centre development and expansion in Adelaide.

It is also making progress on its Hamilton casino hotel plan.

Industry trends included modest casino business growth, continual diversity and investment to capture customers, alternative forms of gambling such as online and social skill based gaming and a focus on having a “social licence to operate”, according to the investor presentation.

Five per cent of SkyCity’s $1 billion revenue and $169 million profit in 2018 came from its hotel businesses, 38 per cent from electronic gaming machines, 25 per cent from table games and the balance from other forms of betting.

About 70 per cent of SkyCity’s revenue is gleaned from its Auckland casino, with 7 per cent each from Hamilton, Adelaide and Darwin and 9 per cent from online betting.

SkyCity just sold its struggling resort and casino business in Darwin and a licence to operate its car park in Auckland city.

SkyCity cashes in on car parks

SkyCity Entertainment Group Limited announced that it has entered into a binding agreement to sell a long-term concession over its Auckland car parks to Macquarie Principal Finance Group for an amount worth $220 million.

Macquarie was appointed by Care Park to operate car park that was required to perform parking operation as per the agreed service standards.

After the fulfillment of certain conditions, the settlement is expected to be completed by July 31, 2019 according to Kaline Media.

The parking pricing for the SkyCity VIP and loyalty customers and staff will be fixed, however it will grow at a rate of 2.5 per cent per annum.

Out of the total car parks, 450 will be reserved exclusively for VIP members.

Also, SkyCity will be able to book up to 900 car parks for the game promotions, four times a month.

During the peak period, there will be a mandatory closure of the car parks in order to prioritise the access for the SkyCity VIP and loyalty customers and staff.

The operator service standard included that the operator will be operating the car park with care, skill as well as diligence in a proper, safe and efficient manner.

The operator will make sure that there is minimal disruption in case of broader business activities of SkyCity.


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