Vehicles trapped in Auckland basement for 115 days: cars yet to emerge from NZICC graveyard.
SkyCity
Coronavirus, the NZ International Convention Centre fire and a challenging VIP gaming market are impacting SkyCity Entertainment Group's outlook, analysts said in reaction to the company's interim result.
Marcus Curley and Matt Ryan of UBS cited these three factors and said earnings uncertainty seems like the main takeaway from avery "messy" 1H20 result.
"Disappointing VIP drives a sub-par outcome within a complex result," they wrote, taking some comfort from ebitda guidance for the full year to June 30, 2020, "but [that] comes with a significant coronavirus caveat."
SkyCity declared normalised net profit after tax down 16 per cent, from $89.7m in 1H19 to $75m in 1H2020. Reported net profit after tax - artificially boosted by more than 3000 car park sales and fire insurance money - spiralled 296 per cent from $82.8m to $328m.
The reported profit was so much higher due to $200m from selling Auckland car parks and $240m in insurance payouts after the NZICC fire, whereas the normalised profits stripped those two one-off boosts from the accounts.
The company held its interim dividend at 10cps, the same as previous.
Curley and Ryan noted how full-year normalised ebitda guidance of slightly under $300m was below the market consensus of $300m but SkyCity stated that it was "too early and uncertain to estimate future financial impacts from coronavirus". FY20 net profit after tax guidance was $130m compared to UBS's $147m and a market consensus of $148m, they noted.
Jarden's Ari Dekker and Grant Lowe said it was pleasing to see the company confirm its expectation that the convention centre fire would be largely economically neutral and that there were sufficient aspects going well - Auckland gaming in particular - to offset negative factors from disruption and coronavirus.
"Given the weakness going into the result, we can see why some relief from the market to this positive response is justified," they said.
They were happy to see the A$330m Adelaide expansion on track.
Mark Brown at Devon Funds said the result was credible, given the fire and coronavirus. The VIP segment had suffered but local gaming, especially in company flagship Auckland, had improved.
Craig Lindberg of Craigs Investment Partners said SkyCity had lowered its full-year guidance by $10m to $15m: "This appears a better outcome than we had thought could be the case given the impacts of the NZICC fire and coronavirus."
In the result presentation, SkyCity had outlined the expected impacts of the virus, saying it had seen no significant impacts on the domestic business in the past three weeks, Lindberg noted.
London's China Town is a selfie opportunity. Photo / file
Some hotel cancellations were offset by new bookings.
The impact on the international business was greater due to the timing of Chinese New Year, "but at this stage, it is too hard to establish. Local customers account for close to 90 per cent of group normalised ebitda and SkyCity estimates less than 5 per cent is generated from China-based customers," Lindberg noted.
"Aside from the raft of abnormal items and external impacts from the fire and virus, the highlight of the result was again in the Auckland electronic gaming machine business, where we estimate revenue per machine increased by 3.5 per cent. Auckland table revenue was [up] 0.6 per cent which was better than we had assumed," Lindberg wrote.
Adelaide performance was slightly better than assumed, although with the focus on the uplift once the new facilities are open later this calendar year, any small ups or downs in this result were fairly meaningless, he said.
International business turnover was significantly lower than Craigs had assumed, he said.
SkyCity chief executive Graeme Stephens told the Herald: "The weak point in our results is international business." He cited a slowdown from Asia, particularly payment restrictions in Macau.
"IB has been disappointing but New Zealand has performed satisfactorily. That's the key results message," Stephens said.
On the NZICC, Stephens said: "Is it going to be built in time for Apec? The answer is no. We have been working closely with Fletcher and they have a vision of a programme and we expect to get that by the end of February. They reached the conclusion it's highly unlikely they can get everything right by 2021 so we can't commit to delivering Apec," he said, although some car parking facilities under the new centre could be functioning by later next year.
Stephens said around 180 vehicles remained trapped on level B4 underground: "There's mould, the cars are a write off and insurance has kicked in. Removing them has been a focus and it's imminent. We must do that safely."
