SkyCity Entertainment shares fall after revising its guidance - Market close

SkyCity Entertainment declined 8c or 4.28 per cent to $1.79 after revising its guidance after five months' trading in the new financial year. Photo / Christine Cornege

The New Zealand sharemarket closed the week flat as it grappled with a slowing economy and a further earnings downgrade, this time from Sky City.

The S&P/NZX 50 Index recovered admirably from its intraday low of 11,408.25 and finished on 11,495.64, down 0.97 points or 0.01 per cent. The index is still 0.3 per cent ahead for the year after gaining 1 per cent this week.

There were 57 gainers and 61 decliners over the whole market, with rebalancing in the FTSE and NZX indices creating some volatility before next Friday’s deadline. A total of 25.85 million shares worth $104.17 million changed hands.

SkyCity Entertainment declined 8c or 4.28 per cent to $1.79 after revising its guidance after five months’ trading in the new financial year. SkyCity is facing a reduction in electronic gaming machine revenue in New Zealand and a weaker-than-expected performance from its Adelaide business.

The casino and hotel operator is now expecting full-year operating earnings (ebitda) of $290m-$310m, which last year was $310m. SkyCity had previously forecast a modest year-on-year increase.

Shane Solly, portfolio manager with Harbour Asset Management, said the SkyCity downgrade was disappointing but not surprising. The cost of living has slowed its activity in New Zealand.

He said companies before SkyCity such as Air New Zealand, Kiwi Property and Freightways have talked about slowing domestic activity and retail sales. “Will there be others – I think so.

“The New Zealand economy is slowing down quite rapidly and the Reserve Bank may be working with a different set of data points when it comes back from holiday in the new year.

“It is a good reminder of what we are dealing with under the [Reserve Bank] tight monetary policy. The market just has to get through this earnings-reset period,” Solly said.

He said the Bank of Japan was looking seriously at increasing liquidity and letting interest rates rise. This may impact the flow of investment capital to Australia and New Zealand.

Overnight McDonald’s, the biggest food brand globally, announced it is opening 50,000 new restaurants by 2027 and has formed a partnership with Google to connect the latest cloud technology and apply generative artificial intelligence (AI) solutions across its restaurants worldwide.

Google-parent company Alphabet rose 5.31 per cent to US$136.93 ($222) after announcing the rollout of its generative AI model. The technology-driven Nasdaq Composite surged 1.37 per cent to 14,339.99 points and has risen more than 36 per cent this year.

At home, Scales Corp increased 7c or 2.28 per cent to $3.14 after confirming net profit guidance of $14m-$19m for the 12 months ending December and then doubling the 2024 profit forecast to $30m-$35m.

Scales is paying an interim dividend for the 2023 financial year of 4.25c a share on January 18.

Fisher & Paykel Healthcare was up 15c to $24; Ebos Group increased 63c to $37.53; Mercury Energy added 7c to $6.32; and Meridian collected 5c to $5.25.

Auckland International Airport gained 5c to $8.25 on trade worth $23.2m; Briscoe Group was up 10c or 2.18 per cent to $4.69; and Eroad continued a good run, rising 9c or 9.89 per cent to $1.

Infratil declined 13c to $9.92; Freightways decreased 11c to $8.32; Gentrack shed 8c to $6.35; NZME fell 4c or 4.44 per cent to 86c; and Steel & Tube was down 2c or 1.92 per cent to $1.02.

In the property sector, Argosy declined 2c or 1.82 to $1.08; Property for Industry was down 4.5c or 2.01 per cent to $2.195; Vital Healthcare Trust decreased 6.5c or 3.05 per cent to $2.065; and Precinct shed 1.5c to $1.18.

In the retirement sector, Ryman Healthcare was down 5c to $5.30; Arvida Group decreased 3c or 3.09 per cent to 94c; and Oceania Healthcare was up 3c or 4.23 per cent to 74c.

The Carbon Fund fell 10c or 5.24 per cent to $1.81; The Warehouse declined 4c or 2.26 per cent to $1.73; PGG Wrightson shed 9c or 2.66 per cent to $3.29; and 2 Cheap Cars was down 2c or 2.27 per cent to 86c.