Forum Archive Index - September 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

Stott,

 

I think it best to stick to the core attractions. ( Incidentally, I had SKC when they were $5 face value shares, and have benefitted since.) Their site: < http://www.skycity.co.nz/ >

 

The negatives are the Queenstown casino, Force and Canbet; three investments, they could have done without as it uses capital without a good return and valuable management time; the opportunity cost is high and has contributed to the issue of the DRP scheme. I am not keen on such schemes.

 

However, this is in hindsight; SKC tends to think that Canbet has a future from overseas betting and there will be futher recoveries from Force, including the Film licenses which can be used in their theatre once they have taken over Force. 

 

SKC is really geared to run large projects; this is where they shine.

 

I do hope that the Adelaide casino will not lose any clients arising from the Air NZ fallout. I don't have any recent info. from there but I think that they have a good relationship with this city. 

 

The Hamilton project will shortly come on stream while the proposed Conference centre across the road in Auckland, will also add further machines. (It will be built on their own land).

 

These two projects will ensure that a sufficient number of machines will be added in the next three years. It is likely that no further casinos will be built. 

 

As to your reference to " inefficiencies ", there always will be some inefficiencies in a large enterprise; talk from contractors is not  reliable!

 

I have spoken to a few contractors in my life time and this negative talk can be prevalent and can be explained. Unless you are 'close' to a company, investment based on 'talk', is not recommended!  

 

I work at the coal face and am interested in results, not small talk. Overall, SKC has an excellent record apart from those mentioned stumbles.

 

They ought to be refocussed, now they are concentrating on the larger projects.

 

I don't know if there is a somewhat reduced tourism and spending. SKC relies on the resident population and NZ tourists. Auckland is a growing city.

 

They tend to have an Annual meeting at the end of October and I normally attend it. Their Annual Report could be out this week! That ought to give more information. I rate the CEO very highly!

 

SKC was ex dividend yesterday but the share price will normally recover quite fast. Interest rates are slowly falling and the company is a good cashcow with sound growth prospects in the next 5 years at least, given that normal conditions prevail.

 

If so, then you would be buying below valuation, I believe.

 

Gerry