Sharechat Logo

Daily ShareChat: Sky City Entertainment

By Jenny Ruth

Thursday 14th May 2009

Text too small?
 Jenny Ruth

Sky City Entertainment Group's about $216 million capital raising and its comments about its outlook send mixed messages, says First NZ Capital analyst Rob Bode.

"We are a little bemused by the mixed messages sent by Sky City at present," Bode says.

"On the one hand, Sky City comments that trends are encouraging but, on the other hand, Sky City is also cautious regarding recent performance, particularly with respect to the Auckland property where most value lies."

While he continues to like the company's positioning and the strong cashflow attributes of key properties, "in our view this placement does start to raise questions about the earnings outlook for 2010," he says.


He sees no apparent near-term use for the funds raised "which may for some time, at least, be invested in low-yielding bank deposits unless Sky City can opportunistically redeem long-dated debt at a decent discount."

Nevertheless, he regards the underwritten placement price of $2.52 per share as good value, "particularly given that the placement will bring enhanced financial strength and flexibility which should widen the investor appear of Sky City's equity."

Bode has cut his discounted cashflow valuation by 20 cents a share to $3.55, the same as his 12-month price target.

 

BROKER CALL:  First NZ Capital rates Sky City Entertainment (NZX: SKC ) as OUTPERFORM.

 



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SkyCity's Queenstown growth ambitions face test with convention centre decision tomorrow
SkyCity buys TVNZ land for $10.6 mln, broadcaster to put cash into upgrading main building
SkyCity shares fall as results show struggle to squeeze growth out of Auckland
SkyCity FY profit falls 8 percent on flat Auckland result, one-off 2012 benefits
FMA recorded Allen's role in SkyCity talks as potential conflict of interest
South Australia approves ‘game changing’ SkyCity casino licence, allowing A$300M investment
Government roped in FMA chair Simon Allen to help close SkyCity deal, papers show
SkyCity cleared to buy Queenstown's Wharf Casino
NZ govt, SkyCity take another 5 days on $402M convention deal
NZ government, SkyCity extend deadline for deal on $402M convention centre