Daily ShareChat: Sky City Entertainment Group

By Jenny Ruth

Monday 15th February 2010

Casino operator Sky City Entertainment Group is likely to report a 3.8% rise in revenue to $438.1 million, a 3.4% rise in earnings before interest, tax, depreciation and amortisation (EBITDA) and a 16% rise in reported net profit when it reports its first-half results tomorrow (Tuesday), according to Jeremy Simpson at Forsyth Barr.

Simpson says the revenue growth will be driven by the Australian casinos while the bottom line will be boosted by lower interest costs that's to last year's $228.3 million capital raisings.

"The Australian casinos are expected to again be a highlight with the Adelaide turnaround continuing and Darwin leveraging off its expanded operations - a risk factor is the strong previous comparable period boosted by the government's stimulus package," Simpson says.

He is also expecting to see evidence the company's new management strategies are turning around the core gaming performance at the Auckland casino.

Likely negatives include a comment on the smoking ban impacting Darwin since January and a lower dividend which has already been signalled.

"Sky City is likely to remain cautious about the near-term risks of a generally weak economy in New Zealand and increasing levels of unemployment on both sides of the Tasman," Simpson says.

BROKER CALL: Forsyth Barr rate Sky City Entertainment as buy.

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