Daily ShareChat: Sky City Entertainment

By Jenny Ruth

Tuesday 21st July 2009

Sky City Entertainment Group's gaming machine operations are out-performing the pubs with the company increasing market share in the $2 billion New Zealand gaming market, says Jeremy Simpson at Forsyth Barr.

"We are forecasting Sky City's Auckland gaming machine revenues to be up 0.5% in (the year ended June 30)," Simpson says.

Figures released by the Department of Internal Affairs showed pub gaming machine spending fell 5.3% to $889 million in the year ended June 30.

Simpson says that was in line with expectations and there are no real signs of a recovery with June quarter spending down 5.9% on the same three months a year earlier.

Almost all gaming machines are now compliant with the new player information display feature required from July 1 with machine numbers down only 1.9% on the previous year although they are down 20% from their peak in 2002, indicating substantial rationalisation has already happened.

"Sky City is well-placed for medium-term operational upside from successfully leveraging off a refurbished Auckland casino that has the worst impact of full smoking bans and regulatory changes behind it," Simpson says.

The soft New Zealand economy remains a near-term risk but he is expecting further improvements in the Auckland casino business in 2010.

BROKER CALL: Forsyth Barr rate Sky City Entertainment Group (NZX: SKC ) as BUY.

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