Forum Archive Index - May 2000

["nick" <acummin@es.co.nz>]

> My guess would be sky city.
     Chris

            You guys are really on form tonight, looks like
  we now can add sky city to the list. Lets take a look

1) earnings per share
1999  1998  1997  1996
47        2.5       36       15

         Only four years data here and one a shocker, yet
 the trend is very positive, with brokers forcasting eps
of 57 for next period, and static for the following year.
        Lets be generous and give them 30% growth in eps

2). pe only 11 which gives us      11
                                               ----        for a PEG  around
.36
                                                30
  Which is very very good, it means growth can slow to 10% and
the shares will still be fairly cheap.

3)  Is chairman happy?  This is the tricky part, the problems with the
     hamilton licence have thrown a spanner in the works, investors
    would have to consider carefully the implications of this before
     investing in the company. What impact will it have on future earnings?

4) Cash flow, being a casino they score top marks on this front,

5)  They certainly enjoy a competitive advantage, with a sole licence
     agreement for ten years in auckland, they are the only casino
    operator in NZ

heres what datex has to say
Comment: The company is the Auckland casino licensee, having exclusive
rights of operation for a period of 10 years. Sponsored by Brierley
Investments and international casino operators Harrah's, the project opened
on schedule in early 1996. Stock exchange listing was achieved in February
1996 following a sell-down by major shareholders the equivalent to $4.25.
Current ownership of the company is Brierley Investments (63.1% - sold down
by way of instalment receipts in 1999) and the public (36.9%), while
agreement was reached in 1997 for the casino to acquire the management
contract from Harrah's. The company's $500m development located in central
Auckland offers a range of entertainment facilities including Harrah's Sky
City casino, six restaurants, three bars, a 700 seat theatre, a 344 room
hotel and convention facilities, and the 328 metre Sky Tower, New Zealand's
tallest structure. The casino has become by far the most visited tourist
attraction in New Zealand, and is the only vehicle presently available in
New Zealand for investment in this sector. Performance in 1998-99 reflected
an increase of 8% in total revenue, strong focus on cost management and
margin performance, also assisted by a share buyback programme initiated in
1998. It also reflected a period of reduced revenue from sections of the
business exposed to the tourism sector, notably the hotel and Sky Tower,
which experienced an 11% reduction in revenue for the year. For 1999-2000,
the company's initial forecasts were based on expected revenue growth of 5%,
figures which have now been upgraded in the light of experience in the first
half (revenue growth 13%, including an encouraging 26% lift in hotel and
conference centre revenue). Medium term the company looks set to benefit
significantly from new casino developments - it is a 60% participant and
equity operator of the proposed Queenstown Casino, expects to have an
interest of up to 55% and be the operator of a new casino project in
Hamilton and has been selected as the preferred bidder to acquire the
Adelaide Casino from the Superannuation Funds Management Corporation of
South Australia. To fund this latter acquisition, the company is offering NZ
resident investors $100m (and potentially $50m more) 5-year unsecured
subordinated 9.25% Capital Notes. The company's performance to date has been
strong and the outlook is encouraging, although resources will be stretched
to accommodate all projects in hand.
Latest Information: Interim profit up 23.5% to $27.7m. Interim dividend
24.0c.





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