Forum Archive Index - October 2000

["Philip Robinson" <robph639@student.otago.ac.nz>]

After discussions here and looking at my dad's annual report I decided to
have a closer look at this company, especially after he said that he loved
them because they were a "cash cow".

EPS from 96 to 00 is 15.5, 36.1, 32.2, 47.1 and 62.6, a great growth rate in
my view.
DPS tracks that at 32.5, 29, 43 and 56.
At there current price of 6.80 they have a yield of 10.8%.

A most impressive feet is that they have taken EBITDA/Sales from 38.6% in 97
to 47.7% in 2000.

They only have $6m of goodwill, at 2000, yahahah: I hate goodwill. But this
will increase with the Adelaide purchase.

There return on equity has gone from 8.34% in 96 up to 38.3% in 2000, a
healthy gain in anyone's book.

The only blip on the screen is the $20.4m they had to pay Harrahs in 98 for
telling them to hit the road, but other than that they are on fire it would
seem.

NPAT growth of 49% from 96-00, real numbers are 15m (96) to 60m (00).

Developments
They have the Adelaide casino which had a EBITDA/Revenue of 26% while Sky
City has managed one of 49%.
There is much new scope for improvement in profitability in Ozzy.
The Queenstown Casino will be finished this year and coming on stream.
They have to sort out the Hamilton one but when they do it will be more
growth.
They have Cabnet at 6.8% with option to go to 33%, but I am unsure whether
to put this into Upside or Downside because it would seem to be very high
risk, they are also "reviewing a number of other potential initiatives for
Sky City participation in the electronic sector."

Downside
On the downside they have the regulatory risk, but it would seem Labour is
more concerned about Power and Phone before Gambling.

Other interesting but useless facts they are visited by 12,500 people each
day and have revenues of $650K/day, 250K from tables and 400K from machines
(1,330 of these little beauties).

As far as Buffet goes:
- My impression is that Buffet wouldn't go near the company because it is
too young and has not settles down. But apart from that.
- They have an identifiable consumer monopoly in Auckland, soon in
Queenstown and Hamilton.
- The earnings are strong and show an upward trend.
- Financing, $70m of Capital and convertible notes, and $478m of Secured
Bank Loan Borrowings, total $550m of long term debt, cf to equity of $157m -
You make the call.
-  It earns a high rate of return on SHF, but not consistently.
- They have a high dividend policy so they don't keep their money.
- It also fails on the rest of the questions because it doesn't retain its
own earnings, but it can adjust prices to inflation - I suppose.

So IMHO a good buy on yield and growth, what do others think of the company.
I have to admit to not having ever heard of EBITDA/Revenue ratio, but that
is what Casinos use to measure performance so the report says.

I have a spreadsheet which I have chucked my figures and ratios into if
anyone wants it.


----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join now.
----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/forum.shtml.