New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>SkyCity's (SKC) 1H24 result provided a reminder that the regulatory overhang is likely to remain for some time, with carded play to be made mandatory in its NZ properties from the start of FY26 and a material fine from the South Australian Government appearing more likely.</li><li>The result itself showed resilient performance in the face of a weakening consumer backdrop, with the company maintaining its full-year earnings guidance.</li><li>The interim dividend was the only disappointment with SKC opting to retain cash as it undertakes a capital structure review. </li></ul>

SkyCity's (SKC) 1H24 result provided a reminder that the regulatory overhang is likely to remain for some time, with carded play to be made mandatory in its NZ properties from the start of FY26 and a material fine from the South Australian Government appearing more likely.The result itself showed resilient performance in the face of a weakening consumer backdrop, with the company maintaining its full-year earnings guidance.The interim dividend was the only disappointment with SKC opting to retain cash as it undertakes a capital structure review. 

SkyCity - 1H24 — Carded After Repeated Infringements

<ul><li>SkyCity (SKC) will report a subdued period of trading at its 1H24 result on 22 February 2024.</li><li>The company downgraded FY24 earnings guidance in early December 2023, citing cost-of-living pressures on consumers and a further deterioration at its Adelaide casino.</li><li>With economic headwinds likely to continue during 2H24, a reaffirmation of its FY24 earnings guidance would be a positive outcome for SKC.</li></ul>

SkyCity (SKC) will report a subdued period of trading at its 1H24 result on 22 February 2024.The company downgraded FY24 earnings guidance in early December 2023, citing cost-of-living pressures on consumers and a further deterioration at its Adelaide casino.With economic headwinds likely to continue during 2H24, a reaffirmation of its FY24 earnings guidance would be a positive outcome for SKC.

SkyCity  - Uncertain Horizon — 1H24 Preview

<ul><li>The Department of Internal Affairs (DIA), NZ’s gambling regulator, intends to commence civil penalty proceedings against SkyCity (SKC) due to its alleged non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). </li><li>This is similar to the action taken by AUSTRAC (the Australian financial crimes regulator) against SkyCity Adelaide and other Australian casinos over the past couple of years.</li><li>The maximum penalty that SKC faces is just NZ$8m (amounting to 1c per share). This is tiny in the context of SKC’s current regulatory discount implied in its share price. </li></ul>

The Department of Internal Affairs (DIA), NZ’s gambling regulator, intends to commence civil penalty proceedings against SkyCity (SKC) due to its alleged non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). This is similar to the action taken by AUSTRAC (the Australian financial crimes regulator) against SkyCity Adelaide and other Australian casinos over the past couple of years.The maximum penalty that SKC faces is just NZ$8m (amounting to 1c per share). This is tiny in the context of SKC’s current regulatory discount implied in its share price. 

<ul><li>SkyCity (SKC) and the AUSTRAC (Australian Transaction Reports and Analysis Centre) have agreed SKC will pay a fine of ~A$67m due to its alleged contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) at its Adelaide casino.</li><li>After almost three years of enhanced regulatory scrutiny, the announcement is a positive outcome for SKC with the fine modestly lower than our expectations, though other regulatory risks with potentially larger valuation implications remain. Retain NEUTRAL.</li><li>SKC's total provision for the AUSTRAC fine and associated cost is A$73m. Assuming ~A$6m of legal costs (SKC is required to pay for AUSTRAC's as well as its own), the fine amounts to ~A$67m</li></ul>

SkyCity (SKC) and the AUSTRAC (Australian Transaction Reports and Analysis Centre) have agreed SKC will pay a fine of ~A$67m due to its alleged contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) at its Adelaide casino.After almost three years of enhanced regulatory scrutiny, the announcement is a positive outcome for SKC with the fine modestly lower than our expectations, though other regulatory risks with potentially larger valuation implications remain. Retain NEUTRAL.SKC's total provision for the AUSTRAC fine and associated cost is A$73m. Assuming ~A$6m of legal costs (SKC is required to pay for AUSTRAC's as well as its own), the fine amounts to ~A$67m

SkyCity - Light Peeks Through Regulatory Clouds in Sky

<ul><li>SkyCity's (SKC) historically defensive and resilient gaming earnings are beginning to show cracks from the weakening consumer environment in New Zealand and Australia.</li><li>The company now expects EBITDA to decline year-on-year in FY24, a change from its prior guidance of a modest increase.</li><li>The impact on NPAT from a reduction in gaming revenue is partially mitigated by lower than expected interest costs. </li></ul>

SkyCity's (SKC) historically defensive and resilient gaming earnings are beginning to show cracks from the weakening consumer environment in New Zealand and Australia.The company now expects EBITDA to decline year-on-year in FY24, a change from its prior guidance of a modest increase.The impact on NPAT from a reduction in gaming revenue is partially mitigated by lower than expected interest costs. 

SkyCity - Taking Some Chips Off the Table

Australia

SKYCITY Entertainment Group Ltd. provides gaming and casino services. The Company offers various casinos accompanied with various bars, hotels, restaurants, and convention centers. SKYCITY Entertainment Group offers services in Australia and New Zealand.

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Skycity Entertainment (SKC AU)

SkyCity - 1H24 — Carded After Repeated Infringements

The result itself showed resilient performance in the face of a weakening consumer backdrop, with the company maintaining its full-year earnings...

Forsyth Barr

SkyCity - Uncertain Horizon — 1H24 Preview

With economic headwinds likely to continue during 2H24, a reaffirmation of its FY24 earnings guidance would be a positive outcome for SKC.

Forsyth Barr

SkyCity - DIA No Longer MIA

The Department of Internal Affairs (DIA), NZ’s gambling regulator, intends to commence civil penalty proceedings against SkyCity (SKC) due to its...

Forsyth Barr

SkyCity - Light Peeks Through Regulatory Clouds in Sky

SKC's total provision for the AUSTRAC fine and associated cost is A$73m. Assuming ~A$6m of legal costs (SKC is required to pay for AUSTRAC's as...

Forsyth Barr

SkyCity - Taking Some Chips Off the Table

SkyCity's (SKC) historically defensive and resilient gaming earnings are beginning to show cracks from the weakening consumer environment in...

Forsyth Barr

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