Fundamental Analyses, Contrarian Cashflows

Contrarian Cashflows

Fundamental Analyses

The purpose of Contrarian Cashflows is to document my investment research and share it with everyone who is interested in value investing. My long term aspiration for Contrarian Cashflows is to become a platform for professional investors and serious amateurs where they can get inspiration and discuss investing-related topics.
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Equity Bottom-Up

<ul><li>Spark New Zealand (NZX/ASX: SPK) is a telecommunications group privatised in 1990 as the former state telephone monopoly, providing mobile, broadband and IT/cloud services (“Digital Services”) across New Zealand.</li><li>Spark already ran the obvious arbitrage: between 2022 and early 2026 it sold 100% of its mobile towers and 75% of its data-centre business to infrastructure buyers at 30-34x and up to 30.8x EBITDA respectively</li><li>Banking roughly NZ$1.98bn — rich prices for passive assets a generalist telecom market was never going to pay for the whole group.</li></ul>

Spark New Zealand (NZX/ASX: SPK) is a telecommunications group privatised in 1990 as the former state telephone monopoly, providing mobile, broadband and IT/cloud services (“Digital Services”) across New Zealand.Spark already ran the obvious arbitrage: between 2022 and early 2026 it sold 100% of its mobile towers and 75% of its data-centre business to infrastructure buyers at 30-34x and up to 30.8x EBITDA respectivelyBanking roughly NZ$1.98bn — rich prices for passive assets a generalist telecom market was never going to pay for the whole group.

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.

Thematic (Sector/Industry)

<ul><li>The RBNZ has done its best to make sure none of us approach 2023 with any illusions of good times ahead</li><li>Mortgage rates have hit a 10 year high, inflation is expected to remain stubbornly elevated, and the icing on RBNZ's economic cake is its forecast of four quarters of declining GDP</li><li>When choosing our five stocks to watch we have leaned on companies with the majority of their exposure overseas (Infratil [IFT], Vulcan Steel [VSL], KMD Brands [KMD]) or with attractive valuations (Oceania Healthcare [OCA], SkyCity [SKC]) where we think that the bad news is firmly in the price</li></ul>

The RBNZ has done its best to make sure none of us approach 2023 with any illusions of good times aheadMortgage rates have hit a 10 year high, inflation is expected to remain stubbornly elevated, and the icing on RBNZ's economic cake is its forecast of four quarters of declining GDPWhen choosing our five stocks to watch we have leaned on companies with the majority of their exposure overseas (Infratil [IFT], Vulcan Steel [VSL], KMD Brands [KMD]) or with attractive valuations (Oceania Healthcare [OCA], SkyCity [SKC]) where we think that the bad news is firmly in the price

Equity Strategy - The Year Ahead: Five Themes and Five Stocks

<ul><li>The Department of Internal Affairs (DIA) is making an application to the Gambling Commission to temporarily suspend SkyCity’s (SKC) NZ casino license.</li><li>The application will seek a suspension for a period “in the range of 10 days” compared to a maximum suspension of six months under the Gambling Act 2003.</li><li>This would mean the gambling operations at all of its NZ properties (Auckland, Hamilton and Queenstown) would be closed during the suspended days if the industry's ruling body, the Gambling Commission, decided in favour of the DIA’s application.</li></ul>

The Department of Internal Affairs (DIA) is making an application to the Gambling Commission to temporarily suspend SkyCity’s (SKC) NZ casino license.The application will seek a suspension for a period “in the range of 10 days” compared to a maximum suspension of six months under the Gambling Act 2003.This would mean the gambling operations at all of its NZ properties (Auckland, Hamilton and Queenstown) would be closed during the suspended days if the industry's ruling body, the Gambling Commission, decided in favour of the DIA’s application.

SkyCity - Regulatory Risk Eating More Chips

<ul><li>We expect SkyCity (SKC) would be a beneficiary of the National Party's (National) policy to regulate online casino operators from the beginning of FY25.</li><li>Online regulation is positive for SKC, with the potential for market share gains from a (likely) reduction in competitors, coupled with a larger overall market size from the legitimisation of the industry.</li><li>While the current government is signalling its intention to regulate the online gaming market, National's announcement and its current favourable polling gives us increased confidence that regulation will happen during the next term of government.</li></ul>

We expect SkyCity (SKC) would be a beneficiary of the National Party's (National) policy to regulate online casino operators from the beginning of FY25.Online regulation is positive for SKC, with the potential for market share gains from a (likely) reduction in competitors, coupled with a larger overall market size from the legitimisation of the industry.While the current government is signalling its intention to regulate the online gaming market, National's announcement and its current favourable polling gives us increased confidence that regulation will happen during the next term of government.

SkyCity - Gambling on a Change of Government

<ul><li>SkyCity (SKC) reported a solid FY23 result, though its guidance for FY24 disappointed and appears cautious.</li><li>One offs late in the year lifted FY23 EBITDA to the top end of SKC’s guidance range, driven by a strong performance from the Auckland property.</li><li>Other properties modestly disappointed, with Adelaide the biggest concern, showing a sharp table gaming revenue reduction following the introduction of cash limits. </li></ul>

SkyCity (SKC) reported a solid FY23 result, though its guidance for FY24 disappointed and appears cautious.One offs late in the year lifted FY23 EBITDA to the top end of SKC’s guidance range, driven by a strong performance from the Auckland property.Other properties modestly disappointed, with Adelaide the biggest concern, showing a sharp table gaming revenue reduction following the introduction of cash limits. 

SkyCity  - FY23 Result — A Waiting Game

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)

Monday Delight: 12/10/2026

Spark New Zealand (NZX/ASX: SPK) is a telecommunications group privatised in 1990 as the former state telephone monopoly, providing mobile,...

Contrarian Cashflows

Equity Strategy - The Year Ahead: Five Themes and Five Stocks

When choosing our five stocks to watch we have leaned on companies with the majority of their exposure overseas (Infratil [IFT], Vulcan...

Forsyth Barr

SkyCity - Regulatory Risk Eating More Chips

The Department of Internal Affairs (DIA) is making an application to the Gambling Commission to temporarily suspend SkyCity’s (SKC) NZ casino license.

Forsyth Barr

SkyCity - Gambling on a Change of Government

We expect SkyCity (SKC) would be a beneficiary of the National Party's (National) policy to regulate online casino operators from the beginning of...

Forsyth Barr

SkyCity - FY23 Result — A Waiting Game

One offs late in the year lifted FY23 EBITDA to the top end of SKC’s guidance range, driven by a strong performance from the Auckland property.

Forsyth Barr

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