Listed casino owner SkyCity Entertainment appears to
be in a prime position to benefit from the Rugby World Cup
being held in New Zealand this year.
SkyCity Entertainment expects to benefit from the Rugby
World Cup. Photo by NZ Herald.
SkyCity Entertainment may have lost a little of the favour
brokers previously had lavished upon it, but the listed
casino owner is working hard to gain every benefit it can
from the Rugby World Cup being held in New Zealand later this
The company recently announced SkyCity Auckland would soon
start construction of three new signature restaurants and
bars on Federal St, between the main casino and the SkyCity
The street is mainly occupied by taxis and is used as a
thoroughfare by commuters at night.
The three restaurants and bars would add to SkyCity
Auckland's existing 19 venues and be next to the Bellota
tapas bar, the company said.
Top Wellington chef Al Brown (Logan Brown), award-winning
Australian chef Sean Connolly and Luke Dallow (owner of
Auckland's Sale St Bar and Chapel) would join established
chef Peter Gordon, who already had "dine by Peter Gordon" and
Bellota, SkyCity chief executive Nigel Morrison said.
"These guys all have such strong reputations for delivering
extremely successful restaurants and bars across Australasia,
and we are thrilled to have their expertise as part of our
leading hospitality team.
"I'm sure these new venues will complement the very
successful Bellota, and this is a great way to start our
revamping of Federal St," he said.
Craigs Investment Partners has a hold on Sky City
Entertainment shares and Forsyth Barr recently downgraded its
recommendation from buy to accumulate.
Craigs broker Chris Timms said, while the company would
benefit from the Rugby World Cup, underlying gambling
expenditure in New Zealand and Australia was expected to
remain challenging throughout 2011. Operating leverage was
not yet evident.
"The potential for significant capital expenditure spending
remains a risk, particularly if the requisite concessions are
The company had a strong start to the second half of the
financial year, with normalised revenue growth of 9% in the
first six weeks.
However, it was boosted by VIP turnover and the timing of
Chinese New Year. VIP turnover in the first six weeks was at
least $360 million, he said.
The underlying growth rates were still strong, particularly
in Auckland, Hamilton and Darwin. Adelaide had remained flat
given weak consumer expenditure.
Most of the growth was in machines, although table revenues
appeared to be improving gradually. Non-gaming revenue growth
remained strong at some properties, Mr Timms said.
SkyCity was undertaking several projects in Auckland
including VIP facilities, Platinum and Diamond Rooms, and the
Federal St precinct.
In Australia, it was making changes in Darwin.
The company was still awaiting developments in relation to
the possible construction of the National Convention Centre
in Auckland ($300 million) and the redevelopment of the
Adelaide Casino ($339 million).
In Auckland, construction of the VIP villas, salons and the
new Pacific Room started in January.
The company was aiming to have construction completed before
the start of the world cup.
The project would include three new VIP salons and four
premium VIP villas, which would be ready by the end of June.
The new Pacific Room, rooftop bar and deck and an additional
VIP salon for groups would be completed by the end of August.
Total cost was expected to be around $30 million, Mr Timms
On the main gaming floor, a new Diamond Tier facility would
The Diamond Lounge would have up to 250 gaming machines and
target local players. Construction will start this month.
SkyCity continued to have discussions with the Government
about a national convention centre in Auckland and believed
it had presented the strongest commercial development
proposal, he said.