Skycity Entertainment, the operator of casinos and cinemas, remains in favour with brokers despite an unexpected stand by institutional shareholders at the recent annual meeting.
SkyCity sought to update its constitution with NZX listing rules but the company said certain institutions voted against resolution four at its annual meeting and it was not passed.
The resolution updated the company's constitution solely to reflect changes to NZX listing rules. The rules were more permissive on a range of issues but the company said it would not suffer as a result of having to stick to its existing constitution with old NZX rules.
Critics said the stand was belated as the NZX rules came into force in April and there was a process of consultation to create them.
Under the rules a company can issue up to 20% of the total number of shares on issue without seeking shareholder approval, up from 15% previously.
There were also changes to the director, employee and related party participation in placements of shares and to the remuneration of directors by the issue of securities.
A fund manager who declined to be named said the vote was a signal of concern about the need for shareholders to be consulted via votes at meetings.
Forsyth Barr and Craigs Investment Partners both have a buy on SkyCity. Forsyth Barr has a valuation of $3.68 a share on the company and Craigs has a target price of $3.90 a share.
Forsyth Barr broker Peter Young said the company remained well placed for a medium-term improvement as it leveraged off its fully refurbished and repositioned Auckland casino.
"The successful Darwin casino has been substantially expanded and Adelaide continues to improve significantly.
"While a soft New Zealand economy continues to make an impact on the near-term prospects, we expect evidence of improvements being delivered at Auckland in 2010," he said.
Craigs broker Chris Timms said SkyCity management remained cautious on the near-term outlook for New Zealand and Australia due to the uncertainty surrounding the future path of the economic cycle. However, it was confident the company had found its feet and was on track to deliver double-digit profit after tax growth for 2010.
"We maintain our positive investment view. We believe SkyCity represents good value despite the recent share price rally."
