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 (SKC) provided a disappointing trading update, disappointing first time guidance for next year and, consequently, a suspension of its dividend for at least the next 18 months.</li><li>It is increasingly difficult to interpret between the structural and cyclical headwinds that SKC is exposed to.</li><li>Regulatory response changes to its operating approach are intertwined with reduced spend per visitor across its properties and products.</li></ul>

SkyCity (SKC) provided a disappointing trading update, disappointing first time guidance for next year and, consequently, a suspension of its dividend for at least the next 18 months.It is increasingly difficult to interpret between the structural and cyclical headwinds that SKC is exposed to.Regulatory response changes to its operating approach are intertwined with reduced spend per visitor across its properties and products.

<ul>
<li>SkyCity (SKC) has agreed with the New Zealand Department of Internal Affairs (DIA) that it should pay a pecuniary penalty of just NZ$4m in relation to its past anti-money laundering and countering financing of terrorism (AML/CFT) failures.</li>
<li>The breaches span from 2018–2023 and relate largely, but not exclusively, to historical matters. </li>
<li>Further to the agreement with Australian financial crimes unit, AUSTRAC, earlier this year (SKC reiterated late last week that it has agreed to an A$67m penalty plus associated costs), this is another positive development as SKC presses forward in resolving its outstanding regulatory issues. </li>
</ul>


SkyCity (SKC) has agreed with the New Zealand Department of Internal Affairs (DIA) that it should pay a pecuniary penalty of just NZ$4m in relation to its past anti-money laundering and countering financing of terrorism (AML/CFT) failures.
The breaches span from 2018–2023 and relate largely, but not exclusively, to historical matters. 
Further to the agreement with Australian financial crimes unit, AUSTRAC, earlier this year (SKC reiterated late last week that it has agreed to an A$67m penalty plus associated costs), this is another positive development as SKC presses forward in resolving its outstanding regulatory issues. 


SkyCity - Clearing Another Regulatory Hurdle

<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>The New Zealand government plans to introduce a new online gambling duty as part of its approach to regulate online casinos.</li><li>The proposed rate of 12% of gross gaming revenue (GGR) will see online casinos taxed at a higher rate than their land based counterparts.</li><li>The aggregate tax rate of ~25% (made up of GST of ~13% [= 15% of 115%] and the 12% duty) compares to ~18% for land based casinos. </li></ul>

The New Zealand government plans to introduce a new online gambling duty as part of its approach to regulate online casinos.The proposed rate of 12% of gross gaming revenue (GGR) will see online casinos taxed at a higher rate than their land based counterparts.The aggregate tax rate of ~25% (made up of GST of ~13% [= 15% of 115%] and the 12% duty) compares to ~18% for land based casinos. 

<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

Australia

Collins Foods Ltd. operates fast-food restaurants.  The Company operates chains of steak and chicken restaurants in Australia.

Jumbo Interactive Limited develops e-commerce and online retailing technologies. The Company also operates a web site that offers Australian lottery tickets for purchase online as well as distributes a wide range of software products.

The Star Entertainment Group Limited owns and operates casinos and hotels. The Company offers services and amenities such as gaming facilities, nightclubs, bars, restaurants, exhibition centers. The Star Entertainment Group conducts business in Australia.

Tabcorp Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides gambling, gaming, wagering, and entertainment services. Tabcorp Holdings serves customers in Australia and in the United Kingdom.

Helloworld Travel Limited operates as a travel company. The Company provides corporate travel management services to corporate and government customers including booking flights, cruises, and accommodation. Helloworld Travel serves customers worldwide.

Ainsworth Game Technology Limited designs, develops and manufactures gaming machines and games combination software and other related equipment for the gaming industry in Australia. Products include the Ambassador video gaming machines, video games and Embassy Jackpot systems.

Retail Food Group Ltd is a retail food brand manager and franchiser. The Company currently manages donut stores and cafes.

Elanor Investor Group is an investment and funds management business. The Company diversifies its investments within funds management, hotels and leisure, and special situation investments.

Reef Casino Trust operates The Reef Hotel Casino Complex in Cairns, North Queensland.  The complex includes a 128-room hotel, nightclub, a conservatory, a gaming area, lounge and bar, restaurants and conference facilities.

Corporate Travel Management Ltd. offers corporate travel management services. The Company operates on a fee for service model and provides business travel advice and services; bookings; ticketing, and ancillary services; and offers travel data diagnostics and recommendations.

PLENUS Co., Ltd. sells take-out boxed meals through a franchise system as well as operates Japanese restaurants.  The Company also sells foodstuff, packaging material, and business uniforms.

LiJiang YuLong Tourism Co., Ltd. provides travel services in Lijiang, Yunnan. The Company provides cableway transportation, bus transportation, food and beverages services, and other related tourism services.

Hna-Caissa Travel Group is in the business of public transportation catering service, including airline catering and railway catering services. It also provides hotel catering services.

Ruth's Hospitality Group Inc. operates a chain of upscale steak houses. The Company's restaurants are located throughout the United States and in several international locations.

ARCLAND SERVICE CO., LTD. operates a restaurant chain based in Tokyo. The Company mainly serves pork cutlets and barbecue.

Cafe De Coral Holdings Limited, through its subsidiaries, operates quick service restaurants, fast casual dining, institutional catering and specialty restaurant chains, and food manufacturing business.

HIDAY HIDAKA Corp. operates a chain of Oriental noodle and Chinese restaurants mainly in Saitama Prefecture.  The Company produces noodles, soup, and dumplings at its own factory.

DOUTOR NICHIRES Holdings Co., Ltd is establish through merger of DOUTOR COFFEE and NIPPON RESTAURANT SYSTEM.  The Company operates a coffee shop and restaurant chain. DOUTOR NICHIRES manages all business operations, from producing and procuring coffee beans to roasting, wholesaling, and retailing.

Biglari Holdings Inc. operates as a holding company. The Company, through its subsidiaries, invests in food and insurance companies. Biglari Holdings serves clients in the State of Texas.

Hana Tour Service Inc. wholesales a variety of travel related services.  The Company provides outbound, inbound and domestic travel packages and cooperates with credit card companies and Internet shopping malls to market its services. Hana Tour Service also works as general sales agency (GSA) of overseas cruise and rail passes.

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 - Dealer Cuts the Dividend

SkyCity (SKC) provided a disappointing trading update, disappointing first time guidance for next year and, consequently, a suspension of its...

Forsyth Barr

SkyCity - Clearing Another Regulatory Hurdle

Moreover, with near-term cyclical headwinds, we think the current discount is fair with SKC trading at ~11x one year forward PE. NEUTRAL.

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 - Taking More Tax

The New Zealand government plans to introduce a new online gambling duty as part of its approach to regulate online casinos.

Forsyth Barr

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

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