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>The three year earnings downgrade cycle that SkyCity (SKC) has been subject to is likely to continue; we consequently downgrade our rating to UNDERPERFORM from NEUTRAL.</li><li>A combination of cyclical and structural factors are impacting the profit outlook. While cyclical drivers will likely reverse at some stage over the next couple of years, the structural factors concerning gaming regulation will act as a meaningful counterweight.</li><li>We recognise that SKC has done a good job in resolving a number of its outstanding regulatory issues — AUSTRAC and the two DIA cases. </li></ul>

The three year earnings downgrade cycle that SkyCity (SKC) has been subject to is likely to continue; we consequently downgrade our rating to UNDERPERFORM from NEUTRAL.A combination of cyclical and structural factors are impacting the profit outlook. While cyclical drivers will likely reverse at some stage over the next couple of years, the structural factors concerning gaming regulation will act as a meaningful counterweight.We recognise that SKC has done a good job in resolving a number of its outstanding regulatory issues — AUSTRAC and the two DIA cases. 

SkyCity - FY24 — The House Isn't Winning; Downgrade to UNDERPERFORM

<ul><li>SkyCity (SKC) will report a material decline in underlying NPAT at its FY24 result, reflecting demand pressures from a challenging cyclical environment, and operational changes for compliance purposes. </li><li>SKC's updated FY24 EBITDA guidance range of NZ$280m–NZ$285m, provided in early June 2024, leaves little scope for operational surprise at the result.</li><li>More interesting will be recent trading and outlook commentary, and any potential refinements to the early FY25 guidance. </li></ul>

SkyCity (SKC) will report a material decline in underlying NPAT at its FY24 result, reflecting demand pressures from a challenging cyclical environment, and operational changes for compliance purposes. SKC's updated FY24 EBITDA guidance range of NZ$280m–NZ$285m, provided in early June 2024, leaves little scope for operational surprise at the result.More interesting will be recent trading and outlook commentary, and any potential refinements to the early FY25 guidance. 

SkyCity - FY24 Preview — The Chips Are Down

<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) 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

New Zealand

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 NZ)

SkyCity - FY24 — The House Isn't Winning; Downgrade to UNDERPERFORM

The three year earnings downgrade cycle that SkyCity (SKC) has been subject to is likely to continue; we consequently downgrade our rating to...

Forsyth Barr

SkyCity - FY24 Preview — The Chips Are Down

SKC's updated FY24 EBITDA guidance range of NZ$280m–NZ$285m, provided in early June 2024, leaves little scope for operational surprise at the result.

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 - 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

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