New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

SKYCITY FY21 Preview&nbsp;— Deja Vu

OUTPERFORM
With FY21 headline numbers largely pre-released, we expect minimal surprises in SKYCITY's (SKC) result on 25 August. However, the return of community transmission in NZ will likely overshadow what is set to be a strong result and limit the ability to provide guidance or any specifics on outlook. SKC's balance sheet is well placed to weather temporary closure, and we expect to see a rebound in trading whenever its properties re-open — as has been the case to date.&nbsp;


Key points of interest



COVID-19 still front and centre:&nbsp;FY21 (and the prior year)&nbsp;includes temporary closures of properties, various periods of restriction and negligible VIP customers &amp; tourists. The return of property closures in NZ this week is yet another reminder of the fluid trading backdrop.&nbsp;This will require some adjustment to FY22E forecasts, depending on duration.

For context, lost trading days in Auckland during 1H21 (19 days closed) impacted EBITDA by ~NZ$20m.


Divisional detail:&nbsp;Narrow FY21 guidance&nbsp;was provided on 11 June, hence, divisional detail is the key focus of the result. We expect the standout area to be domestic gaming, particularly machines across its properties —&nbsp;a favourable mix for margins.&nbsp;
​​​​Recent trading/outlook: We do not expect FY22 guidance, however, look for any insights to help better assess the continued recovery path. Of particular interest is Adelaide which has continued to positively surprise since opening of the expansion.
Balance sheet &amp; dividend:&nbsp;We expect the balance sheet to end FY21 in good shape. SKC has signalled plans to reinstate its dividend&nbsp;—&nbsp;we assume NZ4cps, however, there is risk of&nbsp;an even more conservative stance given recent COVID-19 developments.
Risk and AML protocols:&nbsp;SKC is under investigation from Australian regulator, AUSTRAC, in what appears&nbsp;focussed&nbsp;on historical VIP activities at Adelaide in FY16 and FY19 (3% and 1% of group EBITDA) in a sector-wide blitz. It is likely to be too early for greater clarity, however, any updated commentary or insight into further investment in this area is of interest.



Investor briefing&nbsp;— 12pm NZT (10am AEST) on Wednesday 25 August


Pre-register here;&nbsp;https://s1.c-conf.com/diamondpass/10015293-ah54du.html&nbsp;


Skycity Entertainment

SKYCITY: FY21 Preview — Deja Vu