SKYCITY ENTERTAINMENT GROUP LIMITED (SKC)
Share Price Analysis and Chart

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21/02/2025

3

Neutral

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SkyCity Entertainment reported lower-than-expected 1H25 earnings (EBITDA), at -14% below UBS forecasts, with softer contributions from Auckland, Adelaide, and online, the broker explains.

Adelaide earnings (EBITDA) fell -16% due to costs related to improving regulatory systems, and mandatory card play lifted one-off costs.

Management reconfirmed mandatory card play guidance of a 15%-20% impact on uncarded revenue, which UBS views as optimistic.

UBS lowers EPS forecasts by -16% in FY25 and -1% in FY26 due to lower anticipated NZ gaming revenue and large one-off costs in Adelaide. Dividend payments are not expected to restart until FY27, a delay from FY26.

Neutral rating retained. Target falls to NZ$1.45 from NZ$1.65.

FORECAST
UBS forecasts a full year FY25 dividend of 0.00 cents and EPS of 10.01 cents.
UBS forecasts a full year FY26 dividend of 0.00 cents and EPS of 9.10 cents.

14/03/2025

2

Overweight

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Jarden has reviewed the investment case for SkyCity Entertainment and believes there's a possibility of management no longer seeing a business case for Adelaide given the cash spent to date and its minimal synergy with NZ operations.

The broker notes lower regulated upfront licence cost for New Zealand is a positive.

In terms of asset monetisation, the broker sees an option to sell and lease back Horizon Hotel or Auckland car park concession. Whatever option the company chooses, the broker expects covenant risks will be manageable.

Target price lowered to NZ$1.75 from $1.85. Overweight maintained.

FORECAST
Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of 8.83 cents.
Jarden forecasts a full year FY26 dividend of 0.00 cents and EPS of 7.92 cents.