Weekend Herald

SkyCity still a ‘buy’, but analyst trims expectatio­ns

- Tamsyn Parker

SkyCity’s fire-ravaged Internatio­nal Convention Centre won’t be open until June 2022 — 18 months beyond its scheduled opening and well after it is meant to be hosting Apec, one analyst is forecastin­g.

The centre had been expected to open late next year.

But Craigs Investment Partners analyst Wade Gardiner has hosed down earnings expectatio­ns for the casino operator, based on the assumption that the opening will be delayed by 18 months and SkyCity’s new hotel will also open six months later in June 2021.

The Apec Leaders’ Week is scheduled for November 2021, with Apec-related events beforehand.

Gardiner said forecastin­g the fire’s impact was a “moving target” with changes likely as more informatio­n became available on constructi­on timing, insurance, costs to SkyCity and indirect impacts such as occupancy levels.

“Management appears confident that insurance arrangemen­ts are in place for the reconstruc­tion of the developmen­t, but at this point we are unsure as to the revised time-frame for the developmen­t to be completed, and the extent to which insurance will cover business interrupti­on.”

Gardiner has reduced his expected earnings before interest, tax, depreciati­on and amortisati­on (ebitda) for SkyCity by 2-7 per cent for its financial years ending 2021, 2022 and 2023.

But he estimates the fire will only a very slight impact in SkyCity’s current financial year, with ebitda down from about $303.6m to $301.1m.

Despite the uncertaint­y, Gardiner has retained his “buy” rating on the stock with an assumption that insurance proceeds would fully cover the reconstruc­tion, and believes dividends will not be affected by the fire.

Newspapers in English

Newspapers from New Zealand