SkyCity's Rejected Takeover Bids Highlight Its Latent Asset Value
A prudent domestic gaming focus and $2.6 billion property base have fund managers arguing two rejected takeover approaches still undervalue the business.
30 Sep 2026 · 3 min read
In short
SkyCity Entertainment Group's prudent focus on domestic customers rather than volatile international VIP gaming helped it contrast sharply with peers like Crown, delivering EBITDA growth of 56% in one period.
Deteriorating consumer discretionary spending across New Zealand and Australia, alongside rising fuel prices, forced SkyCity to cut underlying EBITDA guidance to $180-190 million.
Collins St Asset Management notes SkyCity holds $2.6 billion in property, plant and equipment against a market cap of just $490 million, trading on roughly 10 times FY28 forecast earnings after rejecting two takeover approaches.
SkyCity Entertainment Group, which owns monopoly casino and entertainment complexes across Adelaide and New Zealand, delivered strong initial earnings growth from a prudent focus on domestic customers rather than lucrative but volatile international VIP gaming, before deteriorating New Zealand and Australian consumer spending forced an EBITDA downgrade, and the company subsequently rejected two takeover approaches that Collins St Asset Management believes still undervalue the business.
A prudent domestic focus pays off relative to peers
Collins St Asset Management said SkyCity owns and operates monopoly casino and entertainment complexes in Adelaide and Auckland, though it was the largest detractor within the fund's performance profile in the September quarter, even as the financial year market update reported group EBITDA of NZ$216.1 million, in line with guidance and up 56 percent on the prior period. The fund said SkyCity's focus on domestic and regional customers rather than the potentially lucrative yet challenging international VIP market has proven prudent, with performance contrasting sharply against the difficulties faced by peers like Crown.
Its focus on domestic and regional customers rather than the potentially lucrative (yet challenging) international VIP market has proven prudent — performance at SkyCity contrasts sharply with the difficulties faced by peers like Crown.
— Collins St Asset Management, Quarterly Report, December 2025
A $200 million asset sale programme and a deteriorating economy
Cromwell Funds Management said SkyCity Auckland, the group's flagship complex, is the anchor of group earnings, and when the company reported its first-half result in February, management restated its commitment to releasing in the order of $200 million through an asset sale programme. On 1 May, SkyCity released a trading update in which management pointed to deteriorating consumer discretionary spending across both New Zealand and Australia, singling out a step-up in fuel prices since March, with underlying EBITDA guidance cut to $180 million to $190 million.
On 1 May SKC released a trading update: management pointed to deteriorating consumer discretionary spending across both New Zealand and Australia and singled out a step-up in fuel prices since March, and underlying EBITDA guidance was cut to $180-190 million.
— Cromwell Funds Management, Quarterly Report, June 2026
Significant latent value amid economic weakness
Collins St Asset Management said SkyCity has been impacted by weakness in the New Zealand economy, though early signs of stabilisation are emerging, with the company holding approximately $2.6 billion in property, plant and equipment against total liabilities of $1.3 billion, and a market capitalisation of just $490 million. On an earnings basis, SkyCity trades on roughly 10 times FY28 forecast earnings, suggesting significant latent value.
The company holds approximately $2.6 billion in property, plant, and equipment against total liabilities of $1.3 billion, with a market capitalisation of just $490 million. On an earnings basis, SKC trades on roughly 10x FY28 forecast earnings, suggesting significant latent value.
— Collins St Asset Management, Quarterly Report, June 2026
Rejected takeover approaches confirm the undervaluation
Collins St Asset Management said SkyCity rose around 7.4 percent after rejecting two takeover approaches, at NZ$0.70 and NZ$0.75, with management meeting the fund post-results, where Collins St pushed for a formal whole-of-company strategic review to test whether the interest is genuine, while stating it would not sell at those price levels itself.
What fund managers say they are watching next is delivery of the $200 million asset sale programme, whether New Zealand and Australian consumer spending stabilises as early signs suggest, resolution of the formal strategic review Collins St pushed for, and whether further takeover interest emerges at a price reflecting the latent value in the company's $2.6 billion property portfolio.
Questions
Why has SkyCity Entertainment Group outperformed peers like Crown?
Collins St Asset Management notes SkyCity's focus on domestic and regional customers rather than the potentially lucrative yet challenging international VIP gaming market has proven prudent, contrasting sharply with difficulties faced by peers like Crown.
Why did SkyCity Entertainment Group cut its earnings guidance?
SkyCity cut underlying EBITDA guidance to $180-190 million after management pointed to deteriorating consumer discretionary spending across both New Zealand and Australia, alongside a step-up in fuel prices since March.
Why did SkyCity Entertainment Group reject two takeover approaches?
SkyCity rejected takeover approaches at NZ$0.70 and NZ$0.75 a share, with Collins St Asset Management arguing these undervalue the company given its $2.6 billion in property, plant and equipment against a market cap of just $490 million.
4 managers, 11 comments, with each manager's latest recorded position.
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