Summary
The fund managers believe that Skycity Entertainment Group Ltd is poised for significant growth due to its strategic expansion plans and robust recovery post-pandemic. In their opinion, the company's focus on diversifying its offerings, particularly in entertainment and hospitality, will enhance its market position. They highlight the potential for increased revenue from both domestic and international tourists as travel restrictions ease. Additionally, the fund managers note that improvements in operational efficiency and cost management are likely to boost profitability. However, they caution that regulatory challenges and economic uncertainties could impact performance. Overall, the consensus indicates a cautiously optimistic outlook, with an emphasis on the importance of monitoring market conditions closely.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Source: Trading View
Commentary From The Managers
Collins St Asset Management
9 Sept 2025
$0.62
Summary
- SkyCity’s revenue fell 5% to NZ$825 million, with NPAT of NZ$71 million, exceeding consensus expectations.
- Collins St Asset Management views this performance positively, considering the tough conditions including regulatory costs, higher compliance, and New Zealand’s recession.
- Management announced a NZ$240 million capital raise, which Collins St strongly opposes as unnecessary and dilutive given the company’s high-quality, monopoly assets.
- Major shareholder Allan Gray publicly criticized the capital raise.
- On a positive note, the NZ International Convention Centre (costing NZ$700m) is set to open soon, expected to attract millions of visitors and benefit the broader complex.
- Collins St notes early success with carded play in New Zealand.
- Despite management missteps, Collins St Asset Management sees SkyCity as deep value.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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Commentary From The Managers
Collins St Asset Management
9 Sept 2025
$0.62
- SkyCity’s revenue fell 5% to NZ$825 million, with NPAT of NZ$71 million, exceeding consensus expectations.
- Collins St Asset Management views this performance positively, considering the tough conditions including regulatory costs, higher compliance, and New Zealand’s recession.
- Management announced a NZ$240 million capital raise, which Collins St strongly opposes as unnecessary and dilutive given the company’s high-quality, monopoly assets.
- Major shareholder Allan Gray publicly criticized the capital raise.
- On a positive note, the NZ International Convention Centre (costing NZ$700m) is set to open soon, expected to attract millions of visitors and benefit the broader complex.
- Collins St notes early success with carded play in New Zealand.
- Despite management missteps, Collins St Asset Management sees SkyCity as deep value.
Summary
Collins St Asset Management
30 June 2025
$0.83
- Collins St Asset Management highlights that Sky City (ASX:SKC) operates monopoly casinos and entertainment complexes in Adelaide and Auckland.
- Despite challenges faced by competitors like Crown and Star, Sky City has largely avoided similar controversies.
- Sky City’s share price has decreased significantly, from a high of $4 pre-COVID to a low of 82c as of June 30, 2025.
- Challenges include a generally unloved sector due to recent controversies.
- Investor concerns are heightened by fears of regulatory issues.
- One-off costs necessitate 'normalisations' for a clearer performance picture.
- COVID impacts, slow economic recovery, and debt have led to the suspension of dividends.
- Despite these issues, the business generated solid returns, with earnings of 17.5c last year against a share price of 83c.
- Collins St anticipates EPS of 16c for FY27, suggesting a PE of just 5x.
- Value is expected to be driven by the sale of non-core assets such as the Sky Tower and carpark, potentially generating $415 million.
- This amount represents almost 65% of the current market cap, indicating significant shareholder value.
- Collins St expects asset sales, debt repayment, and dividend re-introduction to drive upside in this unloved business.
- Historically, SKC has traded at a PE multiple of approximately 17x; applying a more conservative PE of 12x suggests shares could be valued at $1.90.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who has invested in Skycity Entertainment Group Ltd (ASX:SKC)?
Fund managers including Collins St Asset Management have invested in Skycity Entertainment Group Ltd (ASX:SKC).
Why have investment managers invested in Skycity Entertainment Group Ltd (ASX:SKC)?
Fund managers have invested in Skycity Entertainment Group Ltd (ASX:SKC) due to its strong positioning as a monopoly operator of casinos and entertainment complexes in Adelaide and Auckland. Despite facing challenges such as regulatory scrutiny and the impacts of COVID-19, Skycity has demonstrated solid earnings potential, generating 17.5 cents per share last year. The anticipated earnings per share of 16 cents for FY27 suggests a low price-to-earnings (PE) ratio of just 5x, indicating significant undervaluation compared to its historical PE of 17x. Fund managers believe that upcoming asset sales, particularly of non-core assets like the Sky Tower and carpark, could generate substantial cash flow, further enhancing shareholder value. Additionally, the reopening of the NZ International Convention Centre is expected to boost revenues. Overall, the combination of solid earnings, asset monetization opportunities, and the potential for dividend reintroduction presents a compelling investment case for fund managers.
What happened to Skycity Entertainment Group Ltd (ASX:SKC)?
In September 2025, during a Webinar, Collins St Asset Management discussed their investment in SkyCity Entertainment Group Ltd, noting a 5% revenue decline to NZ$825 million and a net profit after tax (NPAT) of NZ$71 million, which exceeded consensus expectations. Despite facing challenges such as regulatory costs and New Zealand's recession, the fund viewed these results positively. However, they opposed the company's NZ$240 million capital raise, deeming it unnecessary and dilutive, especially given SkyCity's high-quality monopoly assets, including casinos and hotels. Major shareholder Allan Gray echoed this criticism. On a brighter note, the upcoming NZ International Convention Centre, costing NZ$700 million, is expected to boost visitor numbers and enhance the overall complex, while early success with carded play suggests deep value in SkyCity despite management's missteps.