Fund Manager Summary on Skycity Entertainment Group Ltd (ASX:SKC)
In December 2025, Collins St Asset Management commented that Skycity Entertainment Group Ltd (ASX:SKC) is showing improving operational momentum—rising foot traffic, lower costs and a recovering consumer environment—and that monetisation of non‑core assets (notably a car park potentially realising NZ$225 million) and reinstatement of a dividend could materially re‑rate the stock. Across recent fund manager commentary the consensus is that SKC’s monopoly domestic casinos, convention assets and related real estate represent structural value and resilience relative to peers, but that the shares remain deeply unloved due to sector controversies and heightened regulatory scrutiny; managers highlight clear opportunities from asset sales (Tower/carpark proceeds cited at around NZ$415 million in one view), recovery in domestic demand and online gaming growth, while flagging operational headwinds including lower VIP spend, elevated compliance and pre‑opening costs, one‑off normalisations and balance sheet pressure that led to a NZ$240 million equity raise which some investors saw as unnecessarily dilutive versus monetising assets; actionable considerations are to track progress on asset sales and use of proceeds (debt reduction and dividends), management capital allocation decisions and regulatory developments, with potential upside tied to dividend reinstatement and a modest PE re‑rating from current depressed multiples toward historical levels, and the principal risks being regulatory intervention, further revenue softness or continued dilution from capital actions.
Commentary From The Managers
There are 4 insights from 1 fund managers regarding their investment in Skycity Entertainment Group Ltd (ASX:SKC) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Collins St Asset Management
31 Dec 2025
$0.78
Summary
- Collins St Asset Management believes SKC is undervalued and continues to hold because its domestic/regional focus, improving consumer trends, cost reductions and clear near-term value catalysts support a material re-rating into 2026.
- Operations: SkyCity operates integrated casino and entertainment complexes in Adelaide, Auckland, Hamilton and Queenstown with hotels, restaurants and convention centres.
- Prudent customer strategy: A focus on domestic and regional customers rather than the international VIP market has preserved performance and reduced risk.
- Peer contrast: SkyCity’s results and positioning contrast sharply with the difficulties experienced by peers such as Crown and Star Entertainment.
- On-the-ground evidence: Recent site visits and conversations with store operators point to a recovering consumer environment, rising foot traffic and improving spend per visit.
- Cost and earnings tailwinds: Ongoing cost reductions and operational leverage strengthen earnings visibility into 2026.
- Valuation upside: Trading in line with international peers implies a price near $1.40, indicating meaningful upside from current levels.
- 2026 catalysts: Monetisation of non-core assets (notably a car-park sale potentially up to NZ$225m) and the reinstatement of a dividend policy are tangible triggers that could materially re-rate the share price; even modest positive news may have outsized impact.
Collins St Asset Management
30 Sept 2025
$0.59
Summary
- Sky City (ASX:SKC) operates monopoly casinos in Adelaide and Auckland.
- It was the largest detractor in the Fund’s performance during the September quarter.
- Reported Group EBITDA of NZ$216.1 million, up 56% from the prior period, aligning with guidance.
- Underlying Group revenue fell 5% to NZ$825.2 million, with EBITDA down 16%.
- Challenges stem from lower customer spending, increased churn of VIP customers, and elevated costs.
- SkyCity announced a NZ$240m equity raising, which included an institutional placement and entitlement offer.
- Collins St Asset Management questions the equity raising decision and prefers strategic asset sales.
- Participated in the equity raising due to a 30% dilution at the last traded price.
- Currently trading at a price to earnings ratio of approximately 6x forward earnings, representing 9% of the Fund.
- Sky City has adopted AI technology as a shield for protecting revenues and gaming licenses.
- Implemented facial recognition technology in Adelaide to identify at-risk customers.
- Introduced full carded gaming in New Zealand to enhance risk management and detect potential money laundering.
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.
Collins St Asset Management
30 June 2025
$0.83
Summary
- 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.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in Skycity Entertainment Group Ltd (ASX:SKC)?
Fund managers including Collins St Asset Management have invested in Skycity Entertainment Group Ltd (ASX:SKC).
Why do fund managers invest in Skycity Entertainment Group Ltd?
Fund managers invest in Skycity Entertainment Group Ltd due to its monopoly position in the casino and entertainment sector in Australia and New Zealand, alongside strong asset holdings like the Sky Tower. Despite recent challenges, including a reduced share price and regulatory issues, the company shows potential for earnings recovery and strategic asset sales that could enhance shareholder value. Its low price-to-earnings ratio indicates that the stock may be undervalued, making it an attractive option for investors seeking long-term growth and dividend re-introduction.
What happened to Skycity Entertainment Group Ltd (ASX:SKC)?
Fund managers have invested in Skycity Entertainment Group Ltd due to its monopoly position in the casino and entertainment sectors in Adelaide and Auckland, despite recent challenges in revenue and customer spending. While the company's Group EBITDA showed significant year-over-year growth, overall underlying revenues declined. Fund managers express concern over the recent equity raising, noting its dilutionary impact, but recognize the company's strategic transition to AI technologies for risk management and regulatory compliance as a potential stabilizing factor for future operations.
What is the short interest in Skycity Entertainment Group Ltd (ASX:SKC)?
The short interest in Skycity Entertainment Group Ltd (ASX:SKC) is 0.59% which makes it the 265th most shorted stock on the ASX. Of the 1.1B shares that Skycity Entertainment Group Ltd has on issue, 6.5M have been sold short.
What does Skycity Entertainment Group Ltd (ASX:SKC) do?
SkyCity Entertainment Group Ltd. engages in operating entertainment casino complexes in New Zealand and Australia. It operates through the following business segments: SkyCity Auckland, Other New Zealand Operations, SkyCity Adelaide, International Business, and Corporate/Group. The SkyCity Auckland segment includes casino operations, hotels and conventions. The Other New Zealand Operations segments refers to the operations at SkyCity Hamilton, SkyCity Queenstown, SkyCity Wharf and online gaming. The SkyCity Adelaide segment relates to casino operations, hotel, and food and beverage. The International Business segment focuses on the gaming operations for international customers. The Corporate/Group segment is associated with head office functions, funding entities and the Group's investment in its associate Gaming Innovation Group Inc. The company was founded in February 1996 and is headquartered in Auckland, New Zealand.