SkyCity Entertainment Group’s shares are on the rise after it predicted first-half profit to rise as much as 30%.
New Zealand’s only listed casino operator SkyCity said it expected a net profit of $69m to $71m for the half year to December 31, compared to $54.6m for the same prior period. Earnings before interest, tax, depreciation and amortization (EBITDA) will also increase to $170m–$173m, from $140.9m.
The normalized profit is expected to rise by as much as 29% over the same period a year ago, in a range of $83m to $86m.
The improved result is attributable to “strong trading performances” from all its New Zealand businesses and strong growth in turnover in its international high rollers business, which topped $7b in the first half period.
“It looks like a good start to the year, stronger than we were going for. We were expecting a good half-year, given what’s happening in Auckland with a strong economy, lots of events, strong tourism, a busy casino, good restaurants. We’ve seen very strong reports come out from how busy tourism operators are. Retail statistics have been strong too, particularly during the Christmas period,” SkyCity senior equity analyst Forsyth Barr and research director Jeremy Simpson told NZ Herald.
SkyCity spent more than $24 million in the period sprucing up the entrance of its Auckland entertainment complex.
“Stage 2 completion is timed for a mid-2016 and comprises the extension of the main gaming floor into atrium space that is being partially infilled and a new high-end Cantonese restaurant,” Simpson noted.
The forecasted result also reflected significant cost savings as well as lower debt funding costs at the underperforming Adelaide Casino.
SkyCity shares rose 5.9%, the biggest one-day gain since October 20, 2014. The company will announce its final first-half results on February 11.