SkyCity Entertainment hails return of Asian gambling whales


skycity-chinese-vip-gambling-whalesAussie/Kiwi casino operator SkyCity Entertainment Group says its Asian VIP gambling business has recovered from its year-plus slump.

On Thursday, SkyCity published its fiscal H1 report card, which showed revenue rising 4% to NZ$554.7 (US$400.2m) in the six months ending December 31, 2017. Net income fared better, rising 11.6% to NZ$93.5m.

The company credited the gains to modest growth at its New Zealand properties, stable performance at its Australian casinos, and growth in its so-called International Business (IB), which the rest of the casino world refers to as Chinese gambling whales.

Total IB turnover across all SkyCity properties was up 9.4% to NZ$4.8b, and IB revenue was up an identical percentage to NZ$64.8m. More importantly, IB earnings were up 87% to NZ$14m thanks to win rate coming in at 1.55%, above the theoretical mark of 1.35%.

SkyCity says it achieved the IB turnaround by putting an increased focus on key customers and by utilizing more junket operators. Junkets accounted for 50% of 1H18’s IB turnover, up from 40% in the prior-year period. Margins also benefited from reduced bad debt provisions compared with 1H17.

SkyCity’s flagship Auckland casino eked out a modest 2% revenue gain to NZ$290m (excluding IB activity) while earnings rose 3.6% to NZ$131m. The Auckland property accounted for 75% of Group earnings in the half.

In Australia, the Adelaide casino’s revenue (again, excluding IB) nudged up 1.3% to A$78.1m and earnings rose 2% to A$13m. The Darwin venue didn’t fare as well, with revenue slipping 0.4% to A$62m and earnings down 5.4% to A$16.7m, in part due to a A$1m keno payout.

SkyCity CEO Graeme Stephens expressed cautious optimism that the company would hit its FY18 targets, assuming the “inherently difficult to predict” IB market continues to rebound. The company has set a goal of doing NZ$10b in IB turnover in FY18 and says its forward bookings for the upcoming Lunar New Year holiday give it confidence that that figure will be within reach.

SkyCity appointed some new top execs during the period, including former Paddy Power Betfair man Michael Ahearne as chief operating officer with direct responsibility for the Auckland property. The company also hired New Zealand Media & Entertainment vet Liza McNally as its new chief marketing officer.