Thursday, August 19, 2010

Sky City Entertainment Group: Australian Acquisition on the Cards?

In a discussion I had today with a reader I mentioned that Sky City Entertainment Group Ltd [SKC.NZX] was on the lookout for casino assets in Australia and that jogged my memory about a conversation I had with CEO Nigel Morrison on a Convention Centre proposal back in June when Nigel indicated with some animation that the company was kicking the tyres of casino assets across the ditch:

"Off the topic of convention centres Nigel indicated that the Australian casino sector was likely to consolidate over the next couple of years with Tabcorp Ltd [TAH.ASX] a company under a fair amount of pressure as its Victorian gaming/wagering licenses expire.

Mr Morrison indicated that the Sydney casino Star City was the jewel in the crown in terms of gaming in Australia and while well run, its potential was not being fully exploited.

SKC has paid down a considerable amount of debt over the last year or so, with a capital raising in 2009 so far contributing the bulk of that. Mr Morrison indicated that his company has a balance sheet and credit resources that would make it open to any opportunity to purchase the right gaming assets at the right price should a shake up in the Australian gaming sector arise and he seems confident that this will happen in the next few years".

In the same conversation and reiterated in the market this week at the 2010 full year profit release presentation Nigel indicated he was looking at a double digit increase in profit for 2011 and also the aforementioned asset buying. They were in fact "actively looking at acquisitions."

I don't see the company squeezing out 10% more from current operations so putting two and two together in my overactive little brain I see the two public statements as mutually inclusive.

Is Nigel going to acheive his optimistic growth rate through an Australian acquisition?

On balance I think this is on the cards over the 2010 - 2011 calendar year.

Now that I have sown those seeds, you will be the first to know, what is going to be bought and for how much and what I think of it if that matters to you.

You will only find this out of course if you read this blog and do so frequently.

Stay tuned for more dear reader.


Disclosure: I own SKC shares in the Share Investor Portfolio


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