Wednesday, October 31, 2012

Steal & Tube

Click on photo for bigger size. Received this in the post yesterday sold my very small holding in Steel & Tube [STU.NZ] last week. Got about double for it. Stunned that there are so many out there that would sell but there it is, just warning you, beware.


Steel & Tube @ Share Investor

Value Play: Steel & Tube Ltd
Long Term View: Steel & Tube Ltd
OneSteel makes cheeky bid for minority shareholders
NZX's Top 10 Dividend Returns

Discuss STU @ Share Investor Forum
Download STU Company Reports




c Share Investor 2012

Tuesday, October 23, 2012

Sky City Gaming: Morningstars look at Sky City's gaming


Sky City Casino and hotel in Auckland. Photo / Doug Sherring
Sky City Casino and hotel in Auckland. Photo / Doug Sherring

This was out a few days ago. Looks like the prospects for the main driver of profit are limited but Sky Cities Australian casinos look to become the main earners. Look for Darwin's earnings getting more significant as the years pass.

Valuation: $4.00

Last updated:

21/10/12

Revenues hold up despite Rugby World cup boost, Darwin shines.


SKC offers gaming services at its casinos in NZ and Australia. The entertainment complex in Auckland is the major driver of earnings accounting for 60% of its operating profit. SKC faces little competition due to NZ government's blanket ban on new casino licenses. This has allowed the company to operate at very healthy profit margins and generate abundant cash flows. Earnings will pick up next year following the Rugby World Cup in 2011.

Judicious investments are being considered to lift growth in the longer term.

Event

At its AGM Sky City (SKC) provided a trading update and profit guidance for fiscal 2013. Not surprisingly, the Auckland casino (accounting for 70% of group EBITDA) posted lower revenues for the period to 17 October the prior year boosted by the Rugby World Cup.

Darwin, international VIP and Hamilton were the real standouts delivering double digit revenue growth
Based on the performance so far and current market conditions, management expects normalized NPAT for fiscal 2013 to be in the “NZD 140 millions”.

Impact

We are sticking with our NPAT forecast of NZD 147 million as we expect profit growth in the second-half to more than offset lower earnings in the first-half. 

We expect Auckland’s earnings to remain flat with a lower first-half offset by a stronger second half. Darwin is likely to achieve 8% growth spurred on by the recently opened resort facility (established in July 2012) and the creation of new gaming facilities in FY12.

In the longer term we see good prospects for Darwin stemming from growth in international VIP players due to the casinos proximity to South East Asian countries. Potentially the international VIP business, which is practically non existent right now, could have a turnover of AUD 2 billion in the next two years. That would translate into AUD 6.5 million in incremental EBITDA or an increase of 30% from currently levels.

At its AGM Sky City (SKC) provided a trading update and profit guidance for fiscal 2013. Not surprisingly, the Auckland casino (accounting for 70% of group EBITDA) posted lower revenues for the period to 17 October the prior year boosted by the Rugby World Cup. However, Darwin, international VIP and Hamilton were the real standouts delivering double digit revenue growth. Based on the performance so far and current market conditions, management expects normalized NPAT for fiscal 2013 to be in the “NZD 140 millions”. We are sticking with our NPAT forecast of NZD 147 million as we expect profit growth in the second-half to more than offset lower earnings in the first-half. Our fair value of NZD 4.00 per share also remains intact.

Normalized group revenue was up 1.5% from 1 July to 17 October 2013 driven by Australian casinos, which make up 24% of group EBITDA. As expected the Adelaide business posted flat revenues year-to-date given challenging economic conditions in South Australia. For the full year we expect Adelaide’s EBITDA to be up modestly backed by a better performance from table games.

Darwin’s revenue surged 12.4% underpinned by the recently opened resort facility (established in July 2012) and the creation of new gaming facilities in FY12. The redevelopment of the new VIP Level 2 gaming area, expected to be completed by March 2013, is likely to further enhance the casino’s appeal. We expect Darwin’s EBITDA to increase by 8% this year. In the longer term we see good prospects for Darwin stemming from growth in international VIP players due to the casinos proximity to South East Asian countries. Potentially the international VIP business, which is practically non existent right now, could have a turnover of AUD 2 billion in the next two years. That would translate into AUD 6.5 million in incremental EBITDA or an increase of 30% from currently levels. We also think the AUD 32 billion Inpex LNG project will be very positive for the local economy and might underpin foot traffic to the casino.

Auckland reported a 4.9% decline in top line growth year-to-date. Revenue was impacted by NZD 5 million from the roll out of the new Bally gaming system. However the overall impact on EBITDA was neutral because a similar amount was deducted from expenses. Hence on a normalized basis revenue was 1.7% lower than the prior period. The previous corresponding period however included a one-off benefit of NZD 7 million from the RWC which, if excluded, results in revenue growth of nearly 3%. Considering the prevailing tough economic environment we think Auckland’s performance was creditable. The international VIP business in particular is going from strength to strength and is becoming one of the major growth drivers for the company. Revenue increased 40% year-to-date reflecting the full impact of new facilities created last year. For full year we expect Auckland’s earnings to remain flat with a lower first-half offset by a stronger second half.

Among the smaller casinos Hamilton’s performance was noteworthy. Revenue increased 14% to NZD 17.6 million driven by increased customer visits. Disposable incomes in the region are being buoyed by a strong economy underpinned by the dairy sector. Given the lack of quality hotels in Hamilton, SKC has decided to build a 4.5 star hotel near the casino with the aim of lifting foot traffic. The project will cost NZD 35 million and will be completed in Q1 FY15.

SKC expects to conclude negotiations on the AUD250 million Adelaide riverbank development by 31 December 2012. Also, it is awaiting the Auditor General’s report regarding the NZD 350 million National Convention Centre development. We have previously argued that these investments, while significant, could materially increase shareholder value in the long term.


Previous close Market cap
$3.990 $0 Million
52 week high/low
$4.080 - $3.250
Sector
Consumer Services

Intrinsic valuation

Moat rating Narrow
Business risk Medium
Pricing risk Medium
Company beta

Sector beta

Year 06/11A 06/12A 06/13E 06/14E
NPAT ($m) 130.6 142.2 146.8 152.8
EPS (c) 22.6 24.7 25.5 26.5
% change 0.1 8.9 3.2 4.1
DPS (c) 16.0 17.0 17.8 18.6
Franking (%) 0.0 0.0 0.0 0.0
Yield (%) 5.0 4.8 1.9 1.9
PER (x) 14.3 14.4 37.7 36.2
Source: Aspect Huntley analyst estimates.

6 month price chart



Sky City Convention Centre @ Share Investor

Sky City Entertainment Group Ltd: Convention Centre may mean significant expansion
VIDEO - Sky City Entertainment Group : Parliamentary Question related to Convention Centre
Sky City to pay for National Convention Centre
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council

Sky City Entertainment Group @ Share Investor


Share Investor's Total Returns: Sky City Entertainment Group Ltd
Sky City Entertainment Group Ltd: Presentation to Macquarie Group
Morningstar Revalues Sky City Entertainment Group
Guest Post - Michele Hewitson Interview: Nigel Morrison
Failed Sky City bid for Christchurch Casino good news for Shareholders
Sky City Entertainment Group Ltd: Christchurch Casino bid falls short of Investment Criteria
Sky City Entertainment Group Ltd: Never mind the width feel the volume
Sky City Annual Meeting & 2011 - 2012 Profit Forecast
Stock of the Week: Sky City Entertainment Group Ltd
Sky City set to lose National Convention Centre bid
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
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Sky City Profit Upgrade: Always on the Cards
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Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
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Sky City Entertainment share price drop
New Broom set to sweep
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Sky City Casino 2007 HY Profit


Discuss SKC @ Share Investor Forum
Download SKC Company Reports



Share Investor 2012


Friday, October 12, 2012

Moa Beer IPO: A Closer Look


I have to admit, I haven't drunk it but Ive heard so much about it I just have to try a drop - if my wife will let me - Moa Beer Ltd [MOA.NZX

If you can get past the hilarity of the first half of the prospectus - it has an advert for a car in it? - you can get down to the meat and potatoes - the facts and figures.

Moa Group's chief executive, Geoff Ross, yesterday announced the IPO was going ahead on November 13, but had already been over-subscribed by four institutional groups and retail "mum and dad" investors, so expect the deal to be done and dusted already.

The $6.1m brewery extension project is a vital step to take the company's Blenheim-based brewing and bottling capacity from 14,000 to 50,000 cases a month in under a year, which shouldn't be too hard considering the popularity of the drop.

They will offer 38.4 per cent of the company to the public at the price of $1.25, with another 3.6 per cent already having been allocated to existing shareholders who include Ross' Business Bakery, Pioneer Capital, Allan Scott Wines and company executives.

I never really understood the value of such company's it does not seem to bare any relationship to the profit or sales.

Moa sold almost 50,000 cases, mainly across New Zealand, Australia and the United States, in the 2012 financial year and has shifted 35,000 cases in the first six months of the 2013 financial year, so all looks to be on track for a good 2013.

In their healthy looking prospectus - it has a picture of a naked woman in one - the company expects to sell 97,496 cases in the full 2013 year, rising to 195,100 in 2014. However it will still not be running at a profit in that time frame.

The new brewery has been meticulously planned by Scott and his head brewer, Dave Nicholls, who worked at Heineken, alongside Ross and a board committee.

He is not taking the sharemarket float lightly - it was his aim since before he met brand-builder Ross over 2 years ago.

"It's great to see it grow because there was no way I could ever grow a company like this, this quickly," he said from Blenheim.

Scott's "executive brewer" role has been to develop the brand's presence and distribution overseas, under the guidance of Ross who sold his vodka brand 42 Below to Bacardi for $138m in 2006 and we all know well he is noted for that.

The prospectus puts revenues at $2.4m for the 2012 year to March 31, with negative earnings before interest, depreciation and amortisation at minus $2.8m.

The company made a net loss of $2.8m. The company forecast revenues of $4.3m for the year to the end of March 2013 - leading to a $3.5m overall loss.

Its all immaterial anyway, set your gun to off and target someone else this ones for fun, and it just might well do it.

I will be having a word to my broker about setting some aside - a 1000.


Moa @ Share Investor

The Prospectus
Talk Moa Beer @ Share Investor





c Share Investor 2012


Thursday, October 4, 2012

ASB Securities rejects my contract

Can somebody tell me why this contract was cancelled and what I should do about it?


Account 724645 Mr D G Rickard

We have SOLD for you 5000 shares in MFT - Mainfreight Limited Ordinary Shares at NZD 13.5000

Details are as follows:

Consideration: 67,500.00

Brokerage: NZD 202.50

Total Credit NZD 67,297.50

Settlement Instruction: Cash Management Account

Settlement Date: 09/10/2012

A Contract note with full details of this transaction will follow

This email message and attachments is sent for the personal attention of the intended recipient. If you have received this email in error, please advise the sender immediately and destroy this email and any attachments. If you are not the intended recipient, you are notified that any use, distribution or copying of this e-mail or attachments is prohibited.

Where the contract note differs from this notification the contract note will prevail. In some circumstances ASB Securities may cancel this transaction. We will notify you of any cancellation.

Please phone us immediately on 0800 272 732 if you have any queries regarding this order. Thank you for using ASB Securities.

Kind Regards


More Banking Madness @ Share Investor

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Banking Madness!

Discuss this topic @ Share Investor Forum



c Share Investor 2012


Tuesday, October 2, 2012

Time for retirement 2 ?



Metlifecare Ltd [MET.NZ] is now an interesting little stock. It has spent many years languishing at around $2.30 due to its high ownership of shares in a small group. But now it has been released from that grip and looks like it will now florish on its own.

It all happened in July and now places the company in direct competition with Ryman Healthcare Ltd [RYM.NZX] and Summerset Group Holdings Ltd [SUM.NZX].

What do we make of the share price then ?

At $2.95 at close of business yesterday it makes this share the second cheapest and Summerset the next followed by Ryman.

Net asset backing is $3.04 for Met which makes this star, $1.10 for Summerset and $1.30 for Ryman. Clearly the leader by a long shot is Met which still hasn't reached its NTA.

As far as returns go it is only Ryman paying a paltry 2.05% that is turning over. Demand for its scrip has recently seen it shares rise to record highs.

You know me I like a bargain so if you prepared to wait a long time you might get Ryman for a steal, I think it will go down from here, but if you want get in right now you might want to consider getting in with the Met overall its the best bet.

Good luck!


Disclosure : I own RYM shares in the Share Investor Portfolio.



MET @ Share Investor

Stock of the Week: Metlifecare Ltd
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Stock of the Week: Ryman Healthcare Ltd
Time for retirement?

Discuss Metlifecare @ Share Investor Forum - Register free


Summerset IPO @ Share Investor

Summerset IPO: A Closer Look
Summerset Prospectus

Discuss Summerset Heathcare @ Share Investor Forum - Register free


Ryman Healthcare @ Share Investor

Share Price Alert: Ryman Healthcare Ltd 2
Ryman Healthcare Ltd: 2011 Half Year Profit Review
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Time for retirement?


Discuss Ryman Healthcare @ Share Investor Forum - Register free


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