SKC - SkyCity

[entrep]

I suppose the raise being at a premium is out the question     

[Basil]

I suppose the raise being at a premium is out the question     

LOL It'll be interesting to see if they can get enough support for a raise and if so at what sized discount to the last traded price.

[Cod]

Cap raise at 0.70c discount to SP, the question is will it do SPK/GNE and exit the down channel, hummm at 70c not anytime soon.

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[Basil]

Crickey.  Desperation pricing at 70 cents a share.  Only raised $81m fully underwritten shows a woeful lack of support from institutions.    https://api.nzx.com/public/announcement/457150/attachment/450026/457150-450026.pdf 

[Waltzing]

look like they got the lots or almost and there are race goers lining up...  probably in ten years time they will do a buy back... the licenses mean its a shadow bank..  sure they will except crypto soon if not already and it will be a washing machine all over again...punters backing up the truck..

[Basil]

Looks like the underwriters are going to get their pockets filled again just like last time with the RYM placement at ~ $3.  Gosh, this underwriting gig is not quite the gravy train it used to be.  How sad, never mind 

[Foghorn]

For once I got out in time, albeit not soon enough, exiting at 99c last week.  I thought about staying in and taking a turn on the rights shares to mitigate some of my losses, which worked ok on FBU and NZKS, but after the Ryman debacle, decided against it.  SKC has been my worst long term hold, patiently holding on through all the issues (Adelaide, regulatory issues, NZICC, on again off again car park sale, star casinos as a comparator).  none of these issues is going away; is the NZICC ever going to turn a profit? Are the regulators going away? And fundamentally, it's easier to rationalise holding shares in a business which destroys a small percentage of its customers lives when it's paying a 20c dividend. 

[KW]

Crickey.  Desperation pricing at 70 cents a share.  Only raised $81m fully underwritten shows a woeful lack of support from institutions.    https://api.nzx.com/public/announcement/457150/attachment/450026/457150-450026.pdf 

After the Crown and Star debacles, I'm amazed anyone is giving funds to this sector.

[Waltzing]

when credit cards handle crypto imagine it.. and Crypto cards are common and there on line game systems use it.. and they run a  block chain ledger which is superior in many ways to old fashioned transaction databases...

the bad boys line up 30 players with cards and wash the crypto and no one cares, say a decade from now...

not just one person taking in bags of money... NO NO... this games hasnt even started yet...

The big players like black rock and others will support the crypto ledgers..the regulators in a decade from now will be under pressure as governments slash budgets ...

[Waltzing]

This is AI generated and may contain errors.

- Even if you dont like the company - this assets is important for Auckland and probably tourism in the Greater Auckland Area.. Could do some promotional advertising inside for the South Island ... Queenstown..

Pity not own by another group BUT it still an ASSET.

Auckland Conference Centre (NZICC) 
Investment Scale and Timeline
The NZICC represents SkyCity's most significant growth catalyst, with over $430 million invested. The facility is scheduled to open in February 2026, marking the transition from investment drag to revenue generation.
Facility Specifications:

32,500 sqm of total floor space
8,600 sqm of exhibition space
3,000-person capacity with flexibility up to 4,000
2,850-seat tiered auditorium theatre
33 meeting rooms available simultaneously

Revenue Pipeline and Projections
Strong Pre-Opening Pipeline:

FY26: 76 events pipeline attracting ~107k visitor days (29 confirmed)
FY27: 121 events pipeline attracting ~251k visitor days (40 confirmed)
Full Capacity: Estimated 500,000 annual visitations at maturity

Financial Projections:

FY27 Expectation: NZICC breakeven on standalone basis
Revenue Synergies: Significant cross-selling opportunities across SkyCity's Auckland precinct (hotels, F&B, Sky Tower, casino)
Market Position: Expected to capture increased share of large-scale events, exhibitions, concerts, and conventions

Economic Impact
The NZICC positions Auckland as a premier Asia-Pacific convention destination, directly competing with Sydney and Singapore. The facility's world-class specifications should drive premium pricing and high utilization rates as New Zealand's economic recovery accelerates.

Adelaide Operations - B3 Transformation and Regulatory Resolution
Building a Better Business (B3) Program
Adelaide has been the focus of intensive remediation efforts following regulatory challenges. The B3 program represents a comprehensive overhaul of operations:
Investment Profile:

FY25 Spend: NZ$17.6 million (Year 1 of 3-year program)
FY26-27 Continuation: ~$20 million annually
Total Investment: Expected ~$60 million over three years
Completion: B3 costs expected to exit the business by end FY27

Operational Performance
Despite regulatory headwinds, Adelaide showed resilience:

Gaming Revenue: A$145.7m (6.0% decline from A$154.9m)
Non-Gaming Growth: A$66.5m (4.5% increase from A$63.7m)
EBITDA Margin: 13.4% (down from 16.7% but stabilizing)
Visitation: Improved to 1.2m (+5.0%)

Regulatory Resolution
The Brian Martin independent review concluded that SkyCity Adelaide is suitable to hold the casino licence, providing regulatory certainty. While potential enforcement action remains unclear, the fundamental suitability finding creates a stable foundation for recovery.
Key Improvements:

Enhanced AML/CFT systems
Improved host responsibility programs
Strengthened compliance frameworks
Resolved casino duty dispute

Recovery Trajectory
With regulatory uncertainties largely resolved and B3 investments maturing, Adelaide is positioned for margin expansion from FY27 onwards. The facility's monopolistic market position in South Australia provides pricing power as economic conditions improve.


Investment 
SKC represents a possible turnaround story with multiple catalysts converging over the next 5-10 years. The company has endured a challenging investment phase while building world-class infrastructure and resolving regulatory issues. The combination of:

NZICC opening creating a new revenue pillar
Adelaide B3 completion normalizing cost base and margins
Favorable monetary policy supporting consumer recovery
Asia-Pacific growth resumption driving tourism and conventions
Structural market position in supply-constrained premium segments

These factors create a pathway for significant earnings recovery and long-term value creation. While near-term volatility is expected, patient investors should benefit from SkyCity's transformation into a diversified, premium entertainment and convention operator positioned for sustainable growth in the recovering Asia-Pacific economy.
The next 5-10 years should witness SkyCity's evolution from a cyclical gaming operator to a diversified entertainment and convention powerhouse with multiple growth vectors and sustainable competitive advantages.

[Basil]

Retail entitlement offer of $45m was an epic fail with only one third of that amount $15m, subscribed for.  Underwriters got their boots filled again, just like with the RYM capital raise and sure enough, just like in RYM's case the share price is now tracking south.    Overseas evidence suggests that once you initiate full AML compliance and take all the money laundering out of these places the business model is basically broken.  SKC will of course claim otherwise but I think there's a very long road ahead to try and get a reasonable return on capital employed in the new international convention center.

Amended notice - SkyCity clarifies that the approximately NZ$30 million in
New Shares not taken up under the Retail Entitlement Offer have been fully
allocated to sub-underwriters as procured by the underwriters, including to
existing institutional shareholders. See below for full announcement text.
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES MARKET RELEASE SkyCity
Entertainment Group Limited (SKC.NZX/SKC.ASX) 9 September 2025
SkyCity completes Retail Entitlement Offer SkyCity Entertainment Group
Limited ("SkyCity") announces that it has completed the retail entitlement
offer component ("Retail Entitlement Offer") of its NZ$159 million fully
underwritten 1 for 3.35 pro-rata accelerated non-renounceable entitlement
offer ("Entitlement Offer") of new fully paid ordinary shares ("New Shares").
SkyCity has raised a total of NZ$240 million under the fully underwritten
institutional placement ("Placement") and Entitlement Offer announced on
Thursday, 21 August 2025. This includes gross proceeds of approximately
NZ$195 million received under the institutional component of the Entitlement
Offer and Placement, and approximately NZ$45 million in gross proceeds under
the Retail Entitlement Offer. Eligible retail shareholders subscribed for
approximately NZ$15 million in New Shares, including approximately NZ$3
million of oversubscriptions. Eligible retail shareholders who took up
their entitlement in full and applied for additional New Shares in excess of
their entitlement received all of the additional New Shares for which they
applied, up to a maximum of 60% of their entitlement, meaning they could, at
a minimum, maintain their existing percentage shareholding through the
Placement and Entitlement Offer. The effective take up rate by eligible
retail shareholders was approximately 33%. The approximately NZ$30
million in New Shares not taken up under the Retail Entitlement Offer have
been fully allocated to sub-underwriters as procured by the underwriters,
including to existing institutional shareholders. The New Shares to be
issued under the Retail Entitlement Offer are expected to commence trading on
the NZX Main Board on Thursday, 11 September 2025 and the ASX on Friday, 12
September 2025 and will rank equally with SkyCity's existing ordinary shares.
SkyCity wishes to thank all shareholders who participated in the equity raise
for their continued support.

How I see it. The business will keep limping along and get propped up with asset sales in due course.  Highly speculative whether this will ever generate commercially acceptable returns on funds employed again.  I seriously doubt it.  Fails my ESG test too.  There's far too much social harm from gambling in my opinion.

[Auto Rower]

I agree the new shares taken up was disappointing & a fail ,although be straight up it was expected to be so as the share price has been just under the offer price for the past few weeks and in line with other failures in the capitol raise sphere during this bear market .
 It has been interesting & still is tracking the share price closely for the past month or so whilst this has been going on ,the big question now is how low can it go as the underwriters sell off as much as they can , the share price for good reasons seems to be stopped at the 67 cents thereabouts .
I tend to agree with Waltzing Once the convention certain kicks in this will rise again very significantly .
 As far as esg Basil those persons =socially harming themselves will do it far more easily at the t a b and scratch cards drinking alcohol from the liquor store  etc. etc. without any help from skc .
 

[Waltzing]

Actually that report was an Anthropic AI report. We have set up a anthropic project with Financial documents in it. As we have several large AI accounts we can devote some space to Financials as some of our software under several privates registered companies process financial transaction data.

We ran  these report repeatedly until AI got the figures looking a little like they were accurate. AI at present on a normal non API account needs to process information multiple times to get an slightly accurate answer.

It thinks SKC has a chance in 5 years time.. inside that time frame its slow going according to AI.

The CAP raise was probably in light of all thing a success...

[Auto Rower]

I do not use AI much myself just for gathering info ,but your saying you get a different outcome each time with anthropic does not  look very robust or groundbreaking still usefull.
Interesting drop today as it seems the underwriters are disposing ,could go on for a while I look forward to seeing the outcome of this cap raise .
 

[Waltzing]

Off Topic, as AI model memory context is increased the amount of data that AI can access in memory may increase and the number of times context may need updating may reduce and its also the programming tools such as python and javascript used to create the "search" . When we hook up our new binding machines in the next 24 months we might get better answers..

Then running financial reports through the models for investment might become the go to..

Even now it only takes 10 minutes or so to get an interesting an answer and then perhaps 30 minutes to refine that answer...

Thats pretty good although the SKC did take 30 minutes at least as AI had to write python code it seemed which was a shock.

Why was AI writing python code and the AI model not doing the maths? It shows that AI models like anthropic dont run anything like what we the public think and we arnt normal public as we own software like the binding machine a class of software the public dont even know exists.

Now what we saw when it did the SKC report was that Anthropic was running AI models more like a autogenerated VBA excel module coded by AI and then it would generated information from the VBA excel spreadsheet and feed the resulting data report back into AI model along with the financial statements to compare its resulting computations in python to the financial reports..

It model could then get text fragments mixed up and then you see its not AI but more like some fancy maths language machine...

It does not creatively think as such and it more like panning for gold..