Macquarie estimates a pathway to NZ$400m earnings (EBITDA) in the next four years, implying 5% average annual growth, from the NZ$303m reported in FY19. This was calculated on a pre-covid and continuing-operations basis.
The broker also highlights the potential for capital management within two-years, given leverage drops to appropriate levels in FY23, and may involve buybacks. It’s considered M&A is unlikely.
SkyCity holds long-term exclusive licences with SkyCity Auckland, representing more than 70% of earnings, and as such, the analyst doesn’t foresee competition risk. However, there is considered risk of a change in New Zealand’s gaming tax rate.
Macquarie retains its Outperform rating with the price target rising to NZ$4.05 from NZ$3.75.
Sector: Consumer Services.
Current Price is $3.33. Target price not assessed.
