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Current as of 25/12/14 07:40PM NZST

Anne Gibson

Property editor of the NZ Herald

Place your bets - on SkyCity's annual result

News of convention centre progress is on the cards at SkyCity’s annual result today

Growth across all SkyCity businesses was forecast. Photo / Getty Images
Growth across all SkyCity businesses was forecast. Photo / Getty Images

Significant news will emerge from SkyCity Entertainment Group when its annual result is revealed this morning, with the $402 million international convention centre potentially at the heart of it.

A SkyCity spokeswoman said yesterday the company had "a lot to announce" but refused to say if it was about the centre or other matters - like progress on the $370 million Adelaide upgrade now in full swing, or the company's tilt at Queenstown and a possible hotel and convention centre on the camping ground.

But the business with a market capitalisation of $2 billion has not yet started work on the Auckland centre between Hobson St and Nelson St, with no land cleared and no consents in place so it can start, leaving some questioning the apparent hold-up.

Some analysts expect $118 million normalised profit to emerge from the business, saying this figure is in line with the consensus of forecasts.

Matt Goodson, Salt Funds Management managing director, said SkyCity's share price movement lately indicated market expectations were "not particularly high" and he had some doubts about the strength of its financial performance.

"There's three things - first is the overall trading conditions and whether New Zealand's economy has been recovering, and particularly Auckland's; second, progress with the convention centre project which doesn't superficially from the outside appear to have been particularly rapid; and third progress on Adelaide and initially that's [about] trading and whether the redevelopment will hit the mark," Goodson said.

An analyst in Australia was more upbeat about the outlook.

Michael Goltsman of Citi Investment Research forecast the strong New Zealand economy to boost earnings at one of the NZX's biggest companies.

"January 2014 trading has been strong, with normalised revenue up 5.4 per cent on the previous corresponding period, thanks to a more buoyant New Zealand economy," Goltsman said.

"Growth is expected across all businesses in the second half of 2014. While Adelaide should benefit from new premium gaming rooms, earnings growth should be restrained in the near-term due to reduced gaming capacity.

"We forecast full year 2014 normalised net profit after tax of $132 million, a 3 per cent drop."

Goltsman has upgraded his rating on the stock from hold to buy, citing the convention centre as a potentially massive money-spinner.

Craigs Investment Partners head of private wealth research Mark Lister said the finance community had been "underwhelmed" by SkyCity's performance lately.

"If I had to pick a couple of companies that are a little lacklustre, I would include SkyCity in that. Things seem to be going slow."

At the interim result announcement a few months ago, managing director Nigel Morrison forecast growth "across all SkyCity businesses" in the second half of 2014 and said trading in January had been pleasing, with revenues above the previous year in all businesses.

SkyCity shares closed down 5c yesterday at $3.55.

- NZ Herald

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