Transtasman Punts by IRG: SkyCity looks good gamble

Photo / Dean Purcell

Casino and hotels company SkyCity Entertainment Group reported a record net profit of $71 million for the first half of 2010, up 29.6 per cent, earnings growth of 7 per cent from its Australian casinos and said earnings in New Zealand remained stable with an increased market share.

The company is going to be up for a one-off deferred tax liability adjustment of $60 million in 2009-10 thanks to changes in the Budget. That resulted in a reduction in the corporate tax rate from 30 per cent to 28 per cent but removed the ability to depreciate buildings (for tax purposes) with an expected useful life of over 50 years. The adjustment is a one-off.

For 2009-10, SkyCity said it expects net profit after tax to be in the $136-$140 million range, boosted by the $10 million sale of non-core cinema operations.

SkyCity has recession-resistant and monopolistic characteristics and despite its share price being weak for some time, is expected to pick up once the recovery gathers pace.

LEIGHTON ON COURSE
Australian contract miner and engineer Leighton Holdings is on course to achieve its expected full-year profit of A$600 million. Chief executive Wal King has repeated the group's target of a A$900 million profit in five years.

The company reported its biggest profit ever for the 2008-09 year despite being impacted by a reduced property investment contribution and previously flagged impairments. The company also recently announced its wholly-owned Leighton Asia subsidiary won a A$172 million contract for provision of mining services at Indonesia's Martable Gold Mine - a world-class asset with a resource base of 6.5 million oz gold and 66 million oz silver.

Leighton's earnings are robust and a strong performance is expected in 2009-10.

An IRG disclosure statement can be obtained free of charge by calling IRG 0800 474669, or by email info@irg.co.nz.