SkyCity shares win consent bonus

An artist's impression of the Sky City convention centre, as seen from Wellesley St. Photo / Supplied

SkyCity Entertainment Group's stock has avoided a 15-20c hit after it was decided the NZ International Convention Centre does not need resource consent to be publicly notified, according to an expert.

Adrian Allbon, senior research analyst at Craigs Investment Partners, issued a note saying the independent planning commissioners' decision not to publicly notify the consent was positive, "particularly post the Ports of Auckland Court case, but one I think the share price was mostly [80 per cent or so] factoring in. As we have previously commented a notified outcome was probably worth 15 to 20c on the downside".

"The preliminary non-notified decision now enters a finalisation process over the coming months. The timetable for target signing of the construction deal by October is consistent with our SkyCity Auckland estimates, which have the NZICC concessions operative in 2H16," Allbon said.

Paul Turnbull of First NZ Capital also welcomed the decision.

"The notified/non-notified status of the air bridge within the preliminary design was an area of concern for SKC, however it was not raised as an issue in the planners report. The decision for the full resource application to proceed on a non-notified basis is a positive outcome for SKC and, while the likely timing of concession activation and construction remains consistent with our current forecasts, it does alleviate project risk around timing," Turnbull said.

"This will allow SkyCity to move ahead with selection of a construction partner for the project while awaiting the final resource consent decision," he said. "SkyCity expects to sign a binding works contract for the NZICC by October 2015, at which point project related concessions at the Auckland property will be activated."

Darren Manning, Forsyth Barr's head of markets, said non-notification saved time.

"This is what the SkyCity team had been hoping for, as it will significantly speed the process up relative to having to go down a publicly notified path ... There had been some concern that, given the debacle the Auckland Council had experienced with the wharf extension consenting process recently, that this may mean it steered down the publicly notified route for safety sake, hence this is a nice little win," Manning said.

SkyCity shares closed down 1c yesterday at $4.19.

SkyCity's Auckland concessions

• Broader rollout of TiTO and cashless gaming.

• Capacity to deploy an additional 230 extra gaming machines.

• Capacity to deploy an additional 40 table games.

• Capacity to deploy 240 new automated table game terminals.

• Extension of the venue licence to 2048.

• Gaming tax rate certainty for 7 years.

[Source: Paul Turnbull, First NZ Capital]