SkyCity's share plunge dominates NZ sharemarket

SkyCity Entertainment dampened the New Zealand sharemarket by tumbling more than 13% after becoming embroiled in more regulatory action.

Monday, September 4th 2023, 6:21PM

by BusinessDesk

The S&P/NZX 50 Index closed down 15.69 points or 0.14% to 11,513.04 on steady trading of 30.82 million shares worth $93.02m. There were 63 gainers and 73 decliners on the main board.

SkyCity fell 31c or 13.3% to $2.02, with 4.89m shares worth $9.77m changing hands.

The Internal Affairs Department has told SkyCity that it is making an application to the Gambling Commission to suspend the casino operator’s licence in Auckland, Hamilton and Queenstown for a period “in the range of 10 days.” The decision may take some months.

This follows a complaint made to the department in February last year by a former customer who gambled at SkyCity Auckland from August 2017 to February 2021.

The department secretary said the casino business did not comply with requirements in its Auckland host responsibility programme relating to the detection of continuous play by the customer. Australian authorities are also looking at money laundering procedures at SkyCity’s Adelaide casino.

Mark Lister, investment director at Craigs Investment Partners, said SkyCity’s hefty share price fall looked like an over-reaction.

“Often, share prices can shoot first and ask questions later. If SkyCity is closed for 10 days, they will lose $10m-$15m in operating earnings, and that doesn’t make the company 13% worse off than it was,” Lister said.

“It was an ugly headline, but SkyCity was sold off more than the actual financial impact. I don’t want to downplay it – is their procedure not up to standard? – but looking ahead a year or two, the issue will be long forgotten.”

NZ market listless

Lister said the local market was directionless, while others in the Asia-Pacific region were strong. The Hong Kong Hang Seng Index had risen 2.42% to 18,827 points by 6pm NZ time; the Shanghai Composite was up 1.16% to 3169.67 Japan’s Nikkei 225 had gained 0.51% to 32,876.53; and S&P/ASX 200 Index was up 0.48% to 7313.5.

Lister said the Chinese government provided further economic stimulus late last week, creating some short-term confidence.

Meridian Energy, the largest local stock on market capitalisation, did some heavy lifting on its own, increasing 23.5c or 4.46% to $5.50.

Other gainers were Vulcan Steel up 20c or 2.35% to $8.709; Air NZ increasing 1.5c or 1.85% to 82.5c; Foley Wines collecting 3c or 2.46% to $1.25; Michael Hill improving 2c or 1.96 to $1.04; South Port NZ rising 15c or 2.;05% to $7.47; and WasteCo up 0.004c or 6.25% to 6.8c.

Mainfreight was down 32c to $66.34; Contact Energy declined 7c to $8.32; The Warehouse decreased 6c or 3.37% to $1.72; a2 Milk shed 10c or 2.04% to $4.79; Pacific Edge was down 0.007c or 6.54% to 10c; and Move Logistics gave up 3c or 4% to 72c.

Napier Port was down 4c or 1.78% to $2.21; NZME declined 3c or 3.13% to 93; Eroad shed 9c or 6.47% to $1.30; Scott Technology decreased 10c or 3.13% to $3.10; Solution Dynamics fell 11c or 5.79% to $1.79; and Savor Group gave up 2c or 6.06% to 31c.

Property stocks Argosy declined 2c to $1.15; Vital Healthcare Trust was down 6c or 2.68% to $2.18; and Stride shed 3c or 2.16% to $1.36.

Software firm Black Pearl Group, which delivers AI-driven sales and marketing data to small and medium-sized businesses in the United States, rose 10c or 20% to 60c after detailing strong revenue growth to shareholders at its annual meeting.

With more than 3,800 customers, Black Pearl said its new data product Pearl Diver had increased new annual recurring revenue from $354,000 in June to $667,000 in August – a total of $1.5m in 90 days.

The group’s annual recurring revenue of $4.1m had already increased 56% compared with the whole of the previous year.

Ventia Services was down 2c to $3.05. Ventia earlier reported a solid six-month result with revenue up 11% to $2.786b, operating earnings (Ebita) increasing 10.7% to $225.1m, net profit gaining 11.3% to $94.8m, and interim dividend up 11.2% to 8.31c a share payable on October 6.

Ventia has $17.5b worth of infrastructure maintenance work on hand and expects full-year net profit to grow 7-10%.

Booster Innovation Fund, up 0.004c to $1.504, has increased the value of its fund by $454,000 or 2.7% to give a net asset value of $1.539 per unit.

Interestingly, Jarden reports that the French government is paying farmers US$215m (NZ$361m) to destroy this season’s surplus wine, which will be distilled into ethanol and used in cleaning supplies and perfumes.

It's also paying farmers to reduce their vineyards to avoid future gluts, and Bordeaux farmers have applied to rip out 8% of the region’s vines. The current surplus is due to increased global competition and less sales to China.

Tags: Market Close