SkyCity drags NZ sharemarket down

SkyCity Entertainment plunged to a 24-year low on its second earnings downgrade within six months but the New Zealand sharemarket remained reasonably resilient with a slight fall.

Thursday, June 6th 2024, 6:41PM

by BusinessDesk

The S&P/NZX 50 Index was down early to 11,872.1 following SkyCity’s struggles but recovered to close at 11,973.01, down 23.7 points or 0.2%.

There were 73 gainers and 51 decliners on the main board with 36.08 million shares worth $151.36m changing hands.

Matt Goodson, managing director of Salt Funds Management, said buying in large cap growth stocks seemed to be flavour of the month.

“Early in the month, you do see inflows of capital from KiwiSaver and other funds.”

The local market was backed up by strong rises on Wall Street and the Australian S&P/ASX 200 Index, up 0.68% or 7822.1 points at 6pm NZ time.

The S&P 500 and Nasdaq Composite, fuelled by the AI boom, reached new highs after rising 1.18% to 5354.03 points and 1.96% to 17,187.9 respectively.

Chip maker Nvidia rose 5.16% to a new high of US$1224.4 and became the world’s second-most valuable listed company with market capitalisation of $US3.1 trillion, just behind Microsoft US$3.15t and ahead of Apple $US3t.

Nvidia’s share price has risen from US$190 in May 2022, more than doubling this year and tripling in 2023. Nvidia, whose chips power servers that run AI platforms, is having a 10-for-one share split at the end of the week “to make stock ownership more accessible to employees and investors”.

The share price will re-emerge at about $US122. The Bank of Canada became the first central bank to cut interest rates, trimming its official rate 25 basis points to 4.75% – the first reduction in four years after inflation hit a three-year low of 2.7% in April. The market there is expecting another rate cut next month.

On the NZ market

At home, SkyCity finished the day tumbling 26c or 15.03% to a 24-year low of $1.47 on trade worth $10.06m, after reaching an intraday low of $1.34. SkyCity is suspending its dividend through to the end of the 2025 financial year.

The casino and hotel operator reduced its full-year operating earnings (ebitda) guidance to $280m-$285m, from $290m-$310m, and net profit of $120m-$125m, from $125m-$135m. Full-year 2025 guidance is ebitda of $250m-$270m.

SkyCity is due to pay the Austrac civil penalty of A$67m next month and has committed $76m capital expenditure to complete the NZ International Convention Centre next year. SkyCity told the market it has prudent levels of liquidity headroom.

Goodson said SkyCity was paying the price for its past regulatory sins and the tough economic conditions and decline in discretionary spending, as well as the disaster that is the convention centre and Horizon Hotel.

“Its debt levels are really creeping up and it had to suspend the dividend. It’s a very disappointing outcome for the investor when SkyCity was once a blue-chip stock.”

Utilities investor Infratil reached a new high after gaining 33c or 2.98% to $11.40. Contact Energy gained 16c to $9.34.

Summerset rebounded 30c or 3.14% to $9.85; Skellerup increased 12c or 3.17% to $3.91; Gentrack gained 15c to $9.75; Port of Tauranga was up 8c to $5; Mainfreight collected 73c to $69.10; and ANZ Bank added 54c or 1.75% to $31.34.

Vista Group rose 7c or 3.14% to $2.30; Vulcan Steel gained 20c or 2.63% to $7.80; Scales Corp was up 8c or 2.37% to $3.45; T&G Global improved 5c or 2.94 to $1.35; Smartpay increased 5c or 3.85% to $1.35; and Eroad was up 3c or 3% to $1.03.

AFT Pharmaceuticals increased 10c or 3.23% to $3.20. The company has an agreement with Alexso to distribute Maxigesic rapid pain relief tablets in the United States.

Fisher and Paykel Healthcare was down 75c or 2.4% to $30.50 on trade worth $20.63m; Turners Automotive declined 7c or 1.73% to $3.97; Rakon decreased 3c or 3.85% to 75c; and ArborGen Holdings fell 1.3c or 8.23% to 14.5c.

Synlait Milk hit a new all-time low after losing 1c or 2.53% to 38.5c. Comvita fell 9c or 6.47% to a 23-year low of $1.30. Its peak was $12.55 on May 1, 2016.

In the property sector, Investore was up 3c or 3% to $1.03; Stride shed 2c to $1.21; and Property for Industry was down 3.5c to $2.185.

New Zealand Oil & Gas is delisting from the NZX on June 26, with the last trading on June 24. The NZX will then have 181 stocks listed on the main board.

(This story has been changed to amend a reference to a SkyCity court case)

Tags: Market Close