SkyCity’s Near-Term Outlook Improves on Strong Domestic Gaming and Tourism, FVE Up 3% to NZD 3.50

We raise our fair value estimate for narrow-moat SkyCity Entertainment 3% to NZD 3.50 (AUD 3.25 at the current exchange rate) on improved near-term earnings. Strong performance from the New Zealand gaming business and an uplift in domestic tourism activity in New Zealand and South Australia is leading to better-than-expected fiscal 2021 earnings. We raise our fiscal 2021 EBITDA forecast by 5% to NZD 250 million, in line with updated guidance. Shares have rallied following the updated guidance and are now trading in line with our revised fair value estimate. We expect SkyCity to pay a fully franked final dividend of NZD 0.05 per share, representing a 40% payout ratio of full year underlying earnings per share.