SkyCity Upgrade | Telstra Soars on TPG News

30 January 2019

Global markets were mixed overnight as shares on Wall Street swung between gains & losses.  Investors are waiting for upcoming trade talks between the US and China and the Federal Reserve's first policy meeting of the year later this week. 

At the same time, markets continue to digest corporate earnings reports. Apple is set to report after the closing bell this morning – a result which will be scrutinised after the Tech giant earlier this month flagged a weaker result earlier this month, pointing to China. Once again, the current US corporate earnings season is going to be the key near-term factor in terms of driving markets which we are watching closely.


Stock in Focus: SkyCity (SKC:NZX / SKC:ASX)

SkyCity shares have started the year strong, and rallied after raising their guidance for 2019 first half earnings, which have been better than expected due to strong performance from their core Auckland operations and International Business (VIP) making a healthy recovery.

SKC expect normalised earnings for the half to be around $189m, and normalised net profit after tax of $97m, both up +10% and +11% respectively from the same corresponding period last year. With SKC’s core businesses performing better and the recent disposal of their struggling Darwin casino, SKC are expecting a better result for the 2019 financial year. 

We have been vocal supporters of SkyCity as an investment and are encouraged by the update.

Members should look out for a full update on SkyCity to be released in today’s weekly report.

Australia & New Zealand Market Movers

The Australian share market was in the red on Tuesday (ASX 200 index -0.53%) as Telstra's surge was not enough to offset the losses of bank and healthcare stocks.

Telstra shares soared nearly +8% after news that TPG Telecom is cancelling its mobile network rollout (because of the federal government's ban on using equipment from China's Huawei). The market has seen this as an unusual win for both companies, as TPG would have taken some time to earn a return on capital investment on its proposed 5G project, while the news clearly reduces potential competition for the incumbent Telstra. Miners such as BHP and Rio Tinto were also strong as the spot price for iron ore surged to a 10-month high following a second tailings dam disaster at a Vale-owned mine in Brazil in a little more than three years.

The New Zealand market sold off yesterday (NZX 50 index -1.19%) following global moves. Analysts downgrading their forecasts for Australian healthcare device maker Resmed after a poor December quarter report also weighed on New Zealand rival Fisher & Paykel Healthcare. Fisher & Paykel was the biggest drag on the market index.


3 Things Markets Will be Watching this Week

  1. US corporate earnings season continues this week.
  2. The US Federal Reserve makes its first monetary policy decision for the year on Thursday morning (AU/NZ time).
  3. The UK parliament votes on a new Brexit plan on Wednesday morning (AU/NZ time)


Have a Great Day,


Investors are waiting for upcoming trade talks between the US and China and the Federal Reserve's first policy meeting of the year later this week. 

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