Global markets were mixed overnight as Wall Street reversed gains in early afternoon trading on Thursday as tech stocks, including heavyweights Apple and Google parent Alphabet, edged lower.
A Tourism boom across Australia and New Zealand is one of our key medium-term investment themes. Recent tourism data showed NZ visitor arrivals for the June 2017 year rose 10 percent to a new record high of 3.6 million, compared with year earlier levels. Among compnay’s set to benefit from the tourism tailwind are domestic airports, restaurants, entertainment facilities, education providers and retailers. We believe on such beneficiary is SkyCity Entertainment which we discuss below.
Stock in Focus: SkyCity Entertainment (SKC.NZ / SKC.AX)
SkyCity shares slipped this week as the casino operater announced it will write off all the goodwill in its Darwin casino complex with an A$95 million impairment, saying increased competition for gaming machines in the Northern Territory hurt revenue and earnings.
The non-cash impairment will be recognised in its results for the year ended June 30 and will reduce the book value of the Darwin property to A$195 million. The impairment of Darwin goodwill is disappointing, although it does highlight the unavoidable regulatory risk attached to the gaming sector. Further, the Australian Casino’s have been a cause for concern for some time now, and we believe this was reflected in the relatively muted share price reaction.
Members should look out for a full update on SKC to be released in next week’s weekly report.
Australia & New Zealand Market Movers
The Australian share market tried to join a global rally on Thursday (ASX 200 index +0.15%) but the ASX’s gains were kept in check by a continued surge in the Australian dollar. In stock news, miner Fortescue posted full-year shipments in line with guidance and flagged a further fall in cash costs. Macquarie Bank made a positive announcement that it forecasts its 2017-2018 result will be in line with its record 2016-2017 profit.
The New Zealand market was little changed on Thursday (NZX 50 index -0.01%) with A2 Milk at a fresh record (jumping another +7%) and Fletcher Building continuing to recover, while Sky City Entertainment Group fell. In other stock news, Oceania Health which listed in May, said full-year net profit and pro-forma underlying earnings exceeded its forecasts on the back of a lift in the valuation of its care and retirement village assets, at $44.9 million compared to the $25.3 million forecast.
3 Things Markets Will be Watching this Week
1. US Corporate Earnings season will be centre stage with major Tech stocks such as Amazon & Facebook set to report
2. The US Federal Reserve makes an interest rate decision Thursday morning (AU/NZ time)
3. OPEC oil producing nations are set to meet in Vienna this week
Have a Great Day,
Team