SKC

Got to feel a little sorry for Skycity, the casino business of NZ. Revenues collapsed into the pandemic, and have been hit repeatedly by NZ lockdowns ever since.

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But those lockdowns came just after a pretty massive capex program.

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Which resulted in gearing going up.

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In general, gearing isn’t all that bad, modest even, at a headline level. But if the earnings and cashflows aren’t there, however temporarily, solvency can still be an issue.

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Creditors have been prepared to look through it, knowing that the best way to get paid is to be a little patient, hence the update from earlier in the month.

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We see SKC as a high risk high returning reopening play. Not at all for the faint of heart.

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