1 Nov 2010

Sky City gears up for the Rugby World Cup

6:20 am on 1 November 2010

Sky City says the Rugby World Cup will boost its first half earnings next year by up to 25%.

The listed casino operator says its two Auckland hotels are already nearly fully booked for October next year, with rooms fetching more $1000 a night for the duration of the event.

Sky City is planning to spend around $40 million to develop Federal Street into an entertainment precinct and create four VIP gaming salons in its hotel in time for the Rugby World Cup.

Chief executive Nigel Morrison says that based on the 2005 British Lions tour, half of the expected boost in earnings in the first half will come from gaming, with the other half from non-gaming sources.

Mr Morrison defended the performance of Sky City's share price over the past year, after some investors raised concern at the company's annual meeting last week.

The stock has fallen 12% since the start of the year, compared to the NZX benchmark which has lost 2%.

Stock undervalued

Mr Morrison says the stock is undervalued as institutional investors have failed to realise the growth potential of the company.

But he believes that will change over the next six months.

Meanwhile, Sky City's first quarter earnings for the current financial year rose 3.3% on the same period last year, thanks to strong growth in its VIP business.