TLDR Forsyth Barr says SkyCity is entering a stronger cash flow phase after completing major capital projects The company’s NZ$2.5 billion in operating cash flow since FY15 was largely absorbed by heavy spending SkyCity could deliver a free cash flow yield above 14% in FY26, rising to around 20% by FY28 Asset sales, including a hotel, office property, and carpark, should reduce costs and boost returns A double-digit cash dividend yield in FY28 is possible, with residual cash left over for other initiatives
SkyCity Entertainment Group is expected to move into a more productive period for shareholders now that its two biggest capital projects are done, according to investment firm Forsyth Barr.
The New Zealand casino operator runs integrated resorts in Auckland and Adelaide, along with smaller casinos in Queenstown and Christchurch.
Analysts Paul Laxton Koraua and Andy Bowley published a note on Smartkarma saying SkyCity should be a highly cash-generative business from here.
They said the company’s record over the past 12 years has been disappointing, largely because major construction projects absorbed more than half of the NZ$2.5 billion in operating cash flow generated since FY15.
That spending led to poor outcomes for shareholders. But with those projects now finished, analysts say the picture is set to change.
Two Key Projects Now Complete
The two developments now finished are the New Zealand International Convention Centre and the expansion of SkyCity Adelaide.
Forsyth Barr said those completions remove the main drag on free cash flow and open the door to higher shareholder returns.
The firm forecast a free cash flow yield above 14% for FY26, with a path to around 20% by FY28.
Asset Sales to Help Boost Returns
Part of that improvement is expected to come from asset sales already underway.
SkyCity is marketing The Grand