A bargain hunter’s guide to SKYCITY Entertainment Group Limited-Ord

Is SkyCity Entertainment Group Limited-Ord (ASX:SKC) CEO Nigel Morrison worth $100 million?

That’s how much investors slashed from the company’s market capitalisation yesterday after the announcement that he would be leaving the company at the end of April.

Morrison might be flattered. The 4% fall implies investors have less confidence in the company’s future without him at the top. It’s certainly better than the alternative; more confidence with him gone.

That would be hard to believe though given the stability Morrison has brought to the gaming and entertainment company over the last eight years. Morrison took over in 2008, at the very apex of the financial meltdown, just as capital flows around the world started to seize and consumers started running for cover.

Since then SkyCity has seen its share price rise from $2.80 in May 2008 to $4.29 today under Morrison’s lead, a rise of 53%, while the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO) is down 14%.

What now for investors?

Yesterday’s share price drop is less likely to be attributed to Morrison himself, and more likely in response to the uncertainty of a permanent replacement.

For investors the timing makes good sense. SkyCity’s immediate future is well set out towards developing the expansion in Auckland and building the New Zealand International Convention Centre (NZICC), so there is time to find a suitable candidate to facilitate the next phase of the company’s growth.

Should you buy?

I have long been a fan of SkyCity’s investment proposition. The company has an enviable market position and in Auckland – the company’s biggest operation – has strengthened its revenue streams by building an entertainment hub under Morrison’s leadership.

The company pays an attractive dividend and is reasonably priced, particularly compared to Star Entertainment Group Ltd (ASX:SGR). If the share price fell further I would be tempted to increase my current holding in the company.

A better buy than SkyCity? Get our Top Dividend Stock for 2016

Our resident dividend expert names his Top Dividend Share for 2016. Not only are the shares dirt cheap, the company is trading on a 5.6% fully franked dividend yield. Simply click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required!

Motley Fool contributor Regan Pearson owns shares of Sky City Entertainment Group Ltd.. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.