Reef Casino Sinking

17 April ASX announcement:

The Trust’s distributable profit* for the 1st half year from 1 January 2019 to 30 June 2019 is currently estimated to be between $1.7 million to $3.0 million. This current estimate is lower than the actual result for the same period last year. This is due to :-
 Softness in Cairns tourism – at a level not experienced for a number of years, made worse by an extraordinary wet season in the 1st quarter of the year.

 Short term variability in casino table gaming because of a soft gaming and Chinese tourist market including a soft Chinese New Year season, at a level not experienced in recent years.

 A subdued local economy due to soft tourism and increased local competition which has had an impact on casino slots gaming and to a lesser extent on hotel accommodation. A further update will be provided at the Annual General Meeting on 24 May 2019.

 

Then the AGM on May 24:

On 17th April 2019, a trading update advised that the Trust’s distributable profit for the 1st half year from 1 January 2019 to 30 June 2019 was estimated to be between $1.7 million to $3.0 million. Our current estimate of the distributable profit is between $1.2 million to $1.7 million.

Looks like this:

Reef Casino 1H18

The blue 2019 bar is the top end of the revised 2019 range.

How are the numbers on a global tourism hub anchored by a new casino working out again?

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Airport April: dead cat bouncing?

April brought some respite for Cairns Airport with a positive growth number breaking a run of negative months. However we should recall our comments from last month:

There will be no excuses in April with the tailwinds into Cairns all positive from the later Easter shift and a scheduled domestic capacity increase from Qantas.

While international at 6.4% lifted total growth to 1.5% the concern is domestic at just 0.7% despite the Easter shift and capacity increase. That doesn’t look like a good number at all in context and also following this weeks profit downgrade and commentary from Experience Co. Annual growth remains negative at -2%.

Airport April 1Airport April 2Airport April 3

 

Numbers from Sydney airport next week should provide some benchmark comparison. Will have to wait a while for BITRE data for more detail on capacity and routes for April.

Update from Sydney Airport:

“Domestically, subdued load factors and continued capacity management by airlines drove a reduction in domestic passengers for the month despite the later Easter holiday.”

Maybe April wasn’t that bad at least in a relative sense with domestic down -1.3%.

 

Experience Downgrade

Experience Co has yet again downgraded profit guidance due to performance of the Cairns related businesses.  But, “considering the arrival of the late season Cyclone Ann which has temporarily grounded our adventure experiences and skydiving activities, we have revised FY19 guidance.” Cyclone Ann? Huh?

 

ASX RELEASE
16 May 2019
TRADING UPDATE AND REVISED FY19 GUIDANCE Experience Co Limited (“Experience Co” or “the Company”) (ASX: EXP) today announces the following trading update and revised FY19 guidance.
Softer trading conditions in Far North Queensland (FNQ) highlighted in our half year results announcement have continued to impact the region’s tourism market which is experiencing a pronounced challenging period of trading.
Market trends impacting tourism operators in the region include:

• Passenger volumes into Cairns airport are down on the prior year, with the year-on-year international volumes impacted by the reduction in services into the region by international carriers such as China Southern.

• Domestic airlines have reduced their capacity into Cairns and continue to operate high load factors impacting relative affordability compared to international destinations.

• FY19 total passenger numbers ex-Cairns to the Great Barrier Reef are projected to be more than 12% down on prior year with EXP Great Barrier reef volumes expected to be down circa 8% over the corresponding period.

These factors have impacted our earnings in the region, in particular higher yielding activities on the Great Barrier Reef, operated by our Big Cat, Reef Magic and Great Barrier Reef Helicopter brands, with revenue loss and mix relative to forecast, driving a decrease in EBITDA margin, given the operating cost leverage of the FNQ adventure experiences.

In our FNQ skydiving operation we have revised volume expectations down by approximately 4,000 (circa 20%) tandem jumps for 2H19, the decrease being predominately in the April to June period.

Following a review of our Easter holiday trading in late April and into early May and considering the arrival of the late season Cyclone Ann which has temporarily grounded our adventure experiences and skydiving activities, we have revised FY19 guidance.
As a result, revenue for FY19 is expected to be down by circa 4% compared to previous expectations and Underlying EBITDA is expected to be in the range of $27m to $28m.

The core skydiving business in Australia (excluding FNQ) and New Zealand remains solid and is tracking to expectation for the remainder of FY19. Our expectation for full year growth in tandem jump volumes is circa 5% on the prior period across these markets.

The medium-term outlook for the Cairns tourism market remains positive, however we expect the prevailing challenging trading conditions to continue into FY20. Given the fixed cost intensity of our FNQ operations, management is proactively reviewing its assets, product mix and ongoing strategies to increase its market share during this weaker trading period.

Fiona van Wyk Company Secretary f.vanwyk@experienceco.com

The changing demographics of Kennedy

We typically associate Cairns with the Federal electorate of Leichhardt. That is increasingly less so. The division of Kennedy has been intruding into the southern suburbs of Cairns for the last two redistributions because the population of Kennedy continues to decline relative to Leichhardt. Leichhardt is unique in only having a single boundary so there is only one way to balance numbers.

The most recent redistribution took out Bentley Park into Kennedy. The numbers as presented in the AEC determination based on electors at 6 January 2017:

Kennedy

This is SA2 so breaking this down by regional SA4: 60% of Kennedy electors are within Cairns SA4. 16% of Kennedy electors lived in the Cairns southern suburbs based on the new electoral boundaries. But wait there’s more!

The AEC projections there to 2021 look rather suspect. Since the last election ABS numbers indicate a population decline in Mt Isa and population increase in the Southern Suburbs which combined would indicate a total net relative shift in Kennedy including the Bentley Park annexation of 6-7 K electors to the Cairns suburbs from the outback.

Does this matter. Katter 2016 first preference by location for some larger booths:

Mt Isa 47%

Cloncurry 46%

Innisfail 40%

Atherton 39%

Mareeba 39%

Gordonvale 34%

Edmonton 34%

Mission Beach 27%*

Katter will be returned because everyone expects it and preference flows but he is not unassailable particularly as this trend continues with Cairns South the population growth centre of Kennedy. KAP candidates performed quite poorly in 2016 in both the neighbouring electorates of Leichhardt and Herbert.

*Mission Beach is included specifically for Pete Faulkner at Conus and is also the top Greens booth in Kennedy at 17%.

 

BITRE data update

BITRE airport data has been updated to January 2019:

BITRE 2019 1

You can go back and look at how much this has changed since my post last year Cruising just above stall speed.

Cairns is lagging in negative territory even before the shocking numbers for February and March, but poor Darwin. Proserpine is falling fast following the Cyclone Debbie wave and position in the top 20 is threatened. Who would have thought a few months ago that Karratha would now be in the middle of the list.

Route data from BITRE is more recent to February 2019:

BITRE 2019 2

Brisbane is a debacle at least until the Qantas capacity returns from March 31, Sydney has now rolled over slightly , Melbourne growth remains but with some questions on softer load factors in February.

Note: Sorry the series labelled Cairns should be Brisbane for the BNE-CNS route.

March quarter rental data

March quarter rental trends for Northern Queensland regional cities updated for the most recent bond data from the Residential Tenancies Authority:

Rentals march 3Rentals march 2Rentals march 1

A sharp jump in Townsville is almost certainly flood related which would have removed housing stock. The data is a median for the quarter with the flood at the beginning of February so may not fully reflect post flood rents. This will only reflect the median for new bonds lodged not the full stock of bonds where changes would be expected to lag. Something to watch in coming quarters.

This also closes the Cairns rent premium to the lowest margin in two years at $72.50 / week above Townsville for a three bedroom house. Cairns rents continue to rise slowly at around 2% p.a. roughly in line with CPI.

New bonds lodged during the quarter for 2 bedroom units in Cairns were down around 12% on the March quarter 2018 and 20% compared to March quarter 2017.  There is a similar trend in all categories of housing. Total rental bonds held by RTA for Cairns Regional Council at 31/3/2019 were 183 fewer than a year earlier.

Previous posts: Cairns rental bond dilemma; Moar rental bond stuff

 

Airport continues descent

The monthly numbers for March at Cairns Airport were as bad as expected.

Airport March 1Airport March 2Airport March 3Airport March 4

As flagged last month the March numbers are negatively impacted by lunar shifts in Easter and the new year. Again the best timely commentary on general market conditions comes from Sydney Airport which also did a data dump on Good Thursday for bad news.

International and Domestic passenger numbers declined 3.8% and 3.4% respectively on the prior corresponding period. As expected, International passenger numbers were impacted by a shift in timing of both Easter and Lunar New Year driving decreases in both seat capacity and load factors. However, strong load factors on North American routes helped boost US traveller growth to 11%. Domestically, the trends for March were similar to the year to date, where a decrease in frequencies, aircraft downgauging and subdued load factors drove a reduction in domestic passengers for the month.

There will be no excuses in April with the tailwinds into Cairns all positive from the later Easter shift and a scheduled domestic capacity increase from Qantas. After that the lunarcy events will be behind and we shouldn’t (?) see negative monthly domestic numbers of that size at Cairns Airport for the remainder of the year.

 

 

 

 

Townsville WTF are you doing?

I don’t know do you?

Townsville EGM Expliosion

Who could ever guess that the biggest statistical outcome from a disaster event in Townsville would be an explosion in pokie revenue, up 21% for the month on the previous March?

Note: The graph above is annual growth. March comparison numbers would be boosted by the early Easter in 2018 which would take out the Good Friday trading day for venues in that year and add maybe 3% to growth  rates for the month. This would only be a partial contribution to the numbers north of the Burdekin with Cairns also up 10.9% against 4.5% for all Queensland for the month compared to the previous year.

 

Townsville floods the pokies!

I usually update the Queensland EGM (pokie) statistics promptly every month. The numbers for February were released a couple of weeks ago and I haven’t posted because I’m completely flummoxed by the results.

Flooded Townsville exploded with pokie revenue win/loss up an astounding 33% on the previous year in February. That’s about an additional $2 million flushed down the machines in the wake of a disaster.

It has even thrown an extreme wonk into the annual data:

Townsville floods pokies

I don’t know what to make of it and not sure I believe it. Having analysed this data for a while now I can think of a couple of possible partial explanations but not sure I find any satisfactory to explain this extraordinary outcome. Barring any rational explanation I can only suggest it could make a good sociology thesis.

Meanwhile the Cairns growth numbers continue above the Queensland average. Mostly in the suburbs but some interesting numbers down in Innisfail. More significantly the Douglas pokie boom is over. Douglas and Cairns City SA2 (ex casino) are both double digit negative for the opening two months of the year.

 

Dark February at Airport

Travelling back through Brisbane Airport yesterday a quick check on my budget Acer Spin road warrior discovered the Cairns Airport statistics for February. However by the time I arrived home the Airport web site seemed to be undergoing an update with links moved and all I could find on the performance page was the message “Sorry, there are currently no listings.” Luckily the PDF was still open on the road warrior:

Airport Feb 1

  1. Maybe i’m too pedantic but how does an organisation like Cairns Airport manage to post online a document with such obvious errors in some of the growth percentages without being picked up by somebody? Maybe it will be corrected when reposted?
  2. The numbers and trend are awful. You have to go back to the dark days following the GFC crunch to find a negative domestic month of this size. The -7.9% is correct for the month and now -1.65% annual and falling.

Airport Feb 2

However those early month seasonal factors also come into play as well as recent climatic events. As the largest airport and international gateway Sydney Airport’s ASX listing provides the best timely benchmark. Sydney also posted February numbers this week and the monthly commentary is worthwhile posting on seasonal and capacity factors:

The number of International passengers moving through Sydney Airport in February was slightly ahead of the prior corresponding period (pcp) growing by 0.4%. Domestic passenger numbers were down 2.7% on the pcp.

International passenger numbers grew by 0.4%, which is in line with seat growth through the period. As indicated last month, the shift in the Lunar New Year buoyed January while impacting the February comparison.

International passenger growth year to date is 2.9%, representing close to 83,000 additional travellers through the airport. Last year the Lunar New Year shoulder extended into March, so the shift forward in 2019 will impact the March numbers.

Reduced domestic seat capacity (-1.9%) combined with lower load factors (-0.7%) has impacted the February domestic passenger numbers compared to the pcp. In addition, cancellation rates for the month continue to be higher than usual.

Domestic at Sydney was flat in January so it is noted that they have also experienced a slightly slower negative growth start to the year with international growth also below annual growth in the opening months.

Local media, tourism and lobby groups seem to have finally discovered the slow tourism narrative with the Cairns Post running a campaign on it for a week and we were even feted with a visit from Kate Jones. A Sunday jaunt to Port Douglas (for some Pickled in Port drunken gingers) and a weekday evening wander around the city this month both indicated a quiet March also with some businesses taking the opportunity for a break.

April will be a key month to watch with additional Qantas capacity to Cairns scheduled from March 31. Easter also moves later into April with Good Friday last year on March 30. Hanrahan says if we can’t get a positive growth month in April with a tailwind from those factors then we’ll all be rooned before the year is out.