Reef Casino AGM was today and provided an update on current trading:

Our current estimate of the distributable profit* for the first half year from 1 January 2018 to 30 June 2018 is approximately $4.8 million.
So far in the first 4 months of this year, total rental paid by the Reef Hotel Casino to the Trust is up by 19% compared to the same period last year. This partly reflects a degree of short term trading variability in the casino industry and a relatively soft start to last year.
Key factors include an improved Chinese New Year high tourist season, strong performance in table games premium play and strong performance by hotel room operations. We continue to take on the local competition in electronic gaming machine operations and our food and beverage operations continue to strongly support the overall performance of the complex.

That would sound impressive except that ex the rebound from last years slump it would be the lowest 1H result since 2012. It isn’t a stellar result.

Attending this AGM is always entertaining with questions from the floor winner this year dress standards and the appropriateness of Jackie Howe singlets and thongs in the context of gender discrimination. They probably got lost looking for Tradies Bar.

Anyway independent director Keith DeLacy managed a re-election speech this time without having to point to his head for clarification when he said independence was a state of his mind. There was also a rather curious joking comment from doddering Chairman Ben on inadequate takeover proposals. CEO Alan Tan also suggested Commonwealth Games benefits had been overhyped. There seems to be an increased focus on premium play including in capex plans.

Questions at the AGM itself are usually unproductive much better to retire and discuss over coffee. Alan Tan wasn’t really as forthcoming as I would have liked on the EGM pokie competition and expanded hotel hours which is very clearly an issue with this business. We did however agree that capital flight may be an appropriate term for the current hotel investments surge by the GA Group in Cairns. Their absence of any previous hotel experience was noted.

Meanwhile in other corporate activity Mantra Group shareholders approved the scheme of arrangement and the takeover by Accor will complete next week. Ex Mantra CEO Bob East wont be unemployed long and parachutes onto the board of Experience Co where he will subsequently becomes Chairman. A win for that company with a significant local presence.

Disclaimer: Cairns Economy maintains a modest interest in Reef Casino via a SMSF. This is cheaper than tickets to local theatre.

Council’s Economic Development Strategy 2018-2022 identifies actions to achieve a strong, diversified and resilient regional economy that supports the growth of new and existing industry, business activities and provides long-term employment opportunities.

CRC Economic Development Strategy 2018-2022

March data disrupted by rain and Easter continues to throw up volatility including in the Queensland gaming data for pokies.

Never mind. The March blip related to Good Friday trading restrictions coming into the month and perhaps wet season rain didn’t stop the restoration of high growth in April. At the same time growth in Queensland seems to be slip sliding away with clubs back into negative territory.

Reef Casino AGM on Friday may provide some commentary on recent trends.

A significant population trend in Cairns based on most recent data is that the North significantly outperforms the South. This is SA3 data where Cairns – South is the city and designated southern growth corridor. It must be so hard when people don’t go where you want them to.

Cairns Urban = Cairns – North + Cairns – South

To update some perspective Cairns-North is a much smaller SA3 than Cairns-South. Since 2001 the Cairns-North population has grown from 44% of Cairns-South to 52% in 2017. Population growth should be expected to be higher in the northern and southern areas with available land and the inner city with higher density development. Key housing growth areas are Trinity Beach-Smithfield/Redlynch in the North and Gordonvale/Edmonton in the South. The inner city is something to look at further.

This is growth over the same time in nominal numbers:

*Cairns – North median age is 3 years older than Cairns – South on 2016 Census data.

Latest ABS regional building approval data from Conus: Regional Building Approvals; Rest of QLD flat for the year as Far North does better

This latest data is to March 2018. So far the Nova development residential units don’t appear to be in the ABS data. This is despite some construction activity for foundation pilings currently on site which commenced in April and had been well hyped in local media prior to commencement. The usual problem with this data is that building approvals cant always be assumed to translate into construction commencements rather than the reverse.

Also noted in the most recent HTW CairnsWatch April 2018:

Building approval figures for the Cairns urban area for the period October 2016 to September 2017 have been revised significantly upwards by the ABS (by a 22% increase compared to before), with the result that the building approval slump previously recorded for 2016-17 has now been substantially revised away. Building approval levels over the last four years now present a flattish trend that has remained at consistently low levels by long term historical standards.

Certainly not the first time and I have previously come unstuck on not insignificant revisions in the Cairns data. ABS Explanatory Notes:

The information provided to the Australian Bureau of Statistics (ABS) and included in estimates for any month may be revised or corrected in later months. This can occur as a result of corrections made by a provider of data, the late provision of approval records and, occasionally, by approvals being identified after construction work has commenced.

ABS: REVISIONS TO BUILDING APPROVAL STATISTICS

I previously queried the status of the Nova development and quality of the data a year ago (May 2017) when the preliminary operational works were underway with a reply from Kelly Reaston at Cairns Regional Council.

Thank you for your email.
The Nova City approval process is similar to all other Development Approval requirements within the State of Queensland.
The Applicant must seek the following approvals:-
1. Development Approval;
2. Operational Works Approvals; and
3. Building Approvals.
At this stage the Applicant has obtained Development Approvals for the towers and operational works approval for associated drainage works. Building approvals are obtained through a private Building Certifier.
The timeframes for progressing these approvals and the ultimate construction of the development is a matter for the Applicant.
I trust this information addresses your enquiry.

There have been regular reports since of imminent commencement mostly in the context of sales promotion as previously posted Nova City Flurry (February 2018) following an email from Nova marketing:

The most exciting thing of course, will be to see Nova City coming out of the ground. Construction is starting with pilings, the beginning of April!
We had a flurry of buying just prior to Christmas which saw some of our best two bedroom apartments sell to some local Cairns buyers so we recommend that if you are looking to purchase one of our apartments, that you beat the rush and secure your preferred apartment now. We only have 5 one bedroom apartments left and limited floors available on the front overlooking the CBD skyline and out to the Coral Sea.

Data supplied by Aspial and World Class Global to Singapore Stock Exchange on Nova sales:

Project Nova City Tower 1
Type Residential & Commercial
Total Units 187
Launch Date 4Q2016 (calendar year)
Units Launched 101
20172Q % Sold* 34%
20173Q % Sold* 34%
20174Q % Sold* 35%
20181Q % Sold* 39%

* % sold based on number of units launched

No idea how others do their maths but I make that 5 unit sales in 9 months despite yet another hyperbolic headline in the Cairns Post today: “Locals rush Nova units”, with a suggestion from Nova marketing that the number may be closer to 50%. The latest quarterly report from WGC this month makes no comment on construction progress at Nova. The current marketing office building on site was actually completed in 2015.

March rental bond data from RTA confirm previous trends with incremental gains in Cairns and a turnaround in Mackay.

Comparison of Queensland major regions for 3 bedroom house median rent in March Quarter 2018:

Gladstone rents look interesting although the menu at the Gladstone Yacht Club (aka Port Curtis Sailing Club) would need to provide better value than currently to attract my interest as a potential resident. Also Spaghetti Bolognese with Chips should be restored to the menu in recognition of Gladstone’s historic cultural values.

Note: New rental bonds lodged in Cairns were the lowest for the comparable quarter in some years and will be looked at further. There is good data here to explore although the excel format files provided by RTA are not conducive to easy analysis.

OECD Tourism Trends and Policies 2018

Wondering if it would be worthwhile compiling a scatter plot of this data v GDP per capita?

Experience Co (ASX:EXP) has issued a trading update and revised market guidance: Experience Market Update

Experience Co is down 15% in ASX trading this morning.

Cairns Airport numbers in March were up 3.1% for domestic and 1.7% for international compared to the previous year. In context this looks a bit ordinary if anything coming off the back of weak 2017 numbers and with the Easter period moving from mid April last year to commence in late March this year. April last year was a big month for the Airport with double digit growth.

Sydney and Auckland Airport reports both cited the early Easter for strong monthly growth. Perhaps there was also some Games traffic through SYD.

Source: Cairns Airport

When results were first posted by the Airport I thought there was some commentary on positive FIFO traffic but either it has been removed or I have had a brain dysfunction.

Nick Behrens: Is hosting the 2018 Commonwealth Games really worth it?

In summary, there is no question the Games will showcase the iconic Gold Coast and Queensland’s spectacular destinations to a global audience that will have a return on investment for many years in the area of tourism. But there are questions that must be asked after the Games and answered not with ‘gut instincts’ but with evidence.

Gene Tunny: Qld economy well positioned in 2nd quarter 2018, esp. given Commonwealth Games

The state government is hoping for an ongoing rather than just a temporary economic boost from the Games, via greater tourism as a result of the international exposure, but I’m pretty skeptical about purported long-term economic impacts from sporting events. For example, the 2000 Sydney Olympic Games resulted in a surge in visitation for the period of the Games but no lasting impact (see this Conversation article Hosting the Olympics: Cash Cow or Money Pit? by two of Australia’s leading economic modellers, John Madden and James Giesecke).

John Quiggin: A policy lesson from G20

We won’t be lining up for another international summit any time soon, but the Commonwealth Games will be in the Gold Coast in 2018. I’m confident that an analysis after the fact will reveal very little to show for the $2 billion we are spending on them.

Google Trends: Commonwealth Games