South Australia's Development Assessment Commission has approved plans for the Adelaide operations expansion, including more general gaming on the ground level, premium gaming on levels one and eight, an 84-suite hotel including 12 gaming villas, plus cafes, restaurants and roof-top bar.
A separate car park is to be constructed, of which SkyCity have an exclusive lease on 750 parks.
Broker Craigs Investment Partners has upgraded earnings and profits over the next three years, and the 12-month target price, but maintains a "sell'' recommendation, while Forsyth Barr has made no change to earnings or target price, and maintains its "neutral'' rating on the stock.
SkyCity's share price has been trading around $4.54 since it announced the commission's approval, a week ago.
Craigs' broker Peter McIntyre said SkyCity had issued a profit upgrade based on first-half trading conditions having continued through November and December, the key drivers being momentum from high rollers in international business, finding cost savings in Adelaide and leverage off operations in Auckland.
"[However] We retain our sell rating on valuation grounds, given the strong share price reaction broadly captures our earnings upgrade, and we still have question marks over the Adelaide project and future group funding position,'' he said.
Forsyth Barr broker Suzanne Kinnaird said SkyCity expected to spend up to $A300million.
Capital expenditure was in a $A250million to $A270million range, plus additional costs up to $A12million with the South Australian Government over leasing and up to $A35million for additional gaming machines, she said.
The Auckland international conference centre project started late last year and Adelaide's "significant expansion'' was planned to leverage from an improved regulatory and tax environment.
"Both of these projects are large, complex and challeng-ing but directly relate to SkyCity's core areas of expertise,'' Ms Kinnaird said.
They leveraged the existing businesses, providing positive medium-term earnings.
"Recent Auckland and international trading has been very encouraging. However, local gaming performance at Adelaide remains a concern,'' Mrs Kinnaird said.
Subsequently the stock rating remained unchanged in "neutral''.
The casino and hotel is on Adelaide's Riverbank Precinct, next to the Torrens River and it is hoped construction will begin midyear.
When announcing the ‘‘green light'', SkyCity's chief executive, Nigel Morrison, said the major redevelopment would create much-needed jobs and economic growth for South Australia.
The casino operator had closely collaborated with planning authorities, including taking note of concerns raised about the heritage-listed railway station, which will remain intact under the approved plans.
"Precise timings remain dependent on the finalisation of the site lease with the South Australia government and co-ordination with the government's plans and those of other developers being approved for the broader development of the Riverbank Precinct,'' Mr Morrison said.
Mrs Kinnaird said the South Australian government had in early December lodged a development application for its proposal to revitalise the Riverbank zone, which required a formal consultation on prices, which opened on January 13 and closes on Thursday next week.
SkyCity said, for its half-year to December, its expects last year's earnings before interest, tax, depreciation and amortisation up by as much as 23%, from $140.9million last year to a range of $170million to $173million, while reported profit is forecast to rise by up to 30% to $69million to $71million.
● SkyCity's final first-half 2016 results are scheduled for February 11.
