Market welcomes robust results for Sun International

Sun International’s Table Bay hotel. Photo: Supplied

Sun International’s Table Bay hotel. Photo: Supplied

Published Sep 12, 2023


The markets yesterday welcomed Sun International’s robust results after it posted an 11.7% increase in income to R5.8 billion, for the six-month period ended June 30, 2023 in spite of incurring R60 million in net diesel costs to mitigate the impact of load shedding.

The markets cheered a 68.2% dividend hike to 148 cents per share. The share price in late afternoon trade was up 6.77% at R38.98, having risen a whopping 196.59% in three years.

The JSE-listed hotels, gaming and entertainment group said yesterday that the Sun City Resort and The Table Bay hotel on the V&A Waterfront were strong performers during the period.

Total resorts and hotels income was up 26.9% to R1.4bn compared to the same period last year, as Sun City’s income rose by 25.5%.

Sun International CEO Anthony Leeming said there was a continued strong recovery in both international and local business in the resorts and hotels segment of the group.

Leeming said the domestic leisure, conferencing and sports and events revenues continued to grow while international leisure business recovered strongly in the review period.

“Although economic conditions in our operating environment remain challenging, our business has proven to be resilient, and we anticipate that we will continue to improve earnings in the second half of the year,” Leeming said.

Cratos Asset Management posted on X that, “The results were not entirely surprising given the @SAReserveBank’s GDP print last week, which showed restaurants & hotels grew +4.1% in Q2 2023.”

Adjusted headline earnings improved from R444m to R482m, with adjusted headline earnings per share increasing by 10.1% to 197 cents per share for the review period.

The group’s South African debt were at R5.9bn - in line with debt levels at December 31, 2022.

It said the South African debt to adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) and interest cover of 1.8 times and 5.7 times respectively, were well within the group’s lenders’ covenants of less than 3.25 times and greater than 3.0 times, respectively.

Leeming said the group’s balance sheet was in a strong position with unutilised facilities of R2.3bn.

Sun International continued to prioritise increasing free cashflows and disciplined capital allocation to maximise shareholder value

However, load shedding had affected business operations and caused a surge in diesel and other cost pressures during the period.

Sun Slots income fell from R730m to R717m, and adjusted Ebitda reduced from R191m to R166m, for the period as load shedding saw a decline in game play and footfall at its sites, which was the major contributor to the lower-than-expected results during the review period.

Leeming said a number of interventions were deployed to counter the impact of power outages, which result in less game time.

Urban casinos income, however, was up 4.2%, despite a challenging operating environment due to load shedding and the resultant increase in diesel costs, with adjusted Ebitda, pre-management fee, of R1.1bn for the period.

SunBet generated record income during the review period, up by 138.4% in the first half of 2022 and was well on its way to achieving the aggressive growth targets set for this business.

The group continues to focus on customer acquisition and retention, customer experience and margin improvement and has made considerable investments in each of these areas.

Looking ahead, Sun International said, “Although economic conditions in South Africa and the environment in which we operate remains challenging, our business has proven to be resilient, and we anticipate that we will continue to improve earnings in the second half of the year.”