Gaming group looks to South America

Sun International, which owns SA’s Sun City resort, said on Monday it was not expecting a turnaround in SA’s economic conditions in the short term, and was eyeing new opportunities in South America.

The JSE-listed gaming and leisure group said on Monday that operating profit lifted 11% to R900m in the year to end June, with after-tax profit jumping 91% to R258m. This was despite subdued trading conditions in SA, as the effects of a tepid economy and VAT increases put pressure on consumer spending.

Income from SA operations rose 2% to R5.5bn, while income from Latin America jumped 17% to R2.8bn.
The boost came from the acquisitions of Thunderbird Resorts in Peru in April 2018, and the acquisition of the Park Hyatt Hotel in Mendoza, Argentina, in July 2018. The performance of SA casinos was mixed, with Times Square seeing income rise 15% and Sun Slots 13%, while Sun City’s revenue fell 6% and Wild Coast Casino’s 9%.

Adjusted group headline earnings per share rose 30% to 136c during the period. Sun International said it was focusing on improving operations and guest experience, and would be seeking further growth opportunities in Latin America, including in online gambling.

The company is also to up its stake in Sibaya Casino in KwaZulu-Natal to 87.2% from 64.2%, which is still subject to gambling-board approval. It is seeking to increase its equity interest in Sun Slots to 100% through the acquisition of Grand Parade Investment’s 30% stake, subject to approval.

The transactions would allow it to increase its shareholding at attractive multiples, while also reducing cash leakage through the reduction of minority dividends, it said.

At 10am Sun International’s share price had risen 2.7% to R39.95, having slipped 36.6% so far in 2019.

Source: The Herald

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