Record online sports betting, hotel performance boost Sun International profit

Hotels and casino group Sun International is expecting strong profit growth in its half-year to end-June when it benefitted from an ongoing tourism recovery as well as record revenue at its online sports betting business SunBet. But its performance has been muted somewhat after the devaluation of the Nigerian naira.

Headline earnings per share are expected to rise in a range of between 73% and 98% in the six months to end-June, said the group, which generated R231 million worth of this profit measure in the prior year. But adjusted headline earnings are only expected to rise as much as 12%, it said, having taken a R39 million accounting hit stemming from dollar-denominated loans for its Nigerian operation.

The group said SunBet generated record income and was “well on its way to achieving the aggressive growth targets set for this business“, while cash generation and prudent capital management helped keep net debt steady relative to 2022.

At the end of 2022, the company had total debt, including lease liabilities, of almost R8 billion, with R700 million of this in Nigeria. It also has almost R380 million in cash.

Sun said its hotels and resorts had an “exceptional first half,” and urban casinos continued to show income growth, though its limited payout machines business Sun Slots came under pressure from load shedding.

Valued at about R9 billion on the JSE, Sun International operates four resorts and hotels in SA: the Maslow in Sandton, the Wild Coast Sun in the Eastern Cape, the Table Bay Hotel, and Sun City in the North West. It also operates nine urban casinos, with at least one in every province except Mpumalanga, with these including Carnival City in Gauteng and the Western Cape’s GrandWest. The group also has a single hotel and casino in Nigeria, the Federal Palace. That country’s central bank has recently allowed a hefty currency devaluation, which hit Sun International.

Revenue from casinos, as well as SunSlots and SunBet, made up about 80% of revenue in 2022, when Nigeria accounted for less than 2%.

Muneer Ahmed, equity analyst at Denker Capital, said the adjusted profit measure was the one to watch, and it was unfortunate that load shedding was weighing on the slots business, while the recovery in urban casinos had also been slow.

“Nonetheless a decent performance in a tough operating environment,” – he said. Sun International had made very good progress on debt over the past 18 months, but in a high interest rate environment, it would be good to see a reduction in debt, he added.

Shares in Sun rose almost 3% in morning trade and up are up more than a fifth on a one-year basis.

Source: news24.com

About Post Author

Samuel

I am a journalist specializing in gambling in Africa and around the world. I am particularly interested in stories about games and casinos.

See author's posts

Samuel

I am a journalist specializing in gambling in Africa and around the world. I am particularly interested in stories about games and casinos.