Sun International on a roll as gamblers spend big after pandemic

Shares in Sun International leapt more than 7% yesterday after it reported that while load shedding had impacted its costs, it had seen a strong recovery in its resorts and hotels business last year after Covid-19 restrictions were eased.

Its shares rose to an intraday high of R35.55 on the JSE. For the year ended December 31, 2022, the casino, gaming and hotel group said due to consumers going out and gambling, adjusted headline earnings grew from R110 million to R1.1 billion, with adjusted headline earnings growing from 44 cents per share in the prior year to adjusted headline earnings of 439 cents per share.

The group reported earnings before interest, taxes, depreciation and amortization (Ebidta) grew by 96% to R3.3 billion. The board declared a final gross cash dividend of 241 cents. The company did not declare a dividend in the prior comparative period. Sun International said load shedding knocked its costs, with diesel expenses of between R12 million and R14m a month, with about a 20% offset saving in electricity.

“We have accelerated our programme to explore all options around a comprehensive energy plan, which will not only solve this challenge but also achieve good returns on capital,” – it said.

Sun International chief executive Anthony Leeming said:

“We are particularly pleased by the significant progress we are making with our online strategy, with SunBet showing strong growth in all key indicators. Gaming income from casinos, Sun Slots and SunBet showed a significant recovery, with income up 36%.”

Sun Slots reactivated closed sites, resulting in 5 160 of the Limited Payout Machines (LPMs) being active for play during the year under review, and an increase of 508 machines relative to 2021.

“We continue to engage with the regulators to increase the rollout of LPMs to the 6 500 LPM positions that have been allocated,” – it said.

Sun Slots’ income increased 20%, from R1 242m to R1 491m, with adjusted Ebitda up 17% to R367m, notwithstanding the impact that escalated load shedding had on LPM operations in the last quarter of the year.

SunBet income increased by 86% in the same period in 2021, with a growth of 135% in the second half of the financial year.

“Active players on our rapidly expanding online sports betting and gaming platform continued to grow, with additional games being offered and the overall player experience being enhanced,” – the group said.

Sun International reported that total resort and hotel revenue increased by 65% to more than R2.5bn. Overall, the resorts and hotels generated an adjusted Ebidta of R450m, compared to the R56m loss the prior year.

Urban casino operations generated adjusted Ebitda of R2 445m, up 71% from R1 433m in 2021, with adjusted Ebitda margin at 36.4%, reflecting a 200 basis point improvement on 2019 margins.

Net gaming improved by 35.7% to R9bn.

At the end of the year under review, Sun International achieved substantial growth in its key performance indicators against 2021, which included active players up 50%; sports turnover up 23%; and deposits up 130%.

Looking ahead, Sun International said it would expand into new markets, with a 70% investment in SunBet Africa Holdings, for a consideration of $3.2m (roughly R58m).

“The company has online sports betting and casino licenses to operate in Ghana, Zambia and Kenya. We are in the early stages of rolling out the SunBet operating model and brand in these markets, which have attractive long-term growth potential,” – Leeming said.

The group said SunBet was achieving record numbers in terms of revenue and all key indicators, and would deliver another step change this year.

“Our resort and hotel properties have continued to perform exceptionally well, and we anticipate another good year from them in 2023,” – the group said.


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