Sun International, which owns the Sun City Resort, has recorded a rise in gaming and hospitality revenue, and the group is set to expand into new online gambling markets.
According to the group’s interim results for the six months ended 30 June 2023, the group’s strong performance was underpinned by the strength of its diversified operation model.
The group’s income increased by 5.0% to R6.0 billion. Gaming income, which constitutes 77.4% of the group’s total revenue, increased by 3.4%.
Casino income at the group’s four largest urban casinos grew by 2.2%, while the more negligible regional casino growth remained challenging.
Sunbet continued its strong growth path as income grew by 71.8%, surpassing its aggressive growth targets.
That said, Sun Slots income declined by 4.3% to R686 million compared to the prior period.
“One of the key factors impacting the industry has been the licensing of online slots in mid-2022, which has negatively affected the limited payout machine (LPM) share of the national gaming market,” said the group.
“Notwithstanding the preceding, the scale, breadth and depth of the Sun Slots market offering, together with several strategic interventions which the group has initiated, leaves Sun Slots well-positioned to continue to generate attractive returns for stakeholders as well as capitalising on an improving economy.”
Hospitality income, which excludes casino income, from the group’s resorts and hotels also showed strong growth, climbing by 12.3%.
“Total resorts and hotels income was up 6.2% to R1.5 billion on the prior period, despite the first half of the year being impacted by the national elections, with many events either cancelled or moved to later dates during the year.”
“The rooms and food and beverage revenue achieved exceptional growth, increasing 9.8% on the prior period.”
The group’s 5.0% income increase, combined with its cost control, led to a continuing adjusted EBITDA margin of 27.3%, which was in line with the prior period.
The proposed R7.3 billion purchase of Peermont Holdings, the owner Emperors Palace Resort in Johannesburg, is also progressing well. The group is still awaiting regulatory approvals.
The group said that the net savings in diesel costs, which resulted from the reduction in load shedding and after accounting for additional electricity costs, stood at R36 million.
The group is also driving cost mitigation strategies, such as investments in its renewable energy strategy.
Overall, the group’s basic earnings per share rose 97.1% to 337 cents, while headline earnings per share increased by 8.94% to 180 cents.
The group also upped its interim dividend from 148 cents in the prior period to 161 cents.
“The group is in a strong financial position with South African debt (excluding IFRS 16 lease liabilities) at R5.4 billion, down from R5.7 billion as of 31 December 2023, with debt to adjusted EBITDA at 1.6 times,” said the group.
“The debt levels consider the payment of the 2023 final net dividend of R510 million.”
Future Prospects
“The gaming industry is experiencing dynamic changes and Sun International, through Sunbet, will continue leveraging its strong brand and market presence to expand our customer base and enter new online markets across Africa,” said the group.
“Our balance sheet remains robust, providing us with the financial flexibility to invest in growth opportunities.”
“We expect the recent government initiatives aimed at stimulating economic activity and improving infrastructure including the stabilisation of the electricity supply, easing inflation and lower interest rates to create a more favourable operating environment in the medium to long term.”
