Sun International hitting the jackpot with online gaming and hospitality

9 Sep 2024

The hospitality group has declared an interim dividend of almost 9% for the six months ended 30 June.

Sun International is toasting record profits from sports betting and hospitality, which have helped the group boost its interim dividend by almost 9%.

The hotel, gaming and entertainment group, which owns Sun City, GrandWest Casino and Entertainment World and the Table Bay Hotel, has reported robust performance from the two divisions in particular, boosting income for the period under review by 5% to R6-billion.

SunBet, the group’s sports betting platform, is on a winning ticket, with revenue rising sharply by 71.8% to R512-million for the six months to 30 June 2024. SunBet had seen a 72.2% rise in unique active players, a 111.6% increase in first time depositors, and a 74.2% increase in deposits.

Sun International CEO Anthony Leeming noted in a company statement that SunBet, as a rapidly growing online company, offered significant potential for future growth.

“With this in mind, we continue to invest in our people and invested in a new website front-end look and feel that is more user-friendly, with a marketing campaign tying in the iconic Sun City to complete its brand relaunch. The improvements to the registration, customer deposit, and withdrawal processes, as well as an overhaul of the customer contact centre, means our customers interact with us seamlessly.”

Difficult economic environment

However, Sun Slots was smarting from the difficult economic environment, including industry issues relating to the slow rollout of licences. Sun Slots’ income was down by 4.3% to R686-million compared with the prior period, forcing management to introduce new measures to address the decline.

Sun has exceeded its growth targets once again, driven by its successful online gaming expansion and its omnichannel strategy integrating its various gaming and leisure experiences across different platforms and channels, including physical casinos, online gaming, mobile gaming, limited payout machines, and hospitality, which have been instrumental in driving the company’s growth.

Adjusted earnings before interest, taxes, depreciation, and amortisation reached R1.6-billion, up 4%, while adjusted headline earnings increased by 8.7% to R524-million. Earnings per share rose 9.1% to 215c.

Gaming income, which constitutes 77.4% of Sun’s total income, increased by 3.4%.

The group said its South African debt (excluding lease liabilities) had decreased to R5.4-billion from R5.7-billion at the end of 2023.

Strategic share buy-back

It had also participated in a strategic share buy-back, in which it bought back 3,871,138 Sun International ordinary shares in the open market at an average price of R36.54 per share during the period.

The proposed acquisition of Peermont, which was overwhelmingly approved by shareholders on 4 March 2024, was progressing well, it said. Sun has already received R7.3-billion in credit approved funding for the acquisition and was awaiting Competition Commission and gambling regulatory approval, which it was expecting by the first quarter of 2025.

Income from urban casinos was up 0.5%, with some growth from larger properties, although regional casinos were down 1.6%.

Another high point of its results was hospitality income (excluding casino income) from resorts and hotels, which has risen sharply by 12.3%. Sun City and the Table Bay, it said, benefited most from the return of local and international leisure travel.

Income from total resorts and hotels was up 6.2% to R1.5-billion.

Uncertainty around elections

Conferencing was down slightly, which Leeming attributed to uncertainty around the elections and the winter period. He told Daily Maverick that they managed to grow the top line strongly at both Sun City and Table Bay, although Sun City was partly affected by the elections.

“We had a lot of conferences cancelled or pushed out, but we are seeing that H2 is looking a lot stronger, so we expect to end the year better than last year. The leisure side has held up exceptionally well.”

The gaming industry was rapidly evolving, he added. Sun International, through SunBet, would continue to capitalise on its strong brand and market position to attract more customers.

“We have plans to improve performance there as we grow our brand, and we are seeing really great sign-ups and great retention as well. We are excited about it.”

The online betting space was still relatively small, he said, which meant plenty of room for growth. The board had resolved to pay an interim gross cash dividend of 161c/share, totalling R416-million.

It is an 8.8% increase on the prior period’s 148c.

Sun International’s share price was up over 3.5% at lunchtime today. DM

Categories:

Tags:

DM is much better if you are signed in...

Business Maverick

Difficult economic environment

Strategic share buy-back

Uncertainty around elections