Expanded Earnings Enable Sun International to Distribute Dividend

Fun in the Sun Again: Sun International's Bounce Back

South African gaming giant, Sun International, is back in the game, ready to dish out dividends after a six-year hiatus. This comeback is the result of a whopping 30% revenue surge in the first half of 2022.

Sun International's Vibrant Comeback

The COVID-19 pandemic took a toll on Sun International's business. Forced closures and financial losses had the company reeling. However, with the pandemic easing its grip, Sun International has managed to recover steadily.

Sun International offers a mix of casinos, slots, and hospitality services. While its hotel business has been steadily recovering in the current year, it's the company's gambling sector that's been the real game-changer, helping Sun International recuperate from the pandemic's destructive forces. As tourism picks up, more visitors are flocking to Sun International's hotels and gambling denás, lifting business to new heights.

With its business on the mend, Sun International decided it was time to share the wealth and announced an interim dividend of $0.05 per share. This move will see the company pay back $29 million of its debt, bringing it down to a manageable $390 million.

Sun International's share price is still on a rollercoaster ride. Despite the highs and lows, the overall trend shows that the company's shares are also on the road to recovery. However, it might take some time before they reach their pre-pandemic glory.

Sun's Strategic Gamble

Gaming operations form 82% of Sun International's income. Therefore, getting GGR back to its pre-pandemic levels is crucial for Sun to keep dishing out dividends. Currently, the company's slots operations are its top performer, with revenues surpassing pre-pandemic levels.

Regarding the company's recovery, a spokesperson commented that casino income is looking excellent and signifies a robust comeback.

Casino income has proven to be a resilient performer, swiftly recovering from the pandemic's blow.

South Africa shines as a promising gaming market on the rise. Africa, as a whole, is seen as a vast, untapped market rife with opportunities. Consequently, numerous companies are working hard to establish a presence in this burgeoning continent and position themselves as game-changers shaping African gaming.

Two months ago, global bookmaker Betfred increased its footprint in South Africa thanks to a deal with LottoStar. On the other hand, at the beginning of July, Gaming Laboratories International announced it had hired 100 South Africa-based employees.

Enrichment insights: Sun International's gaming operations took center stage in its post-COVID recovery through strategic restructuring and sector outperformance. Post-COVID financial strain pushed the company to prioritize cost-cutting, asset sales, and balance sheet repair, leading to a return to shareholder distributions. Key contributors to the company's recovery include a focus on South Africa's regulated gaming market, strategic investments in refurbishing casinos and hotels, and a shift away from less profitable markets like Latin America and Nigeria. These efforts, combined with equity raises and deleveraging, generated enough cash flow to resume dividends, with potential for further returns if pending M&A materializes.

The casino sector within Sun International has proven to be a resilient performer, swiftly recovering from the pandemic's blow, likely contributing significantly to the company's overall comeback.
As gambling operations, such as slots, are outperforming pre-pandemic levels, Sun International is likely to aim at getting GGR back to its pre-pandemic levels to keep dishing out dividends.
Numerous companies are working hard to establish a presence in the burgeoning African gaming market, seeing it as a vast, untapped market rife with opportunities, similar to Sun International's approach.
The recovery strategy of Sun International includes a focus on South Africa's regulated gaming market, strategic investments in refurbishing casinos and hotels, and a shift away from less profitable markets like Latin America and Nigeria, all aimed at generating enough cash flow to resume dividends and potentially for further returns if pending M&A materializes.