Sun International falls as investors show concern after the industry fell short of forecasts. The gaming and entertainment company has reached its lowest level in seven years.
Sun International Still Has a Chance
Sun International dropped down to R63.05, an amount of 9.3%. This is the lowest the company's shares have been since March 2009. The company was valued at R7.2 billion at the close of business on the same day.
De Wet Schutte, an Avior Capital Market's analyst, said: "South African casinos are actually quite resilient businesses and we are still seeing some growth on the top line for the industry, so that talks to the resilience of the business. But the market's taking a fairly dim view on the valuations and the outlook."
Last year, the first half of the year saw the company's earnings rising by 11%, however during the second half of the year, there was a decline in earnings before tax, interest, depreciation and amortisation.
Schutte further noted that the business is "operating in a very difficult macro environment, but it's also in restructuring mode." He further noted that there are still some deals that Sun International has not yet concluded, which means that the drop is not the final word, and that there is "still a lot going on for the group."
South Africa's Gross Domestic Product was expected to grow by 0.9% according to predictions by Bloomberg economists. In reality, the GDP only rose by 0.6%.
About Sun International
Sun International is a casino and hotel resort chain that was founded by Sol Kerzner in 1967. The original casino resort was Sun City Resort located in the North West Province near Rustenburg. Some of the most well known of the casinos and resorts are Sun City, Grand West, The Table Bay Hotel in Cape Town, and The Palace of The Lost City hotel based at Sun City.
Sun International currently has an interest in or owns and operates 27 casinos, luxury hotels, and resorts that are located in South Africa and other countries. Fifteen of these are located in South Africa, and another eight are located in other countries in Africa. There are two in Lesotho, two in Zambia, one each in Namibia, Nigeria, Botswana, and Swaziland. Sun International also has a large presence in Latin America.