South Africa’s leading gambling operator, Sun International, is a safe investment in an industry which is seeing hard times.
It seems that investing in South Africa’s leading casino operator, Sun International, is still a good idea despite the slowdown in growth of the casino industry over recent years.
Since the 2010 World Cup, the whole hotel and casino industry has shrunk with tourists and locals spending less on table games and slots. Furthermore, according to an investment analyst with Sanlam, Andrew Kingston, over the last couple of years there has not been much casino revenue over the last two years.
However, despite all of this, Sun International has successfully maintained its market share and strengthened its image internationally. A number of investment analysts also think that the group is well placed to take advantage of the improving economic situation.
This is due to the many assets that the group holds both locally and internationally. These include Sun City, GrandWest Casino and three 5-star hotels; the Table Bay in Cape Town, The Palace at Sun City and the Royal Livingstone at Victoria Falls in Zambia. Sun International has also managed to obtain 13 out of the 39 casino licenses issued by South African authorities.
Of course the group are facing some problems. Since David Coutts-Trotter resigned in November 2011 they have not had a CEO. Furthermore Sun International’s exclusivity license to run a casino in the Cape Town Metropole area expired two years ago, it remains to be seen whether competitors will make themselves felt in the region.
According to Kingston Sun International will either have to make a sizeable payment for a new exclusive arrangement or accept a competitor. Whichever they decide, it will have a negative impact in the short term.
However, there are many positives. For instance Sun International have recently negotiated a 15 year casino license for Port Elizabeth’s The Broadwalk and have committed to investing R1 billion in redeveloping the location.