TRADE of the MONTH
Phumelela vs Sun International
Sports-betting group Phumelela looks fit for a flutter
Sun International and Phumelela are both in the game of persuading people to try their luck on a wager. But that’s where the similarity ends. While casino giant Sun International is struggling, horse-racing and sports-betting group Phumelela is thriving. At a time when SA casino gaming revenue growth has stalled, Sun International finds itself weighed down by a debt mountain. At the end of its half-year to June, debt stood at R15.1bn — R11.46bn related to SA operations and R3.64bn to its 65%-owned Latin American casino division, Sun Dreams. It dwarfs Sun International’s market cap, which has sunk to a record low of R5.4bn. In the six months to June, the debt brought an interest bill of R592m, up from R385m in the corresponding 2016 period. Ominously, it meant the group breached its SA debt covenants. The covenants have been renegotiated, but things still look bad, with debt to earnings before interest, tax, depreciation and amortisation (Ebitda) standing at 3.9. The new maximum cove...
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