Sun International shares tumble
Earnings decline per share is expected to nosedive by between 35% and 45% in six months
SUN INTERNATIONAL fell nearly 15 percent on the JSE yesterday after the hotel and resorts group said it expected a decline in diluted adjusted headline earnings per share (Aheps) to nosedive between 35 and 45 percent for the six months to end-December.
The company warned in a trading update yesterday that the diluted adjusted headline earnings per share would fall between 189 cents and 223c a share, down from 344c a share reported in 2015. Its share price fell 14.78 percent to close at R74.95 – its lowest level in three months and down from Tuesday’s closing price of R87.95 a share – as the market digested the news.
Sun International said it considered Aheps as the most meaningful measure of its performance.
But it said earnings per share (EPS) were likely to grow 117 percent between 75c and 120c compared to a loss of 453c a share in 2015.
It said headline earnings per share (Heps) were also expected to increase between 260c and 305c per share or 155 percent to 165 percent higher when compared to the reported loss of 473c a share last year.
“The expected difference between EPS and Heps is primarily due to impairment charges of R208 million of the Carousel assets,” the group said.
Revenue was expected to increase 30 percent while earnings before interest, tax, depreciation and amortisation (Ebitda) “we forecast at 24 percent for the period as a result of the consolidation of ‘Dreams SA’ and GPI Slots operations first time from June 1 and July 1 respectively, contributing to a 30 percent increase in revenue and 24 percent increase in Ebitda.”
The company said local casino operations, however, continued to be affected by difficult trading conditions linked to an uncertain macro-economic environment and reduced consumer spend. “South African casino revenue has declined by 2.7 percent following weaker than expected December trading. Sun City and Table Bay continued to benefit from an increase in international tourists which helped boost overall rooms’ revenue by 14 percent.
“Ebitda of the group’s South African casino, hotel and resort operations, excluding international VIP business, was down 8 percent,” the group said. But it said the opening of the Time Square casino in Menlyn, Pretoria, remains on track for April1, with the arena expected to open in November and the hotel in March 2018.
Sun International is expected to release its results on or about March 27.