Will the ‘em­peror’ re­turn to the JSE?

Financial Mail - Investors Monthly - - Cover Story -

Though pun­ters are hold­ing off any big bets on the JSE’s casino sec­tor, a per­sis­tent ques­tion re­mains around whether Peer­mont Global, SA’s third-largest casino group, will make a re­turn to the JSE. Peer­mont, which is an­chored by its pop­u­lar Em­per­ors Palace casino in Jo­han­nes­burg, was listed on the JSE in 2004 but delisted in 2007 fol­low­ing a pri­vate eq­uity buy­out. In­ter­est­ingly, in 2015 ri­val casino firm Sun In­ter­na­tional un­suc­cess­fully pitched a R9.4bn of­fer to buy out Peer­mont. Of­fi­cially, Peer­mont is diplo­mat­i­cally non­com­mit­tal. New CEO Nigel Ather­ton says it is dif­fi­cult to pub­lish Peer­mont’s in­ten­tions as a non­listed en­tity. “But there may be con­sid­er­a­tions for the fu­ture — ob­vi­ously our growth plans and mar­ket con­di­tions need to be op­ti­mal,” he says. Peer­mont has been a sur­pris­ingly strong per­former over the past few years de­spite not boast­ing the op­er­a­tional scope (or di­ver­sity) of larger ri­vals Sun In­ter­na­tional and Tsogo Sun. The writer had ac­cess only to abridged fi­nan­cial re­sults — but these did con­firm solid num­bers for the year to end De­cem­ber 2016 with rev­enue up 3,9% to R3.56bn and sim­i­lar Ebitda growth to R1.35bn. Peer­mont’s key prop­erty, Em­per­ors Palace, was af­fected by mar­ginal growth in the Gaut­eng gam­ing mar­ket and re­ported gross gam­ing rev­enue growth of 3.2%. Cash in­flows from op­er­at­ing ac­tiv­i­ties came in at close to R2bn, boosted by the R675m set­tle­ment from Sun In­ter­na­tional (stem­ming from Peer­mont with­draw­ing ob­jec­tions to the new Men­lyn casino). Ather­ton says that though the SA gam­ing mar­ket started to soften in the sec­ond half of 2016, Peer­mont prided it­self on in­dus­try-lead­ing mar­gins through con­tin­u­ous cost-base man­age­ment and a strong cus­tomer fo­cus. In fi­nan­cial 2016 Peer­mont man­aged to hold its Ebitda mar­gin at an en­vi­able 37%. Ather­ton points out that from 2011 to 2016 Peer­mont achieved com­pound Ebitda growth of nearly 6%. “The gam­ing in­dus­try is a lead­ing in­di­ca­tor of the state of eco­nomic growth, and tracks GDP growth quite closely. As in the case of the 2008 down­turn it is likely that, with the right so­ciopo­lit­i­cal sta­bil­ity and pos­i­tive global eco­nomic sen­ti­ment, the gam­ing in­dus­try will re­turn to win­ning ways.”

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.