HCI rides wave of leisure spending
• Empowerment investment group gets nearly half its interim headline earnings from its hotel and casino interests
The profit of investment holding company Hosken Consolidated Investments (HCI) has more than tripled as it cashed in on people spending more on travel and leisure. This is as the performance of its hotel and casino interests headed back to prepandemic levels.
The profit of empowerment investment holding company Hosken Consolidated Investments (HCI) has more than tripled as it cashed in on people spending more on travel and leisure.
The company, valued at R14.73bn on the JSE, reported in its half-year results to endSeptember that its profit more than tripled (205%) year on year to R1.49bn.
Its headline earnings per share (Heps) — a profit measure that strips out impairments and one-off items — almost quadrupled (297.6%) to 1,185.3c.
Net asset value per share soared 28.7% to R198.11.
This comes as the performance of its hotel and casino interests — which together generated 47.41% of headline earnings — headed back to pre-pandemic levels following less spending over the past two years because of the Covid-19 pandemic and the government lifting lockdown restrictions.
However, gaming remains 8% below pre-pandemic levels, while the total income from this segment surged 46% year on year, boosted by casino revenue and net gaming wins.
At hotels, the average occupancy levels more than doubled from 21.9% in the same time in 2021 vs 46% in the last reporting period, which helped to boost total income by 170% to R2.48bn as rooms and food and beverage revenue jumped.
The total revenue of HCI’s interests include media, transport, coal mining and properties.
The group’s total revenue rose almost one quarter to R6.18bn and total income 29.6% to R11.19bn.
The company, which has interests in Tsogo Sun Gaming, Southern Sun, eMedia and the Vukani Gaming Corporation, generated most of its revenue from media and broadcasting (24.63%), branded products and manufacturing (24.41%), transport (18.86%), coal mining (18.46%) and gaming (11.54%).
But gaming was the biggest money-spinner in terms of headline earnings, followed by coal mining, hotels and media and broadcasting.
Coal sales volumes from its Palesa Colliery, near Bronkhorstspruit, were up by almost a third to 436,000 tonnes, driven by Eskom buying more coal as the state power utility tries to keep the lights on.
Record levels of load-shedding and the ongoing problems at Eskom have affected the media and broadcasting.
EMedia said in its interim results last week that the power cuts affect its viewership as the Average Minute Rating, the average number of audiences per minute, decreased 16.5%.
Despite this, HCI’s television and radio advertising revenue edged up 3% and its prime time market share fell two percentage points to 36%.
The board declared a dividend of 50c per share.
Anthony Clark, an analyst at Small Talk Daily Research, told Business Day that HCI provided little information on its oil assets, which he described as “possibly the biggest value accretion play” within the group.
“I would imagine you might only get some form of update at the final results or maybe even only at the annual general meeting (AGM) in August regarding the biggest, single news event inside HCI, which is TotalEnergies’ Venus,” he said.
“All in all, they are keeping their cards close to their chest regarding oil,” said Clark.
HCI owns about half of oil exploration company Impact Oil & Gas, which is drilling to ascertain the true value of Venus, a deep-sea oilfield about 290km off the coast of Namibia. Impact has a 20% stake in Venus.
Business Day reported in August that CEO Johnny Copelyn said at the AGM that shareholders in the Venus block — which include energy giant TotalEnergies with a 40% stake — might ultimately need to fork out between $50bn and $80bn to participate fully in the discovery.