Tsogo Sun Gaming: betting on a recovery


Tsogo Sun Gaming: betting on a recovery


Published Date: 2021-11-26 | Source: INCE|Community | Author: The Finance Ghost

Tsogo Sun Gaming: betting on a recovery

The casino side of the Tsogo business (Montecasino, Gold Reef City and many others) has also released results, hot on the heels of its hotel cousin.

In the six months to September 2021, income increased 144% and operating costs were up 85% as the operations reopened. EBITDA came in at R1.3 billion, up 570%. Headline earnings per share (HEPS) was 159% higher at 30.9 cents.

Interestingly, the EBITDA margin of 33% is in line with the pre-Covid period. This is such an impressive result under the circumstances (operations were closed from 28 June 2021 to 25 July 2021 during the third wave) and shows that the business just needs to pull the balance sheet back in line after this terrible period.

The next debt covenant tests are for the rolling 12 months to December 2021. The directors sound confident that the covenants will be met, which include net debt to adjusted EBITDA lower than 3.8x and interest cover (adjusted EBITDA / interest) of not less than 3x.

Net interest bearing debt and guarantees reduced by R1.5 billion from R11.8 billion at 30 September 2020 to R10.3 billion at 30 September 2021.

The share price is trading at similar levels to February 2020. It has dropped sharply in the past 30 days, down 12.8%.


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