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SUN INTERNATIONAL LIMITED

SUI JSE Listed

Investment Analysis: Sun International Limited (JSE: SUI)

Date: 9 January 2026 Share Price: ~R39.00 (3,900c) Analyst Role: Senior Equity Analyst, JSE

Step 1: Data Gathering & Source Verification

I have reviewed the most recent financial disclosures and key SENS announcements. A critical development in the last 12 months was the termination of the Peermont acquisition, which materially alters the investment case.

  • Interim Results: Reviewed the Unaudited Interim Group Financial Results for the six months ended 30 June 2025 (Released 8 September 2025).
  • Annual Financial Statements: Reviewed the Audited Annual Financial Results for the year ended 31 December 2024 (Released March 2025).
  • SENS Activity (L12M): Key announcements include the termination of the Peermont (Emperors Palace) transaction (2 July 2025) due to regulatory delays, the retirement of the CFO (early 2025), and the robust Interim Dividend Declaration.

Data Sources:

  • Interim Results (Sep 2025): https://corporate.suninternational.com/investors/financial-results/
  • Peermont Termination (July 2025): https://www.sharenet.co.za/v3/sens_display.php?tdate=20250702083000&seq=11

Step 2: Metric Extraction

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R9.97 Billion | Mid-cap gaming and hospitality leader. | | Dividend Yield (L12M) | ~9.6% | Highly Attractive. Total L12M dividend of 375 cents (Interim 2025: 172c + Final 2024: 203c). The group maintains a generous payout ratio of 75% of adjusted headline earnings. | | Liquidity Check | High | Average daily value traded is robust (~R15m+). It is a top 130 traded stock on the JSE. | | P/E Ratio | ~6.4x | Deep Value. Based on trailing Earnings Per Share. The low multiple reflects the market's concern over the failed Peermont deal and stagnant land-based casino growth. | | Net Asset Value (NAV) | ~1,228 cents | Tangible NAV. The stock trades at a massive premium to Tangible NAV (~3.1x), which is typical for casino operators where the real value lies in the casino licenses and brand equity, which are often undervalued on the balance sheet. |

Step 3: Operational & Strategic Analysis

Business Overview Sun International is an omnichannel gaming group.

  • Land-Based: Owns iconic assets like Sun City, GrandWest (Cape Town), and Time Square (Pretoria).
  • Online (The Growth Engine): SunBet, which offers sports betting and online slots.
  • Hospitality: The Table Bay Hotel (recently transitioned) and The Maslow.

Performance Trend

  • The "SunBet" Star: The online division is shooting the lights out. In the June 2025 interims, SunBet income surged 70.7% to R874 million. It is rapidly becoming a material contributor to group earnings, effectively offsetting the sluggishness in physical casinos.
  • Casinos Stagnating: Urban casino income declined 1.4%, reflecting the strain on the South African consumer. Unlike the online segment, the physical floor is struggling for volume growth.
  • The Peermont Pivot: The deal to buy Peermont (Emperors Palace) for R7.3bn was abandoned in July 2025.
  • The Good: The balance sheet remains pristine (Debt/EBITDA ~1.5x) because they didn't take on the acquisition debt.

  • The Bad: They lost a massive step-change in cash flow and market share.

  • Margins: Adjusted EBITDA margin softened to 25.4% (from 27.2%), hit by rising utility costs and the mix effect of lower-margin online betting growing faster than high-margin casino floors.

Sector Context

  • Online Migration: The structural shift from land-based to online gaming is accelerating. Sun International is winning here (SunBet), whereas competitors like Tsogo Sun are lagging in digital adoption.
  • Regulatory Risk: The Tobacco Products Control Bill remains the "Sword of Damocles." If passed in its current form (banning indoor smoking areas), it could slash land-based gaming revenue by 15-20%.

Step 4: The Verdict

Bull Case (Why Buy): Yield & Digital Growth. You are buying a 9.6% dividend yield that is cash-backed and safe (Debt < 1.5x EBITDA). Unlike many value traps, SUI has a genuine growth engine in SunBet, which is growing at 70%+. . The failure of the Peermont deal, while disappointing strategically, leaves the company overcapitalized—which could lead to special dividends or aggressive share buybacks in 2026 since they don't need to hoard cash for the acquisition.

Bear Case (Why Sell): Ex-Growth Physical Assets. The land-based casinos are essentially ex-growth. They track GDP at best and lose share to online at worst. The smoking ban regulation is a massive unpriced risk. If you remove SunBet, you are left with a portfolio of expensive hotels and casinos facing rising electricity costs and flat revenues.

Fair Value Estimate: R48.00 - R52.00 Implies a re-rating to ~8x P/E, giving credit for the SunBet explosion.

Final Rating: BUY The yield alone pays you to wait. The market is pricing SUI as a dying land-based operator, ignoring the fact that it is rapidly transforming into a digital powerhouse.

Next Step: Would you like me to compare Sun International's (SUI) online growth metrics directly against Tsogo Sun (TSG) to see which one is winning the digital war?

AI Generated Analysis Last Updated: 2026-01-14