Sin sector shares have traditionally been popular in bad times for the economy. Bad habits die hard, and vices ... well, they tend to linger. With this in mind, is it time for investors to place their bets on JSE-listed gaming stocks?
It might be too early to make a definitive call about the respective strategies, with such developments perhaps best judged over a longer period. But the scoreboard will show that Sun, which delivered solid results and a stout dividend for the year to end-December, has had a remarkable run in its share price of late.
The last set of numbers to glean would be the interim results to end-September. But Tsogo should have a trading update out by mid-May for the full year to end-March. In terms of balance sheet management — remembering that Tsogo did not opt for a rights issue in the Covid lull — the net debt-to-adjusted-ebitda ratio for the past rolling 12 months was 2.22. This is hearteningly down from the 2.89 of the end of March 2022.
It’s worth noting that Tsogo’s EBT and LPM operations accounted for a chunky 20% of the ebitda line. Collectively, if the sports betting interests are added in, they donated almost as much as Tsogo’s KwaZulu-Natal hub, which consists of the sprawling Suncoast and the Golden Horse casino in Pietermaritzburg. This is an important statistic, as Tsogo is likely to have more expansion opportunities in its alternative gaming portfolio than in the traditional casinos in the next few years.
Sun, seemingly, was forced into action, and it, too, managed to buy a meaningful minority stake in GPI. Sun has effectively set itself up as a potentially obstructive shareholder that is able to block any special resolutions that might be mulled by GPI in the future. RECM & Calibre holds a 58.8% stake in unlisted gaming specialist Goldrush, which offers EBTs, LPMs, online gaming and sports betting.