Our opinion on the current state of SSU

Previously called Tsogo Sun Hotels, Southern Sun Hotels is a gaming, hotel and entertainment business which has split into separate gaming and hotel businesses in order to unlock shareholder value and to enable each business to become much more focused. As President Ramaphosa stabilises the economy, following the pandemic and introduces more growth-oriented policies we can expect business and consumer confidence to gradually recover. The company's investment in limited payout machines (LPM) and electronic bingo terminals (EBT) has proved to be profitable. These are located mainly in restaurants and bars and outperform larger gambling outlets, but they are impacted by COVID-19. In its results for the six months to 30th September 2023 the company reported occupancy at 56,3% and headline earnings per share (HEPS) down 21%. Income was up 34% and the company conducted R389m in share buy-backs. The company said, "Group adjusted headline profit for the six months ended 30 September 2023 of R255 million (2022: R17 million) has improved by R238 million. Improved trading has been particularly prevalent in the Western Cape, which has enjoyed several large events hosted at the Cape Town International Convention Centre such as the recent Netball World Cup". We have been saying for some time that the share looks oversold to us. Since COVID-19 and the share went through an extended "island formation". We advised waiting for a clear upside break through the share's downward trendline. That break came on 21st March 2021 at 175c per share. Since then the share has risen rapidly to current levels around 480c.