"This is revenue and profit it is unlikely ever to see recovered in the current weak South African consumer economy. Clark points out that a prospects statement for Tsogo stated that the Covid-19 lockdown to date had cost the business R2 billion in lost revenues. In recent results Tsogo saw a drop in profit year-on-year from R1.6 billion to R277 million. Tsogo Sun has debt of R11.2 billion and a market value of R3.9 billion. He wonders why Sun International did not raise more, "though such an exercise would have been highly dilutive to shareholders and crushed the share price even further". For Clark that seems like a drop in the bucket compared to the current operational debt pile. Sun International announced a R1.2 billion rights issue last Friday. Of that debt, about R8.8 billion is local and the balance offshore.Aggressive expansion and the cost of Times Square in Pretoria and now the impact of the Covid-19 lockdown and restrictions to trading has severely impacted the hotels, hospitality and gaming sector," Anthony Clark, an independent analyst at Small Talk Daily Research, commented on Monday. "Sun International has R13 billion in debt and a market capitalisation at present of R1.6 billion. Tsogo's share price declined 82% over the past five years and that of Sun International by 86% over the same period. The strain the industry has been under - even before the unexpected sudden arrival of the coronavirus pandemic - is reflected in the share prices of South Africa's big listed leisure companies Sun International (owner of Sun City) and Tsogo Sun (split into Tsogo Sun Hotels and Tsogo Sun Gaming).
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