Know your Brands: Southern Sun Limited

With the festive season just around the corner, travelers and tourists are busy making their bookings. Options include renowned brands such as Southern Sun Hotels, SUN1, Garden Court, and Mount Grace Hotel & Spa. For investors, these brands collectively fall under Southern Sun, formerly known as Tsogo Sun.

Tsogo Sun Hotels changed its name back to Southern Sun in May 2022, and in August of that year, their JSE listing was also updated to SSU, finalizing the rebranding process; It is a well-known hotel company that has been around for more than 50 years.

Whether you're looking for a simple or fancy place to stay, a relaxing or exciting destination, Southern Sun has something for every type of traveler. They have hotels and resorts in many different places, including South Africa, other parts of Africa, the Seychelles, and the Middle East. They also have numerous restaurants and bars, as well as venues for meetings and events.

Disclaimer: The brands may not be limited to the logos on the image and may change. The use of logos are for educational purposes only.

Here's a full list of its brands.

Financials, Dividends and Share Buyback 

For the 2023 Financial Year, Southern Sun Limited's Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent (Ebitdar) rose to R1.4 billion (FY22: R590 million), marking a 6.2% growth from the pre-pandemic FY20 level of R1.35 billion, despite a lower FY23 occupancy of 51.5% (FY22: 30.6%). Trading improved in the latter half, except in the Sandton node, which faced a slower recovery due to ongoing remote work.

By that time, the group added: "The impact of winter with a severely constrained electricity system is unknown. Having successfully strengthened the group's balance sheet over the past year, it is able to withstand short-term trading volatility but will continue to maintain the discipline of managing liquidity and capital allocation prudently. The group's strategy is to continue reducing debt levels and making the most of the properties in the portfolio, many of which are irreplaceable, and to focus on customer delivery."

In May of this year, the group revealed that it bought back 10 million shares at an average price of R4.46, adding that additional buybacks are intended should the group remain undervalued.

In terms of dividends, the directors decided to hold onto cash reserves to ensure the group can meet its obligations until business conditions improve and the risk of increased power outages diminishes during winter. As a result, no final cash dividend was declared for the year ending on March 31, 2023.

Acquisitions:

In May 2022, the company and TSG agreed to terminate management contracts for 15 hotels for R399 million. Additionally, the company bought Southern Sun Mbombela and StayEasy Mbombela for R142 million, enhancing their Mpumalanga presence. All requirements were met by January 2023, leading to a net cash inflow of R257 million by March 31, 2023.

Earnings

Southern Sun Limited is expected to release the financial results for the six months ending in September 2023 in November. You can head over to your EasyZAR account to buy a whole or fraction of a share.