SunBet trajectory central ahead of 1H26 results

Sun International is due to release 1H26 results on Monday, 7 September, with investor focus likely on SunBet's growth trajectory. We believe SunBet has continued to outpace the sector, with its EBITDA contribution becoming increasingly material at c.26% in FY26e vs c.10% in FY24A. The voluntary trading update guided to c.6% group revenue growth, in line with SUI's 5-year CAGR target of 6–8%, but below our prior FY26e expectation of c.10%. We believe reported growth is distorted by the TBH base effect, while softer underlying growth likely reflects slower Sun Slots momentum due to delayed Type B machine rollouts. Urban Casinos could show relative resilience despite broader market weakness.

We have lowered our medium-term EBITDA margin assumptions, reflecting continued investment in SunBet's technology and product capabilities as SUI targets a doubling of market share to c.8% by FY30. We also trimmed Urban Casino margins, as smaller casinos are likely to remain under pressure given subdued trading conditions in smaller towns and a relatively high fixed-cost base. We now estimate FY26e/27e adjusted diluted HEPS of R6.31/R7.22 versus prior estimates of R6.55/R7.48, with 1H26e adjusted diluted HEPS of c.R2.55, +11.6% y/y. Our valuation range moves to R56–R66 from R59–R65, implying a total return of 24–45%, including a dividend yield of c.11%, which we believe remains attractive to investors. SUI's share price is up 28% YTD.

SunBet growing ahead of the sector. We estimate SunBet revenue growth of c.45–48% in 1H26, based on the historical relationship between site traffic and revenue growth, where traffic growth has typically been c.1.2–1.4x higher than revenue growth. Based on Similarweb data for c.15 online betting operators in South Africa, we estimate SunBet's site-traffic share increased to c.4.4% in 1H26, from c.2.0% in 1H25, reflecting faster growth than peers. In July 2026, site-traffic share increased further to c.4.7%, from c.3.2% in July 2025. We believe this points to robust customer acquisition, engagement and retention.

Urban Casinos self-help supporting relative resilience. We estimate Urban Casino net gaming wins to be flat to slightly positive in 1H26 (+c.0.5%), ahead of the broader sector, which we estimate declined by c.2%. We believe this reflects self-help initiatives implemented in 2H25, including pricing, training, floor optimisation and product-mix improvements. This suggests the positive GGR momentum seen in 4Q25 (+c.4.0%) has broadly continued into 1H26.

Sun Slots growth tempered by possible Type B rollout delays. We have lowered our FY26e Sun Slots revenue growth forecast from high-single digits to low-single digits, as we believe there may have been delays in rolling out additional machines under Type B licences in the Western Cape, where provincial growth was negative in 1H26 (c.-4%). For 1H26, we estimate Sun Slots revenue growth of c.1.4%, supported by improved portfolio optimisation. Prior results showed higher GGR per machine per day despite declines in machine count and games played. We expect improved optimisation to support 1H26 EBITDA margin of c.23.5%, up c.50bps y/y from 23.0% in 1H25.

Resorts & Hotels – TBH distorts reported growth, LFL likely positive. We expect reported Resorts & Hotels revenue to decline c.1% in 1H26, mainly due to the TBH transition, as 1H25 still included c. two months of contribution before the lease ceased in Feb-25. Excluding TBH, we estimate LFL total revenue growth of c.4.5% and non-gaming revenue growth of c.2.3%, broadly in line with sector trends, where occupancy remained positive, but room rates declined off a high base. Resort casino income could grow c.4%, helped by easier comparatives at Sun City and Wild Coast Sun. We estimate EBITDA margin, pre-management fees, to recover to c.18% from c.16% in 1H25, supported by improved operational performance across the resort casino portfolio.

Management transition and key risks. We view Norman Basthdaw's retirement from 1 April 2027 as a loss, given his role in strengthening SUI's balance sheet post-LATAM exit. We welcome Ms Vanessa Olver's appointment, with her financial services experience relevant as SunBet scales across regulated digital platforms and payments. Key risks remain tax reform, advertising restrictions, regulatory overhang and inflationary pressure.

Read PDF