South Africa's Peermont bets on casino growth in Africa
South African hotel and casino company Peermont Global is in talks to launch hotel and casino resorts in Mozambique, Angola and Uganda as it expands in Africa to keep profits rising.Chief Executive Ernie Joubert told Reuters South Africa's second-biggest hotel and gambling company expected to clinch a deal next month and at least another by the end of December and that all projects abroad would be done with a local partner."We believe Africa has tremendous potential," he said in an interview. "Obviously you have to take the bad with the good but our initial experience looking at Mozambique and Angola has been positive. We are also looking at something in Uganda."The company, which floated on the Johannesburg stock exchange in September, said it was investigating four possibilities in South Africa, and said new projects at home and abroad would be combined hotel and casino complexes.Peermont, which currently runs hotels and casinos in South Africa and Botswana, says business is booming amid burgeoning consumer confidence and expects its net earnings to rise this year "in line with analyst expectations".It did not give further details. One analyst said he expected the company to report fully diluted headline earnings per share of 60 cents in 2005 compared to 49.7 cents in 2004.SINGAPORE UNLIKELYThe company expects to invest around 175 million rand this year on developing new properties and will likely stick to this kind of figure over the next five years, Joubert said.Peermont bid earlier this year for a contract to build two massive casinos in Singapore, pitting itself against Las Vegas giants like Harrah's Entertainment, MGM Mirage and Las Vegas Sands.Joubert said that while the company was pleased to have made a shortlist of 13, it did not realistically expect to win the contracts -- expected to be the most expensive with a combined investment of $3 billion to $4 billion."Realistically our chances are low ... we are still part of a big crowd running against some very big companies and the process favours the big ones," he said.If Peermont did not win the contract in Singapore, it would likely shelve plans for massive expansion and focus on Africa, at least in the short term, said Joubert, who left South African rival Sun International in 1993 to form Peermont."Our strategy is one of cautious, controlled growth, starting with what we know," he said.Peermont would continue to focus on cities and main towns, although the company was also interested in running safari lodges, a move it would have to make with a partner or by acquiring a stake in a company with expertise in this area.But nothing was on the cards so far.Shares in Peermont, which have gained 43 percent since their debut last year, were flat at 7.70 rand by 1320 GMT, lagging a slightly firmer Johannesburg all-share index.
2005-05-12
