Cresta turns a profit of US$1.5m, a significant improvement from previous year loss of US$3.4m
Cresta Marakanelo Limited, was profitable in FY 2022, with attributable earnings of Pula 19.2m (US$1.5m), an improvement from the Pula 40.2m (US$3.4m) loss in FY 2021.
Highlights:
- Cresta was severely affected by Covid 19, hence recorded losses in both FY 2020 and FY 2021 as a result of Covid lockdowns, ban on alcohol sales and limited numbers permitted at conferences.
- 2022 sales revenue increased by 65% to US$28m.
- Operating margins improved to 13% in 2022 from -12% in 2021.
- The company has a high long-term debt/equity ratio of 181% and an interest cover ratio of 1.9 times, primarily attributed to the 2019 acquisition of four hotels that were previously leased. The acquisition was funded through a debt of Pula 252m (US$23m) and has a term until 2029.
- Management has a positive outlook and plans the expansion of Mahalapye hotel (Oct 2023) and construction of a new hotel hotel in Jwaneng (Feb 2024).
Investor Issues
- Share price now above its all-time low.
- Will a rights issue be needed to reduce the long-term debt/equity ratio and fund the hotel expansion plans?
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About the Author: Hartland-Peel Africa Equity Research
Sub-Saharan Africa ex SA: Equity, debt and FX research covering sixteen countries and advising institutional investors. Proprietary data base of sixteen African stock markets, 250+ companies which is one of the most extensive and complete. New issues, IPO’s and distribution of equity on privatisation. Development of lending and corporate finance opportunities for the bank, privatisation and asset management. An ‘A’ rated equity analyst by South African institutional investors as polled by the Financial Mail in 1998 and 1999.
