Southern Sun Limited (JSE: SSU) has reported impressive financial results for the year ended March 2024, buoying investor confidence and propelling the share price to new heights. The company’s revenue surged by 19% to R6.0 billion, driven by a robust tourism and business travel recovery, particularly in the Western Cape.
Southern Sun’s strategic cost-saving measures implemented during the COVID-19 period have paid off, contributing to a significant improvement in profitability. The company’s adjusted headline earnings per share (HEPS) surged by a remarkable 88% to 56.4 cents.
Furthermore, Southern Sun has demonstrated a commitment to shareholder value by declaring its first-ever dividend of 12.5 cents per share, reflecting the company’s strong financial health.
Technical Analysis
Southern Sun’s share price is currently trading at R5.69, continuing its upward momentum. The recent surge has seen the share price climb decisively above the key moving averages – the 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line) – all of which are now exhibiting a positive slope. This technical indicator suggests a strong uptrend.
The RSI (Relative Strength Index) currently sits at 65.89, comfortably above the 50.00 level, indicating continued buying momentum. A sustained push higher could trigger a breakout towards the all-time high of R5.88. A successful breakout above this resistance level, accompanied by significant volume, could pave the way for a test of the 23.60% Fibonacci extension level (R6.14) and the 38.20% Fibonacci extension level (R6.29) in the near future.
However, the market could be mindful of potential downside risks. A sustained pullback could see the 508 cents level act as initial support. A decisive break below this level, coupled with significant selling volume, could signal a bearish reversal and potentially expose the 479 cents and 428 cents support levels in the following sessions.
Summary
Southern Sun’s impressive financial performance, coupled with bullish technical indicators, paints a compelling picture. While the RSI suggests a potential short-term pullback, the overall sentiment remains positive. Key levels to monitor include resistance at 588 cents and support at 508 cents. With a robust recovery in the hospitality sector underway, Southern Sun appears well-positioned to capitalize on the positive momentum.
Sources: TradingView, Southern Sun, MoneyWeb, News24, Business Day.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
