Hosken Consolidated Investments (HCI) trades at an unusually steep 60% discount to its NAV, the key yardstick for valuing any investment holding company.
It’s a wide gap compared with most JSE-listed peers, all the more striking given that much of HCI’s portfolio, which includes Tsogo Sun, eMedia Holdings and Southern Sun, is publicly listed, transparent and straightforward for the market to value.
A major reason for this disconnect lies with Tsogo Sun, which makes up nearly half of HCI’s NAV. Once the group’s unassailable crown jewel, Tsogo is now contending with a structural decline in its traditional casino business as gambling habits migrate online. Digital platforms now generate more than two-thirds of South Africa’s gross gaming revenue, while the casino sector’s share has dwindled to just 27% — a striking contrast to markets such as the US and Australia, where online gaming penetration remains far lower.
Tsogo, a late entrant to online betting, saw its contribution to HCI’s headline earnings fall from R880m to R747m in 2025. It’s scrambling to modernise its loyalty ecosystem, integrate hotels and entertainment, and push digital offerings through its newly unified app. Yet it faces well-funded international operators who moved first and faster. Still, Tsogo’s entrenched physical footprint — resorts, hotels and metropolitan casinos — remains a formidable base, and HCI’s bet is that Tsogo’s cash-generating core and gradual digital pivot will stabilise the group’s largest asset.
If Tsogo is wrestling with disruption, Southern Sun is basking in recovery. The hotel group delivered R415m to HCI’s headline earnings, up from R310m, with the Western Cape surging and Gauteng finally finding its post-Covid footing. The balance sheet has strengthened markedly and debt reduction is ahead of plan. Durban lags, weighed down by the weak administration of its convention centre, while Mozambique’s political turbulence dampened tourism. But group-wide occupancies remain low, leaving headroom for further gains.
In transport, Frontier Transport Holdings continues to prove an unlikely star. Despite chronic challenges — strikes, arson attacks and the slow grind of MyCiTi contract renewals — Frontier produced R315m in headline earnings, nearly matching the prior year’s record. It has successfully litigated for wage increase exemptions, introduced electric buses and is now receiving 120 battery-powered units by December 2025.
By contrast, HCI’s coal division endured its worst year in a decade. Eskom’s contractual delays left mines producing into stockpiles until space ran out, slashing earnings to just R64m from R227m. A new eight-year contract is now in place, albeit at lower tonnage and modest pricing. Margins won’t return to prior highs, but stability should.
EMedia, the broadcaster behind e.tv, spent 2025 fighting key legal battles — and winning. Court rulings against both the government and MultiChoice preserved its 34% national viewership and crucial advertising revenue. Despite high legal costs, the victories safeguard growth as its streaming platform eVod expands and a new VFX studio nears completion to boost local production quality.
Looking further ahead, HCI has turned a once-passive stake in the Mossel Bay gas fields into a 48% holding in Africa Energy Corp, now leading development of South Africa’s only multitrillion cubic-foot gas discovery. Environmental hearings are in progress, with a production licence possible by early 2026. The key hurdle is offtake: condensate can be exported easily, but domestic gas use depends on new gas-to-power or LNG infrastructure, projects that could place HCI at the centre of South Africa’s energy transition if they prove viable.
Southern Sun delivered R415m to HCI’s headline earnings, up from R310m
HCI’s other major energy investment, Impact Oil & Gas, remains a long-term prospect despite a mixed year. It holds stakes in Namibia’s Orange Basin, a region that has drawn global interest after several significant oil finds.
Progress over the past year has been somewhat disappointing, with three wells drilled on different prospects within these blocks proving unsuccessful, but development of the primary Venus discovery continues on schedule. HCI remains optimistic that the project will reach a final investment decision by the end of its 2026 financial year, paving the way for first oil production by late 2029.
Amid all this operational activity, the group’s intricate transaction with its long-time empowerment partner and largest shareholder, the Southern African Clothing & Textile Workers’ Union (Sactwu), aims to solve two long-running problems: the union’s liquidity pressures and HCI’s share price overhang.
Since Covid, Sactwu has been forced to sell HCI shares to fund obligations, eroding HCI’s BBBEE credentials and market confidence. The revised agreement enables Sactwu to realise part of its investment while maintaining HCI’s empowerment credentials — a critical factor given that many of the group’s licences and contracts, spanning sectors from gaming to energy, rely on sustained BBBEE compliance.
If the Sactwu transaction succeeds in stabilising HCI’s shareholder base, Tsogo Sun manages to halt its earnings decline and the Namibian oil venture makes tangible progress, the group’s steep discount to NAV could finally begin to close.
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