Balwin Properties’ share price may have made an impressive 13% leap on Monday after the launch of Mooikloof Mega City, the largest sectional title development planned in SA, but these gains seem unsustainable.
On Monday, Balwin will release its financial results for the six months to August having warned through a trading statement that Covid-19 and the lockdown stopped construction for months and derailed its performance.
Headline earnings per share in the six months to end-August are expected to fall between 55% and 60% from the previous period’s 40c, the group said in the trading update. The average selling price also fell 5% in the period.
The news is likely to hurt a company whose shares are owned by its founders, directors and a number of high net worth individuals, but which has few institutional or retail investors.
The company needs to find a way of attracting institutions to its shares. This may require improving its executive line-up by adding people who have experience in managing property funds backed by institutional investors.
Balwin is going to need to raise hundreds of millions of rand to build its Mooikloof Mega City's 50,000 housing units. It might need some help at the top as it becomes a corporate entity building mega projects after being started by CEO Steve Brookes, a businessman who learnt more on the job than in a lecture hall.
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