SA’s largest sectional title developer, Balwin Properties, says it has been enjoying the benefits of sustained demand for its apartments, but it is eyeing the potential effects of rising interest rates and the war in Ukraine.
The group, valued at R1.6bn on the JSE, said on Wednesday it recognised revenue from the sale of about 2,960 apartments in its year to end-February, up 16%, though selling prices remained relatively consistent due to a change in the sales mix, with the group watching the potential effects of inflation.
Russia’s invasion of Ukraine has prompted fears that inflation is set to accelerate globally, having already started the year at multi-decade highs in major economies as a result of supply-chain disruptions and central bank largesse due to Covid-19.
The Reserve Bank is widely expected to deliver a 25 basis point increase on Thursday, the third consecutive meeting where policymakers have decided to hike, which would bring the repo rate to 4.25%. Higher borrowing costs and higher inflation suppresses demand for new homes making them expensive for homebuyers.
Balwin was founded in 1996 by CEO Stephen Brookes. The company specialises in large-scale sectional title estates for SA’s low- to middle-income population. Estates typically consist of 1,000-2,000 sectional title residential apartments and are located in the targeted nodes of Johannesburg, Tshwane, the Western Cape and KwaZulu-Natal.
Balwin said on Wednesday that consolidated core headline earnings per share (HEPS) for the year to end-February are expected to increase by between 12% and 17% over the previous period’s 71.5c.
Headline earnings is a widely used profit measure in SA that excludes certain items, with the core measure preferred by Balwin for its operating performance, excluding the accounting effects of empowerment transactions.
Balwin said on Wednesday that it was also pleased with its cash position of R659m at year-end, an increase of R328m, with cash management remaining a focus area for the group.
By the JSE’s close on Wednesday Balwin’s shares were up 0.96% to R3.15, having fallen 7.89% so far in 2022, while having risen by more than a quarter over the past two years, or over the course of the pandemic.
Update: March 23 2022
This article has been updated with additional information.
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