Calgro M3, the affordable housing and memorial parks developer, has advised shareholders to expect improved earnings when it publishes its half-year results in mid-October, boosted by the mix of units developed and sold which diversified its revenues.
Revenue is anticipated to have increased by about 13.5% for the six months ended August, Calgro said in a trading update. Headline earnings per share (Heps) are expected to rise between 28.4% and 48.4% from 57c in the prior year.
The increase is “primarily driven by adapting the mix of units developed and sold in response to market conditions, successfully shifting focus to open market sales,” Calgro said.
“Group cash and cash equivalents increased when compared to previous reporting periods with sufficient available liquidity due to undrawn cash resources.”
The market welcomed the news with Calgro M3 shares surging 10.31% to R4.60 on Monday morning their highest level since November 2021.
The company, which has a market capitalisation of R490m on the JSE, operates a residential property development segment which generates 96% of group revenue, with the rest coming from the memorial parks segment.
The small-cap firm, which primarily operates in Gauteng and the Western Cape, develops and sells residential units, with prices starting from R499,000 and R1.2m for free-standing homes.
To further diversify its revenues, the Johannesburg-based group has expanded its reach by targeting fully subsidised homes to houses in excess of R3m, ensuring diversity in light of current economic conditions and market challenges.
CEO Wikus Lategan has emphasised that the firm would focus on diversified projects and product offerings to cater to various groups.
According to the company’s strategy, this revenue diversification between projects and provinces, alongside the sustainable mix of customers, will ensure consistent handovers and, in turn, cash flows.
On Monday the company signalled the strategy was gaining traction as cash generated from operations increased from the previous period despite the high interest rate environment causing a reduction in the number of units handed over.
Calgro said it had repurchased 22.6-million shares during the period at an average price of R2.63, representing 18.6% of opening issued share capital.
Though its memorial parks such as Fourways and Durbanville, which predominantly sell family estates, have seen a significant slowdown in reservations, last October Business Day reported the group has a strong pipeline of work for the next five years, reporting about 24,000 units scheduled for completion at various stages.
Some of the projects include Belhar CBD, Fleurhof, Jabulani Precinct, La Vie Novelle, Scottsdene, Maitland, South Hills and KwaNobuhle.
— with Denise Mhlanga
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