Our opinion on the current state of CALGRO-M3(CGR)

Calgro (CGR) is a developer specializing in large-scale integrated properties, rental units, and memorial parks. Established in 1995 and listed on the JSE in November 2007, the company identifies suitable land, develops it, and then sells or rents the resulting residential or memorial park units. Recently, it secured $25 million in funding to support new development projects.

A significant challenge has been illegal land invasions, which resulted in a loss of around 25% of turnover for the half-year ending August 2019. However, in its results for the six months ending August 31, 2023, Calgro reported a 13.5% increase in revenue and headline earnings per share (HEPS) of 78.88c, up from 57c in the prior period. The company stated that it handed over 949 units during the period, compared to 1,193 units in the previous year. Currently, 2,118 units are under construction, with over half expected to be completed by February 2024. The company has 1,937 serviced units available, and another 3,398 are being serviced.

In a trading statement for the year ending February 29, 2024, Calgro estimated that HEPS would increase by 20.2% to 27.7%. The company noted a reduction in its issued ordinary shares due to a share repurchase program, which reduced the total from 121.4 million to 95.5 million shares.

Technically, the share price has been in a strong upward trend since March 2023. Like many other property companies, Calgro is currently trading well below its net asset value (NAV), presenting a potentially attractive investment opportunity.