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

Calgro M3 Holdings (CGR) is a South African developer known for creating large-scale integrated residential properties, rental units, and memorial parks. Since its inception in 1995 and subsequent listing on the Johannesburg Stock Exchange in November 2007, Calgro has specialized in acquiring land, planning developments, and either selling or renting the resultant residential or memorial park units.

A significant challenge for Calgro has been dealing with illegal land invasions, which notably impacted its operations, costing the company about 25% of its turnover in the half-year period ending in August 2019. Despite these hurdles, Calgro has continued to expand and secure additional financing, most recently obtaining $25 million to fund new development projects.

In its most recent financial report for the year ending 29th February 2024, Calgro showed positive developments. The company managed to hand over 1,794 units, with an additional 1,748 units under construction. There was a notable increase in headline earnings per share (HEPS), which rose to 189.87c from 153.18c in the previous period. This improvement reflects the company's ability to manage costs and enhance profitability efficiently.

Moreover, Calgro reported its highest ever net asset value (NAV) per share, which increased by 40.60% to R13.37, up from R9.51 the previous year. This growth in NAV per share is significant, particularly as it indicates the company's successful enhancement of asset value while maintaining conservative valuation principles, valuing assets at the lower of cost or net realisable value.

From a technical perspective, Calgro's shares have been in a strong upward trend since March 2023, suggesting growing investor confidence. However, like many companies in the property sector, Calgro’s shares are still trading well below their net asset value, which could represent a compelling value proposition for investors looking for opportunities in the real estate development sector. This undervaluation, combined with the company's recent financial improvements and strategic funding to support new projects, positions Calgro as an attractive option for investors seeking exposure to property development with potential for growth.