Calgro M3 tells shareholders to expect leap in profit
Diversified property developer Calgro M3 has advised its shareholders to expect a profit leap of as much as a fifth for the year ended February.
The group expects headline earnings per share (Heps) to rise as much as 20% to about 183.82c for the year to the end of February from the 153.18c reported in the previous year, it said in a trading update.
The R541m JSE-listed group attributed the enhanced earnings to improved performances in both its developments and memorial parks segments coupled with a successful nearly R73m share buyback programme.
“This improvement in both EPS and Heps is a result of prudent capital allocation and was achieved through a combination of the reduction in the company’s issued share capital and the operational performance of the group’s divisions within the year,” said Calgro.
Calgro M3 reduced its issued ordinary shares from 121,400,069 shares to 95,487,126 as a result of the share repurchase programme implemented by the board. This came at a total cost of R72.7m in the current financial year, said the Johannesburg-based group.
Calgro’s share price rose 3.04% to R4.74 on Monday afternoon, the biggest rise since last Thursday when the share closed 8.83% higher.
The uptick in earnings continues the upward trajectory of the 2023 interim period, which was a profitable one for the group as profit after tax rose 41.25% to R186.2m, from R132m in 2022.
Calgro’s development division serves a broad market ranging from fully subsidised to bonded homes, enabling the company to adapt and reposition construction activities in response to economic shifts. The group aims to maintain a balanced mix of units including those ready for sale and those with granted bonds, awaiting transfer and under construction.
At the half-year stage, the group highlighted that the developments segment had a revenue pipeline of R15bn, with more than 22,000 residential opportunities. Its residential property development business, with eight projects in Gauteng and the Western Cape, accounts for 97% of total revenue. The company flagged that the memorial parks segment had more than 99,000 burial opportunities.
With memorial parks at sites such as Fourways, Nasrec and Bloemfontein, Calgro said its layby offering introduced in July 2022 was gaining traction with expected growth.
The group said that the model had so far resulted in an additional R11.2m in sales, though these were not yet reflected in its revenue.
When announcing interim results in August, the company told investors it had expansion plans in place, “with hopes of launching a new park within the next 12 months”. A memorial park is a privately owned modern garden of remembrance that uses uniformed markers on landscaped plots to memorialise a grave, rather than the headstones of traditional cemeteries.
Some of these highlighted prospects in both its development and memorial divisions are expected to have contributed to the upward swing that the group will report on when it publishes its annual results on or about May 13.
Calgro counts Pershing LLC, DNS Trust and BPM Familie Trust among its largest investors.