Solid foundation for 2016

Finweek English Edition - - MARKETPLACE HOUSE VIEW - *The writer owns shares in Calgro M3 and Bal­win.

With the re­cent list­ing of Bal­win* and the fact that I now own shares in both th­ese com­pa­nies, peo­ple have been ask­ing if I will sell Calgro as it is very sim­i­lar to Bal­win and is priced on a much higher val­u­a­tion. The an­swer is sim­ple: I am not sell­ing and will con­tinue to hold Calgro. Here’s why: Calgro operates in the lower LSM mar­kets whereas Bal­win is in the mid­dle and up­per mar­kets. As such, Calgro is lower risk as most of its clients are us­ing gov­ern­ment grants. Fur­ther­more, 2016 is an elec­tion year and we typ­i­cally see a ramp-up in low-in­come hous­ing de­mand as gov­ern­ment tries to look good for the vot­ers. Over and above this, Calgro has built a lot of base in­fras­truc­ture; while im­por­tant, this isn’t di­rectly rev­enue gen­er­at­ing. The next stage is the top struc­tures (houses) and this is the profit. So I ex­pect a good 2016 from Calgro and con­tinue to hold the stock.

The Pen­nyville de­vel­op­ment south­west of Jo­han­nes­burg

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