Solid foundation for 2016
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