Happy to hold on
I sold half of my Calgro M3 shares back in December when we played a game of finance minister musical chairs, but halted the selling when minister Pravin Gordhan was reappointed. Recent results show it was a good hold.
Headline earnings per share (HEPS) were up 26.7%; debt slightly lower; and its pipeline of work now stands at R27bn (up from R19bn and about eight years of work). What struck me about the results was how many things did not fire on all cylinders.
Calgro’s Namibian operation had been halted – although it was never going to contribute revenue for the year – and has now started again. The retirement village wasn’t working so it restarted with new marketing, and its cemetery development is only just starting up. Yet, despite all this, the company still had great results and going forward these projects should all improve and contribute more to the bottom line. That said, on a priceto-earnings ratio (P/E) of around 15 times I think Calgro is fair value, but I’m happy to hold as it will likely experience HEPS growth of around 30% again for the 2017 full year, giving us some price upside.
Pennyville This Calgro M3 project was developed in partnership with the City of Johannesburg and the department of housing.