Calgro M3 expects jump in profit and doubling of cash generation

Property developer Calgro M3 has flagged a profit surge for the year to end-February, a sign that the prospect of rising interest rates has not significantly undermined demand for affordable housing in SA.

Calgro, which builds lower-income residential housing and develops and manages memorial parks, said in an update on Thursday it expected headline earnings per share of more than 100c for its year to end-February, from a loss per share of 15.17c in the prior year, and earnings of 42.79c at its half year.

That implies that the group expects full-year headline earnings of more than R120m, from a headline loss of R19m in the prior year, while in its 2020 year it had brought in only R2m.

Calgro, which closed its construction business in late 2020, has also been narrowing its scope of operation, seeking to get more out of existing projects to reduce capital expenditure.

The group has said more than 2-million families in SA need affordable housing, and that it was confident about its prospects in 2022, even as interest rates rise as the economy recovers from the Covid-19 pandemic. For its 2022 year, the group had generated headline earnings per share of 42.79c.

Calgro, which primarily operates in Gauteng and the Western Cape, said cash generated from operations was expected to more than double from the R114.7m in the prior year.

Cash and cash equivalents increased 23.6% to R191.1m at the end of February, with the group also settling R136.3m in land purchases during the year.

In early trade on Thursday, Calgro’s shares were up 4.53% to R4.15, on track for their best day in about two weeks. The shares have risen 3.75% so far in 2022, and more than 16% over the past two years, giving it a market value of R582m.

gernetzkyk@businesslive.co.za