Calgro M3 H1 HEPS jumps 28%

Calgro M3, the housing and memorial parks developer, recently released its earnings report for the first half of the year, showcasing a significant 28% surge in headline earnings per share. Despite a 26% decline in revenue, primarily due to reduced unit sales, the company remains optimistic about the future. CEO Wikus Latakhan shed light on the positive outlook and the factors shaping it during an interview with CNBC Africa. Latakhan highlighted that while the revenue appeared to drop, a deeper analysis revealed that the contribution from joint ventures offset the decrease. Revenue from joint ventures increased substantially, mitigating the overall revenue dip. The memorial park business also performed exceptionally well, generating significant cash flow to cover administrative expenses. Latakhan emphasized the company's focus on achieving financial targets, with plans to leverage the high gross profit margin for sustained growth. Discussing the development business, Latakhan noted a marginal decline in revenue but underlined a positive trend in average sales price and gross profit margin. He attributed the improved financial performance to the company's prudent asset management strategy and cost optimization efforts. Additionally, Calgro M3's strategic share buyback initiative contributed to the impressive growth in earnings and headline earnings. Looking ahead, Calgro M3 is set to launch Bank & Feld Development in the first quarter of the next year, tapping into new opportunities in the market. The company is gearing up to address the housing backlog in South Africa by introducing affordable housing options priced significantly lower than the current average. By aligning with potential interest rate cuts and offering attractive pricing, Calgro M3 aims to capitalize on the market demand and expand its market share. Moreover, Latakhan discussed the sustainability of the Memorial Parks business, highlighting its consistent performance and brand strength. The segment has evolved into a reliable revenue stream, showcasing the potential for long-term stability and growth. Latakhan expressed confidence in the sustainable nature of the Memorial Parks' contribution to the company's financial health. In response to inquiries about the company's approach to government housing projects, Latakhan emphasized a balanced strategy that reduces reliance on public sector contracts while maintaining a strategic partnership with the government. He hinted at ongoing discussions with various government levels to enhance housing policies and delivery mechanisms, emphasizing the broader socio-economic impact of housing projects. Overall, Calgro M3's robust financial performance and strategic initiatives underscore its resilience and adaptability in the dynamic market conditions. With a clear focus on affordability, sustainability, and market expansion, the company is poised to navigate challenges and seize new opportunities in the housing and memorial parks sectors.