Calgro M3 - Earnings underpinned by gross profit margin
Calgro M3’s core business is integrated residential housing development and memorial parks. In the six months to August 2024, the company posted a 28.5% increase in EPS to 101.4 cents, which also represented a three-year EPS compound annual growth rate (CAGR) of 37%. This was supported by a strong gross profit margin of 29.7%, a 383% increase in the share of profits from joint ventures and a 2% decrease in admin costs. Group revenue declined by 26.4% to ZAR507m, compared to H123, but the gross profit margin, which exceeded the target range of 20–25%, offset the decline in revenue. The net asset value (NAV) increased by 6.9% to ZAR14.3 per share, resulting in a price-to-book ratio of 0.5x. Calgro M3’s NAV recorded a three-year CAGR of 26% to August 2024. The company is trading at a historical P/E of 3.9x.Calgro M3 Holdings Limited is a residential developer specializing in integrated developments focused on the entry-level consumer. The Company operates through three segments: Professional services, which consists of various activities, such as identify projects and due diligence, securing land and township establishment; Property development, which consists of various activities, which include infrastructure development, marketing and sales, construction and handover to client, and Memorial Parks, which includes memorial park business. Its products relating to the Memorial Parks segment consist of burial rights and the associated burial and maintenance services. The operations of its Property Development and Professional services segment encompass a range of products, including mid to high income housing, as well as integrated developments. Integrated developments comprise housing, grassroots affordable people's homes and finance linked individual subsidy program, among others.
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