Calgro M3 - Investments support strong revenue pipeline
Calgro M3’s core business is integrated residential housing development and memorial parks. Established in 1995, the company generates the bulk of its revenue from the Gauteng and Western Cape provinces in South Africa. The residential development business acquires land, develops bulk infrastructure and builds affordable and luxury residential units for sale. In Q224, Calgro M3 acquired a huge land parcel that it plans to develop over the next 15 years, adding ZAR18bn to the current revenue pipeline of ZAR16bn. Calgro also acquired Platinum City Memorial Park, which added ZAR426m to the memorial parks revenue pipeline. The stock is trading at a low historical P/E of 3.0x and a shareholder yield (sum of dividend yield, share buyback yield and debt repayment yield) of 5.4%, underpinned by the recent ZAR73m share buyback. The price to book ratio is 0.4x.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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