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Balwin Properties on track to maintain current growth

By SA Commercial Prop News 2015-11-27 05:54:00

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Balwin Properties CEO, Stephen Brookes said the listing on the JSE had led to a boost in new sales and the group was set to continue its strong growth path.

Balwin Properties, which made an entry on the JSE in October, on Wednesday announced its financial results for the six months ended 31 August 2015.

The company focuses on building and selling residential properties with 500 to 1,000 units per complex. These units have a price range of R600,000-R1.7m in size from 45m2 to 120m2 and target buyers in the mid to high living standards measures.

During the period, revenue grew 71% to R823m, while its net asset value rose 45%.

Balwin Properties CEO, Stephen Brookes said the listing on the JSE had led to a boost in new sales and the group was set to continue its strong growth path.

“The market’s response has been fantastic, with most first phases sold out within a couple of weeks from launching as we expanded into Pretoria for the first time and launched new developments in Cape Town, Somerset West, Sandton, Modderfontein, Randburg and Oakdene, south of Johannesburg,” he said.

Operating profit increased by 81% to R319 million. Earnings per share increased by 76% to 58 cents and headline earnings per share was up 100%, also to 58 cents, based on the 400 million shares in issue at the end of the reporting period.

The company plans to re-invest 70% of after-tax profits back into the business and distribute the remaining 30% of profits to shareholders.

Balwin is not a speculative builder as it constructs and sells its developments in several phases according to demand. This phased build-to-sell model has high barriers to entry and is easily scalable.

In addition, the company plans to develop, retain and manage a rental portfolio of 2,000 to 3,000 units by 2020.

Investec Asset Management portfolio manager, Peter Clark said Balwin has a strong track record where it executes its projects efficiently. "Its pipeline is impressive and it is well-positioned in an attractive segment of SA’s residential market and is expected to continue its strong performance," said Clark.

“Headwinds aside, we anticipate to maintain our growth and current sales levels. This is a seasonal business with most units traditionally transferring towards the end of the financial year. Our forecasted sales for the 2016 financial year were 83% secured at the end of the interim reporting period,” Brookes concluded.