BALWIN Properties, the JSE’s biggest listed sectional title residential estate developer, released a voluntary trading update on Thursday that pleased its investors.
Balwin’s share price closed 14.71% higher at R7.80, with more than 1.294-million shares traded, after it announced its headline earnings per share would be between 47% and 55% higher for the year to February compared to the year before.
Earnings per share were expected to be between 37% and 44% higher than the comparative period.
Its strategy is to re-invest 70% of after-tax profits in the business and distribute the remaining 30% to shareholders.
"Balwin’s strong profits have been driven by a substantial increase in the number of residential units sold, with strong demand in new and existing developments, such as Greenstone Ridge and Greenstone Crest in Johannesburg East, Kyalami Hills and The William in Johannesburg North, and De Velde in Cape Town," said CEO Stephen Brookes.
He said Balwin’s targeted focus on the middle income market in metropolitan nodes had proven to be "sufficiently robust and resilient from the downturn in the broader economy and continues to see strong demand for its product and offering".
The company announced in December that it had concluded a nonbinding conditional agreement for the development of 15,000 residential units in the Waterfall node, for which strong demand was expected.
Mr Brookes said he was also looking to develop units in the Modderfontein area.
One of the biggest property developers in the Modderfontein area is Zendai Development SA, the local subsidiary of Hong Kong-listed Shanghai Zendai, which has plans to build a city in the suburb of Modderfontein, saying it will develop 1,600ha into the "New York of Africa".
Mr Brookes said Balwin was managing difficult economic conditions, as homeowners downscaled from houses to sectional title estates.
Equity analyst Keith McLachlan said Balwin was an excellent developer that knew its market well. "Investors have not really liked recently listed property developers, but Balwin is an exception. One of the barriers to entry in its market is scale, but they have impressive scale and they can diversify their offering as a result," he said.
Balwin’s strong profits have been driven by a substantial increase in the number of residential units sold