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.

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