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Balwin holds off on dividend
Balwin holds off on dividend
Published Date: 2020-05-19 | Source: Stephen Gunnion | Author: Stephen Gunnion
The residential property developer will reconsider a dividend once it has greater certainty about the impact of Covid-19 on its business.
Balwin Properties says demand for its lifestyle apartments remained strong last year despite ongoing economic headwinds and pressure on consumers. However, the residential property developer has decided not to pay a final dividend yet due to uncertainty surrounding the continued impact of Covid-19 and its implications on its cash resources.
Balwin has a secure pipeline of 29,487 apartments across 22 developments in key target nodes with an approximate eight-year development horizon. It develops large-scale, sectional title estates aimed at low to middle-income buyers. It also has two elite developments but said due to prevailing macroeconomic conditions it would exit this market once the existing developments were completed. It earns annuity income by selling ancillary services to customers such as fibre to the home.
Revenue rose 11% to R2.91 billion for the year to end-February as it recognised revenue from 2,715 apartments, up from 2,437 last year. However, it said its cash flow was impacted by council delays which meant it was unable to register 542 apartments by year-end. It has since registered most of them, with the remaining apartments expected to be registered once lockdown restrictions are lifted and the deeds office is operating again. It pre-sold 644 apartments for the 2021 financial year.
Profit declined 9% to R411 million due to a sharp rise in operating costs as it increased its headcount and spent more on marketing. The group said its gross margin was likely to show a slight increase from the interim period to end-August but would be down on last year. That's due to the inclusion of its elite model and Green product developments. Headline earnings per share came in 8% lower at 88c. Its net asset value per share increased by 11% to 631c.
Balwin said it would reconsider a dividend once there was greater certainty on the impact of Covid-19 on its business.
Its shares rose 14% to R2.28 yesterday.
Balwin Properties Earnings:-- Nick Kunze (@NickKunze2) May 18, 2020
-FY REVENUE UP 11% TO R2 914 MLN
-PROFIT FOR YEAR DOWN 9% TO R411 MLN
-HAS DECIDED TO DEFER DECLARATION OF DIVIDEND FOR PERIOD.
$JSEBWN Balwin +11% on FY2020 results-- Smalltalkdaily Research (@smalltalkdaily) May 18, 2020
HEPS -8% as I forecast
Passing the dividend will chasten (some) but is prudent in this #Covid19SA environment
With R1 in cash on balance sheet or half market cap...a tough 2H needs to be overcome so cash cushion is king in property pic.twitter.com/KBaUqWtpr7