Continued strong demand for Balwin lifestyle apartments
The group said in a trading update yesterday that it held R475 million in cash at year-end, representing an increase of R150m over the previous year.
Consolidated earnings per share and headline earnings per share (Heps) for the year were expected to fall by 6 to 11percent, translating into a decrease from the prior year’s Heps of 95.82cents (95.84c), to a range of between 85.3c to 90.5c per share.
“Despite economic headwinds and consumer pressure, the sustained demand is reflected in an 11percent increase in the number of apartments recognised in revenue in the year, compared to the prior year,” the group said.
Demand for one- and two-bedroom apartments remained strong and comprised about 74 percent of total apartments sold. Balwin in the second half followed the trend of the interim results, by increasing its marketing campaigns to clients.
These were successful in driving sales, but the campaigns contributed to an approximate 5percent reduction in the average selling price of apartments, which was absorbed by the healthy margins generated by the business.
Campaigns offered to clients in the upcoming financial year would be limited, however, some campaigns would continue.
Balwin’s gross margin was expected to increase slightly from the interim results, but would reduce compared to the prior year. This was due to the inclusion of the elite apartment model and Green product developments.
Excluding these developments, the margin of the core business model remained consistent at about 32percent for the year.
About 570 apartments had been pre-sold and not recorded in revenue.
“Sales in the early part of March 2020 have been exceptional. This is mainly due to the launch of Munyaka, the new flagship development in Waterfall featuring the second Crystal Lagoon introduced by Balwin and the first of its kind in Johannesburg. More than 550 apartments were sold in the month to date, totalling R850m."
Overhead costs were expected to substantially increase in the current financial year due to an increase in head-count and salaries, as the company grew its middle-to-top management and marketing costs.
Balwin shares closed 1.85percent higher at R2.75 on the JSE yesterday.