Balwin Properties’s share price leapt 8 percent yesterday after it said it expected its interim earnings to increase up to 50 percent, despite the challenging macro-economic factors and the construction price inflation experienced in the industry.
The share price closed the day at xxx
In its trading statement for the six months ended August 31, 2022, the group said consolidated earnings per share and headline earnings per share for the period were expected to increase by between 45 percent and 50 percent over the prior corresponding period. This translated into an increase from the prior financial period’s 24.95 cents to a range of between 36.18 and 37.43 cents per share.
Approximately 1 360 apartments were sold and recognised in revenue in the period, compared to the first half of 2022, which was 1 261 apartments.
Balwin Properties said sustained strong demand resulted in an approximate 8 percent increase in apartments recognised in revenue for the period.
The group said while it continued to maintain a healthy sales rate, rising interest rates and general economic pressures on clients are expected to temper the rate at which sales volumes have increased in recent years.
“This will be largely mitigated by the healthy pre-sales position of the group, with approximately 1 700 apartments forward sold beyond the reporting period,” it said.
To further address the anticipated challenging economic environment, Balwin said it would continue to dynamically optimise its apartment mix based on demand, while ensuring appropriate alignment of the rate of construction to the rate of sales.
“The group will also continue to focus on improving margins by flattening the yield curve between the first and last phase of each development under construction to increase returns, a discipline that has generated positive results to date,” it said.
Looking ahead, the board said it remained positive about the prospects for the core business and leveraging Balwin’s brand in the development of complementary, annuity-based revenue streams.
“The board, however, notes expected increasing macro-economic headwinds in the near-to-medium term, particularly with respect to cost price inflation and rising interest rates. While these factors continue to be closely monitored and managed, it is expected to place moderate pressure on margins and the sales rate,” Balwin said.
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