Affordable Housing Developer Outperforms Market with 4.4% Return – Huge Growth Potential Ahead

Cape Town, South Africa – Desert Lion’s Fund had a successful month of April, boasting a return of approximately +4.4% net. The fund’s performance for the year so far has been impressive, surpassing the decline of the JSE All Share Index (J203) by 8.4%. This positive performance reflects the exciting opportunities within the fund’s portfolio and universe.

One highlight in the fund’s portfolio is Calgro, a residential property developer in South Africa focusing on affordable housing for lower- and middle-income market segments. With a significant housing shortage in the country, Calgro’s strategic position and operations offer substantial growth potential. The company’s recent financial results showcase their ability to drive efficiencies and margins, leading to improved profits even in challenging economic conditions.

Calgro’s strong balance sheet and strategic initiatives, such as share buybacks at deep discounts, have resulted in positive outcomes. The company’s return on equity and earnings per share have demonstrated solid growth, reflecting their commitment to value creation for shareholders. The recent acquisition of the Bankenveld project has further expanded Calgro’s pipeline, setting a foundation for long-term growth and sustainability.

Investors are optimistic about Calgro’s future prospects, with the company currently trading at attractive valuation multiples. Despite the current low PE and discount to book value, there is confidence in the company’s ability to deliver consistent returns. The management team’s track record of competence and integrity, coupled with a robust balance sheet, instills trust and confidence among investors.

Looking ahead, South Africa’s upcoming general elections in May present a potential catalyst for market sentiment. The possibility of a change in government leadership could impact the economy and investor confidence positively. With a democratic tradition of peaceful power transitions, the expectation is for a favorable post-election impact on the economy and private sector growth.

The outlook for Calgro and Desert Lion’s Fund remains optimistic, with a focus on long-term value creation and investor trust. As the investment landscape evolves, opportunities for growth and value creation are expected to drive returns for investors. With a commitment to transparency and performance, the fund continues to leverage opportunities in the market to deliver value for its partners and investors.