Calgro M3 (JSE:CGR) in Desert Lion 2024 Q3

Affordable Housing Developer with Strong Growth Prospects

Apr 14, 2025

Summary

Investment rationale: Undervalued "fallen angel" with solid fundamentals.
Market positioning: Focuses on affordable housing in major South African metros.
Risks and challenges: Leadership transition with CEO and CFO departures.
Recent performance: H1 2024 EPS up 29% year-over-year, driven by margin expansion and share buybacks.
Future outlook: Positive momentum expected with high double-digit EPS growth and favorable economic conditions.

In the Desert Lion 2024 Q3 fund letter, Calgro M3 (JSE:CGR, Financial) was highlighted as a significant holding, reflecting the fund's confidence in its undervalued status and strong growth potential. The fund manager, Rudi van Niekerk, emphasized Calgro's focus on affordable housing in key South African metropolitan areas, which positions it well for sustained demand and growth.

"In our July 2023 letter, we detailed our thesis that Calgro was a fallen angel with solid fundamental prospects that were unappreciated by the market. Our position is up over 100% (gross) to date; however, the shares remain extremely cheap and we see years of strong momentum ahead. As a refresher, Calgro is a residential property developer that focuses on affordable housing in the main South African metropolitan areas of Gauteng and Cape Town." — Rudi van Niekerk, Desert Lion Capital, Q3 2024 Fund Letter

Read full letter at gurufocus Desert Lion 2024 Q3 page.

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