Calgro's quiet takeover

Dec 31 2010 11:33
Marc Ashton

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Johannesburg - While the cat is away the mouse can play, would appear to be an apt saying for small cap property developer Calgro M3, whose management appears to be quietly manoeuvering towards some kind of management buy-out in the new year.
Rumours of a delisting have been hovering around this counter since 2008, but the stock market meltdown and tumble in the local property market may have discouraged management from following through.

However, the friendlier market conditions of 2010/11 might have put these plans back on track.
In December, CEO Ben Malherbe and financial director Wikus Lategan quietly went about buying up shares on the open market at between 44 cents and 48 cents per share, primarily from other directors.

This continued a trend since the company's annual general meeting in June. With the counter bid at 45c and thinly on offer at 55c, this perhaps gives some idea of the value management is attaching to the business.
Calgro is not a stock which is widely followed by institutional managers, but one manager who holds the counter in his portfolio has told Fin24 that there is value to be found.
The interim results released in August show signs of a company which is bouncing back, but certainly not shooting the lights out.
It posted headline earnings of 3.6c at the half year, and went from a cash positive position of R15m to a negative R10m (overdrawn).

Calgro also had to inject further cash into its Fleurhof and Pennyville operations to take them forward.
By its own admission, the Fleurhof and Jabulani projects will only deliver returns in late 2011 and early 2012. But there are already signs that sales activity is picking up, with cash from operations rising from R1m in the previous six months to R31m.
Net asset value (NAV) for the group was reported at 124c and of R365m worth of assets, about R37m is goodwill. By Fin24's calculations, that leaves the group with a tangible NAV of around 95c/share, a significant premium to where the stock is trading at the moment.
There is very little investors can do to stop a company like Calgro delisting, once management sets its sights on doing so. But that doesn't mean a punter can't make a few bucks while they are doing it.

 - Fin24

property market  |  property developers



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