ARTICLES

Balwin

The JSE property index (J253) has fallen over 68% since December 2018, firstly because of the adverse report about the Resilience group in January 2018 and then because of the pandemic in March 2020. This has left the index trading at a fraction of its underlying value – which represents an opportunity for private investors.

Among the property shares there are some which we believe represent bargains, and one of those is Balwin.

Balwin is focused on developing secure sectional title properties close to the major centers in South Africa. Listed 5 years ago, the share has a net asset value (NAV) of 631c as of 31^st August 2020. The current share price is 428c – so it is trading at a 32% discount to the net value of the properties which it owns. The company has shifted towards renting out properties for between R4500 and R8500 a month to generate income. This is a part of the rental market where there is strong demand, even after COVID-19, because many households have been downsizing into smaller, cheaper accommodation.

The company recently launched the R44bn Mooikloof Megacity development which is a public/private partnership aimed at South Africans earning between R3500 and R22000 a month. This type of development will ensure that the company has a steadily rising income for years to come.

But perhaps the most attractive feature of this under-valued property counter is that its loan-to-value (LTV) is only 25%. This means that it is very under-geared compared to most real estate investment trusts (REIT) and has substantial headroom to make acquisitions and survive these tough times. Consider the chart:

Here you can see that since listing in October 2015, the share has been in a falling property market where property shares have generally gone out of fashion.

But, its recent results for the six months to 31^st August 2020 have changed investor perceptions resulting in a clear upside breakout through its long-term downward trendline. We believe that this share will continue to perform well in the future and that it represents a really solid investment at current levels around 428c. The CEO, Steve Brookes, is planning to grow the company to have assets of over R10bn by 2025 and he is in a good position to do that because the balance sheet leaves room for acquisitions in a market where there are plenty of properties selling cheaply.

He also talks about increasing the company’s “free float” which will certainly make it more attractive to institutional investors. Over the six months to 31^st August 2020 Balwin is one of the very few REITs to pay a dividend. And the dividend it is paying (19,6c) is a whopping 68% more than it paid in the previous year.

We feel that this share represents a low-risk high-value opportunity in the current market.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

The Debtors' Book

A BIT OF HISTORY

Many years ago, in 1982 when I started this business (which became “PDSnet”), I ran advertisements in both the Rand Daily Mail (RDM) and in the Star – which were the two most widely read newspapers in Johannesburg at the time. At that time, we were a very small business and had no credit rating at all. Despite this the RDM immediately

WeBuyCars - Results

The financial results of companies show how profitable they are and give a good indication of their share’s risk and potential return. WeBuyCars (WBC) is a recent listing which came to the JSE on the 11^th of April 2024. Unlike other listed motor vehicle companies, it is a company which specialises in the purchase and sale

Choosing Winners

We are often asked how we go about selecting the shares to put on to the Winning Shares List (WSL). Right now, there are 102 shares on the list with 5 having gone down since they were added, 94 are up and 3 are unchanged. On an annualised basis, 24 of them are performing at above 100% per annum.   

As a private investor,

Kore Revisited

Kore (KP2) remains at once the most exciting and most risky investment on our Winning Shares List (WSL) at the moment. We originally added it to the list just over a year ago on 16^th May 2024 at a price of 20c. It subsequently rose to a high of 83c on 3^rd October 2024 and we published an article

Rand Strength 2025

The strength of the rand is both a critical and a complex issue for private investors on the JSE. Our currency is influenced by two primary forces:

1. Our local economy’s prospects
2. The rand’s role as a leading emerging market currency

These, in turn, are

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024,

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s