Balwin Properties Limited (JSE: BWN) reported a challenging financial year for the period ending February 2024. Revenue declined by 29% to R2.4 billion, reflecting a significant drop in apartment sales (down 32% year-on-year) due to weak consumer demand caused by high interest rates, inflationary pressures, and political uncertainty. Headline earnings per share also plunged by 48% to 47.94 cents per share. Consequently, the board decided not to declare a dividend for the 2024 financial year, prioritizing debt reduction instead.
Despite the negative results, there are some positive signs. Balwin’s annuity business is showing strong growth, contributing an increasing share of total revenue. The company is also attempting to differentiate itself through lifestyle branding, with a focus on padel facilities and other amenities. The recent share price recovery suggests some investor optimism for a potential turnaround.
Technical Analysis
The daily chart shows that Balwin’s share price is currently trading at 201 cents, attempting to maintain its upward momentum. The recent recovery has pushed the share price above the 50-SMA (blue line) but still trades around the 100-SMA(orange line). The 200-SMA (red line) remains a significant resistance level.
The RSI (Relative Strength Index) at 58.63 indicates the share is not yet overbought, but a failure to break above the 100-day SMA could see a decline towards the 189 cents support level. A sustained move below this level would be a bearish sign, potentially leading to further declines towards 172 cents and the major support at 160 cents.
Conversely, a break above the 100-day SMA on significant volume could trigger a rally towards 210 cents. A successful breakout above this level could see the share price challenge the major resistance at 248 cents in the short term.
Summary
Balwin Properties’ financial performance reflects the current economic headwinds in South Africa. While the company faces short-term challenges, its focus on long-term growth through lifestyle offerings and debt reduction is encouraging. Technically, the share price sits at a pivotal point. A sustained break above the 100-SMA could lead to a rally towards 248 cents, while a drop below 189 cents could signal further downside.
Sources: TradingView, Balwin Properties, Business Day, MoneyWeb, Business Tech.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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