18 October 2020 By PDSNET

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 31st 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:

Balwin (BWN): May 2016 - to date. (16 October 2020). Chart by ShareFriend Pro.

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 31st 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 31st 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.


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.

Share this article:


The Confidential Report - December 2020

We have come to the end of a tumultuous and unique year marked by the “black swan” event of COVID-19, various Trump excesses and, finally, his vanquishing. The long-term progress of the S&P500 as outlined in “our Background Approach” on our web site remains in tact. In that scenario, the world economy is moving into a strong boom phase stimulated by unprecedented


Property shares on the JSE have had a torrid time over the last few years. It began with the melt-down which resulted from the Resilient crisis, now substantially behind us, and continued with the eventual failure of the Edcon Group and the effects of the COVID-19 lockdown. These events have combined with a generally negative economy to reduce the value of property shares significantly.

Market Overview

Now that the uncertainty of the US election is essentially over, it is perhaps a good time to step back and consider where we are and what is likely to happen next.

The S&P500 index, which is an excellent benchmark for trends in the international markets, appears to be breaking to a new record high – above the resistance at 3580. Consider the chart:

Insider Trading

The JSE has just witnessed one of the most blatant examples of insider trading in many decades. It involved a small real estate investment trust (REIT) called Texton. This company owns 53 properties, 56% of which are in South Africa and the balance in the UK. After it listed on the JSE in August 2011, the share rose to a high of 1235c on 6th March 2015 before beginning a steady

The Confidential Report - November 2020

At the close of trade on Friday (30-10-20), the S&P500 index was down 7,5% from its cycle high of 3534 made on the 12th October 2020 – and this puts the market on a knife-edge. Consider the chart:

The critical level from a technical perspective is the previous cycle low of


Enterprise Outsourcing Holdings (EOH) offers the private investor a very instructive example of a quality share that gave a clear signal of its impending troubles. It shows that, just because a share is an institutional favourite, does not mean that it is immune to the vagaries of the market. Any share can fall on hard times – and the secret is to watch the technical signals as

The Great Bull

We have often stressed the importance of understanding the long-term context within which the share market is moving. It is very difficult to see what is likely to happen in the future unless you go back in history and study how we arrived at this point. In this context, it is important to understand that, these days, the major markets of the world generally move together – and they all follow Wall Street.

The Confidential Report - October 2020

Technically, September 2020 was a correction month on Wall Street, with the S&P500 falling about 9,3%. The market was certainly due for some sort of correction following its record high of 3580 on 2nd September. Consider the chart:

You can see here that over the past month the S&P

The Relationship between Fundamental and Technical Analysis

There are generally two approaches to share assessment – fundamental and technical analysis. The fundamentalist is trying to answer the question, “How good will the company be as a generator of dividends in the future?” while the technician is looking for patterns in the share’s price and volume charts to improve his predictions of where the share


The Oil market is usually an excellent barometer of the state of the world economy. When there is growth, people buy more cars and drive more, more products are consumed which means they have to be transported to retail outlets – usually by an internal combustion engine of some sort.
The COVID-19 pandemic caused the oil price (North Sea Brent) to collapse to prices below $20 a barrel