Stock Name: CRESNDO
Company Name: CRESCENDO CORPORATION BHD
Crescendo Corp Bhd
(June 28, RM1.59)
Maintain buy at RM1.54 with revised target price of RM2.46 (from RM1.81): Crescendo's 1QFY12 net profit of RM10.4 million came in above our expectations at 29% of our full-year forecasts. The variance was largely due to the higher-than-expected profit before tax (PBT) margin as well as lower tax rate.
Year-on-year, Crescendo's 1QFY12 net profit grew by more than 100% driven by: (i) 17% increase in revenue; and (ii) 10-percentage point increase in the PBT margin. We attribute the increased margin to a better product mix and decline in finance costs.
Quarter-on-quarter, Crescendo's earnings dipped 27% due to some one-off compensations of RM6.5 million for compulsory land purchase. Excluding this, 1QFY12 earnings would have grown by 34% q-o-q.
Crescendo has secured new sales of RM152 million for FY11, surpassing FY10's new sales of RM78.9 million. Year-to-date FY12, the company has locked in RM54 million new sales largely from the sale of industrial units at Nusa Cemerlang Industrial Park. This has improved the group's earnings visibility with unbilled sales of RM116 million as at April 2011.
We raise our FY12/13 earnings by 24% and 18% to factor in higher earnings before interest and tax (Ebit) margin of 35% (from 27% previously) from the development of industrial properties at Nusa Cemerlang Industrial Park and Desa Cemerlang. We expect future earnings growth to be driven by: (i) current outstanding unbilled sales of RM116 million; (ii) projected sales of RM176 million to RM245 million for FY12/13; and (iii) sufficient landbank of more than 3,000 acres for future development. We maintain our higher dividend projections of 11 sen for FY12/13, which is equivalent to a yield of 7%. Our projections are premised on the low funding requirements for land acquisitions for FY12/13.
We roll forward our valuation base year to CY12. We continue to peg our valuation with a price-earnings ratio of eight times, which is at a discount to our sector PER of 12 times for mid-cap property stocks. This is to factor in the concentrated risks in relation to its sole exposure to the property development in Johor.
We arrive at a new target price of RM2.46 (from RM1.81 previously). We continue to like Crescendo as it is one of the key beneficiaries of the government's 'My First Home Scheme' as its residential properties in Johor are generally priced at RM200,000 per unit. Given the potential upside of 60%, we reiterate our 'buy' recommendation on Crescendo. ' TA Securities Research, June 28
This article appeared in The Edge Financial Daily, June 29, 2011.
Company Name: CRESCENDO CORPORATION BHD
| Research House: TA | Price Call: BUY | Target Price: 2.46 |
Crescendo Corp Bhd
(June 28, RM1.59)
Maintain buy at RM1.54 with revised target price of RM2.46 (from RM1.81): Crescendo's 1QFY12 net profit of RM10.4 million came in above our expectations at 29% of our full-year forecasts. The variance was largely due to the higher-than-expected profit before tax (PBT) margin as well as lower tax rate.
Year-on-year, Crescendo's 1QFY12 net profit grew by more than 100% driven by: (i) 17% increase in revenue; and (ii) 10-percentage point increase in the PBT margin. We attribute the increased margin to a better product mix and decline in finance costs.
Quarter-on-quarter, Crescendo's earnings dipped 27% due to some one-off compensations of RM6.5 million for compulsory land purchase. Excluding this, 1QFY12 earnings would have grown by 34% q-o-q.
Crescendo has secured new sales of RM152 million for FY11, surpassing FY10's new sales of RM78.9 million. Year-to-date FY12, the company has locked in RM54 million new sales largely from the sale of industrial units at Nusa Cemerlang Industrial Park. This has improved the group's earnings visibility with unbilled sales of RM116 million as at April 2011.
We raise our FY12/13 earnings by 24% and 18% to factor in higher earnings before interest and tax (Ebit) margin of 35% (from 27% previously) from the development of industrial properties at Nusa Cemerlang Industrial Park and Desa Cemerlang. We expect future earnings growth to be driven by: (i) current outstanding unbilled sales of RM116 million; (ii) projected sales of RM176 million to RM245 million for FY12/13; and (iii) sufficient landbank of more than 3,000 acres for future development. We maintain our higher dividend projections of 11 sen for FY12/13, which is equivalent to a yield of 7%. Our projections are premised on the low funding requirements for land acquisitions for FY12/13.
We roll forward our valuation base year to CY12. We continue to peg our valuation with a price-earnings ratio of eight times, which is at a discount to our sector PER of 12 times for mid-cap property stocks. This is to factor in the concentrated risks in relation to its sole exposure to the property development in Johor.
We arrive at a new target price of RM2.46 (from RM1.81 previously). We continue to like Crescendo as it is one of the key beneficiaries of the government's 'My First Home Scheme' as its residential properties in Johor are generally priced at RM200,000 per unit. Given the potential upside of 60%, we reiterate our 'buy' recommendation on Crescendo. ' TA Securities Research, June 28
This article appeared in The Edge Financial Daily, June 29, 2011.
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