Crescendo tunes up for more projects

29 June 2004

Crescendo Corp Bhd, listed on the Bursa Malaysia main board, has strong upside potential and an attractive divi­dend yield. Mayban Securities, in. a report released on? Wednesday, looks at some of its upcoming projects and the prospects for the company.

CRESCENDO Corp Bhd is one of the few developers in Johor that has emerged unscathed from the financial crisis, according to Mayban Securities.

Despite the weak property market, the group has registered profits, and hasa growing contribution from construction and education.

Currently, Crescendo has a total land bank of 2,570 acres, entirely in southern Johor, which is expected to last it for the next 12 to 15 years.

Its flagship projects are Desa Cemerlang (DC) and Taman Perindustrian Cemerlang (TPC), both located 10km from johor Baru. Crescendo has sold RM728mil worth of properties from TPC and DC and has RM85mil worth of ongoing projects. An undeveloped land ban4c of 294 acres at TPC and DC will keep the company busy for the next few years.

A mixed development township Bandar Cemerlang at Ulu Tiram will be launched in the second half of this year. Prospects are enhanced by the projects good accessibility via the Johor Baru-Kota Tinggi Expressway, and significant contribution is expected in financial year 2006.

 FY End Jan  FY02A FY03A  FY04A  FY05F  FY06F 
 Turnover (RM mil)  62.1  62.5  62.4  75.4  134.4
 Net profit (RM mil)  11.8  12.7   13.9  15.5  29.2
 EPS (sen)*  7.7  8.4  9.1  10.2  19.2
 DPS (sen)  5.0  5.0  6.0  6.0  7.0
 P/E Ratio (x)  14.1  13.0  12.0  10.7  5.7
 Div. Yield (%)  4.6  4.6  5.5  5.5  6.4

          * Adjusted to reflect eblarged share base of 152m units. Source: Mayban Securities

Crescendo has 843 acres in Tanjung Surat, Kota Tinggi, reserved for a resorts and mixed development project called Ambok. This is targeted at the Singapore retiree market, in line with the Government?s drive for Singaporeans to make Malaysia their second home.

The launch of Ambok is expected after the completion, by middle of 2008, of a 500m bridge across Sungai Johor and an RM800m expressway linking the east coast of Johor to the North-South Express­way.

Crescendo has lined up 437 double-storey terrace houses worth RM90m to be launched from 2005 to 2007.

On June 1, Crescendo announced UEM World Bhd (UEW) gave it the rights to develop an industrial park on its 341.9 acres of land, which forms part of its Bandar Nusajaya, Johor Baru, project.
UEW has given Crescendo the option to acquire the land at a maximum of RM169.7mil. This land bank is poised for immediate development to complement Crescendo s existing 2,570 acres of land.
If the option is not exercised, there will be profit-sharing with UEW, thus reducing the profit margin for the development.

All in, the project is earnings enhancing, as an industrial park development typically returns 30% to 40% in pre-tax margin.

Its forecast has not considered the additional contribution from Crescendo?s new campus in DC and the propose joint venture with UEW.

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