Sunday, July 21, 2013

Crescendo Value for Premier Quality

Crescendo has a land bank of 2,975 acres, out of which 1665 acres are prime lands in the Iskandar Region. The company is in property development, manufacturing and trading in concrete products, and to a small extent in education. It is moving from medium to high-end products. This means better margins going forward.

As at Jan 31, 2013, its key statistics are as follows:

Paid-up capital: RM195.49 million
Par Value: RM1
NTA: RM 3.07 per share
EPS: 29 sen
Interim Dividend: 4 sen less tax
Final Dividend: 8 sen single tier (x-date 6.8.13; payment 30.8.13)
Current Ratio: 3.15
Quick Ratio: 2.09
Debt/Equity: 0.1558
Debt/Total Capital: 0.1312
Institutional shareholders: Public Mutual Bhd holds 7.44 million shares
Controlling shareholder: Kim Loong Bhd holds 55.73%
Chairman and CEO: Gooi Seong Lim 

From the above statistics, we can easily discern that the company has little debts and a strong balance sheet with good assets in lands.

For the financial year ending  Jan 31, 2014, the company has four on-going projects in the Iskandar region. These four projects are very well-positioned with a full spectrum of products for sale. These products are: medium industrial factories, commercial buildings, shop houses and residential houses. Demand for these products are good. Not only Singaporeans and other foreigners are keen to buy them, locals are keen to buy them as well. Thus, sale is not a problem.

In the past year, some sales were purposely held back for the purpose of better profits. This is reflected in better earnings of 9.23 sen per share for the first quarter ended April 30, 2013. In the corresponding quarter of the past year the EPS was only 6.59 sen.

Land values have always been on the rise. Some of the lands of the company were purchased way back in 2005. If a revaluation of these lands is carried out, the NTA value of the stock is sure to go up. In property counters, NTA (net tangible assets) is an important figure to consider.

Manufacturing and trading of concrete products contributed 34% of revenue. An improvement is expected with more sales to Singapore.

In Education, the campus for the Crescendo International College has been operational since May, 2013. Initial intake was reported as encouraging.

The group's future outlook is good. The 1665 acres of prime land, mentioned earlier, has a gross development value of RM7 billion according to the CEO. 

Recently the stock was traded to a high of RM3.80. It was last traded at RM3.12.

I am long on the stock. I expect it to surpass RM3.80 per share before 2014.

Your listen to me at your own risk, and buy at your own risk as well.