9M18 CNP of RM32.6m is in line at 77% of our full-year estimate. Property sales of RM154.4m are also on track to meet our target of RM221.0m. No dividends declared, as expected. No changes to our FY18-19E earnings. Maintain OUTPERFORM with a lower Target Price of RM1.55.

Within expectations. CRENSDO’s 9M18 CNP of RM32.6m came in within expectations, at 77% of our full-year estimates. No consensus estimates available. Its 9M18 property sales of RM154.4m are also on track to meet our full-year target of RM221.0m. No dividends declared, as expected.

Results highlight. 9M18 CNP registered strong YoY growth of 51% underpinned by the decent improvement in several areas; (i) improvements in revenue (+21%), and (ii) improvements in EBITDA margins by 2ppt to 27%. These improvements in revenue and margins are mainly due to decent progressive billings and contribution from industrial properties. QoQ, 3Q18 CNP declined 43% mainly due to weaker revenue (-18%) stemming from lower industries property sales.

Outlook. Going forward, CRENSDO is looking to launch 24 units of cluster factories at Taman Perindustrian Cemerlang, 102 units of mid- market landed residential properties at Bandar Cemerlang, 54 units of shop offices at Bandar Cemerlang and Taman Desa Cemerlang as well as 426 units of affordable housing at Bandar Cemerlang and Tanjung Senibong with a combined GDV of >RM300.0m. Unbilled sales stands at RM168.4m, providing at least one year’s visibility.

FY18-19E earnings unchanged. Post results, we make no changes to our FY18-19E earnings and keep our FY18E sales target at RM221.0m.

Maintain OUTPERFORM after considering its decent sales performance and better mix of industrial product sales coupled with improving profitability. However, we lower our TP to RM1.55 (from RM1.60) based on an updated -1.0SD level historical RNAV discount of 76% (from 75%). We believe such valuations levels are fair considering its full exposure to Johor. Our TP implies 9.2x FY19E PER which is below its historical average of 11x.

Source: Kenanga Research - 26 Dec 2017