9M19 CNP of RM26.2m came above our expectation at 84% of estimate, mainly due to a stronger EBITDA margin this quarter. Property sales of RM221.4m also came above our sales target at 95%, mainly driven by residential units sales. No dividends declared, as expected. Cease coverage due to rationalization of our coverage. Previous recommendation as follows: MARKET PERFORM; TP: RM1.30.

9M19 CNP of RM26.2m came above expectation at 84% of our full- year estimate. Top-line was within expectation but the positive deviation vs our FY19E CNP was due to a stronger EBITDA margin this quarter. No consensus numbers available. Property sales of RM221.4m also came above our FY19E sales target of RM234.0m at 95%. Property sales were driven by sale of residential units, making up c.62% of the RM221.4m sales. No dividend was declared as expected.

Results highlight. YoY-Ytd, 9M19 revenue was up 6% mainly due to higher billings from the property development and construction segment. However, 9M19 CNP declined 15% due to (i) weaker EBITDA margin (-2.1 ppt) from lower industrial property sales being recognised, which normally has higher margin, (ii) higher depreciation and amortisation expense (+81%) and (iii) higher interest expense (+16%).

QoQ, despite revenue coming down 27% on lower billings from the property development and construction segment, 3Q19 CNP increased 9% driven by (i) improvement in EBITDA margin (+9.9 ppt) on higher portion of industrial and commercial properties sales being recognised, which normally yield better margin, and (ii) lower effective tax rate (-4.6 ppt).

Outlook. Currently, its unbilled sales stand at RM227.3m, providing less than one year’s visibility. As of 9M19, they have launched 40 units of industrial property at Taman Perindustrian Cemerlang, 24 units of shop offices, 102 units of mid-market landed residential properties and 204 units of affordable housing at Bandar Cemerlang with a total GDV of RM223.9m. Moving forward, the group plans to launch 222 units of affordable housing at Tanjung Senibong.

Cease Coverage. We officially cease coverage on the stock due to rationalization of our coverage universe. Our last recommendation for CRESNDO was MARKET PERFORM with a Target Price of RM1.30 based on a RNAV discount of 79% to its RNAV of RM6.32.

Source: Kenanga Research - 28 Dec 2018