Crest Builder Holdings Berhad (CRESBLD, 8591) is a specialized construction and engineering contractor with over 25 years’ experience. The company has also ventured into the property development business. With multiple projects in progress and strong property sales momentum, we expect the company to turn profitable in FY24, with core net earnings anticipated at RM10.2m in FY24 and RM12.1m in FY25. BUY with a TP of RM0.97, based on a 13x PER (peers PER of similar scale) over FY25 EPS, supported by a solid order book of RM1.75bn and robust sales of its property development projects.

CRESBLD has an order book replenishment target of approximately RM500m per annum. Overall, the company has an order book cover ratio of 3.5x. Key projects include the Noora Desa ParkCity development, a RM478.9m mixed-use project with 23% progress, and Connaught One, valued at RM314.5m, with construction currently at 3.1%. Other notable developments include Sunway Velocity 3, a high-rise residential project valued at RM448.5m, and Allevia Mont Kiara, which is nearing completion at 96.1%, with a contract value of RM192.1m.

In the property development division, CRESBLD has seen success with The Interpoint @ Bandar Bukit Tinggi, achieving a 70% sales rate, and the revival of the Latitud8 project, which is on track for completion in 2027. These projects, along with the concession income from the UiTM Tapah 2 campus, which runs until 2034, provide a solid foundation for long-term growth.

CRESBLD owns two prominent investment properties, The Crest and Tierra Crest. The Crest, a 16-storey office tower in Section 19, Petaling Jaya, has a net lettable area (NLA) of 144.8k sqft and 1,500 car parks, generating RM4.8m in annual rental income. Meanwhile, Tierra Crest in Kelana Jaya features a 17-storey commercial development with office towers and a three-level retail podium, offering an NLA of 285k sqft, yielding RM7.8m annually. Additionally, CRESBLD manages the UiTM Tapah 2 campus concession, serving 5,000 students and providing an annual income of RM43.5m until January 2034.

Looking ahead, CRESBLD plans to capitalize on its strong market presence by bidding for more large-scale projects, ensuring long- term revenue growth. The company’s strategic focus on cost optimization and efficient execution enhances its ability to deliver projects profitably. Financial leverage remains manageable with a net gearing of 0.4x as at 30 June 2024, and an interest coverage ratio of over 10x.

Source: Rakuten Research - 17 Sep 2024

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