Is Crescendo Corp a value trap?

[i4value]

Crescendo is Bursa Malaysia property company whose main projects are in Johore. There has been some positive news about the Johore property market. But I am not sure how this is going to translate into the performance of the property developers in the short run.

I bought Crescendo about 9 years ago having valued its EPV then at RM 4.00 per share. The Book Value then was RM 3.25 per share.

The Book Value had not changed very much since then with the 2022 value at RM 3.29 per share. Its share price today is RM 1.38.

Is this a value trap?



Over the past 12 years, the Group has generated a positive total gain for the shareholders. This was due to the dividends. The Group has a good dividend track record paying out about 40% of its earnings. I expect this dividend payments to grow in line with the Group’s performance.

Given that my purchased cost is below both the Asset Value and Earnings Power Value, I would continue to hold onto the stocks as I have a positive view of the sector over the long-run.

For more insights into Bursa companies go to “Are these outstanding stocks - what to consider? (Bursa Malaysia)”

[donmihaihai]

The math isn't right. Net asset per share remain the same after 9 years while payout over the same period was only 40% of earnings. Where did the 60% earnings gone to.

[i4value]

There were some conversion of ICULS and share issuance along the way. Looking at per share value alone is not sufficient.

[donmihaihai]

Looking at net asset per share is never sufficient.

But with same net asset per share after 9 years plus dividend payout ratio and now another liner, now I know that Crescendo Corp did raise money through share issuance and ICULS at some discount to net asset per share.

Throw me some more numbers, i might be able to connect more dots.

[i4value]

Haha. Read my detailed analysis in Is Crescendo a value trap? https://www.i4value.asia/2023/04/is-cres....html#more

[i4value]

Crescendo’s performance over the past 12 years has been impacted by the soft property market. Despite this environment, the Group managed to be profitable every year. But the property sector is cyclical and with the post-Covid-19 opening of the economy, the bottom of the cycle has been reached.

Crescendo's outlook is optimistic. Positioned near vital projects like Iskandar Malaysia and Pengerang Integrated Petroleum Complex, it is poised for growth in demand for
both residential and industrial units.

Crescendo is currently trading below its Asset Value with more than a 30% margin of safety. As a property company, the Asset Value is a good reflection of its intrinsic value. Have a look at my updated valuation at page 20 in INVEST https://notice.shareinvestor.com/email/n...-15Mar.pdf