CRESNDO: 5 reasons NOT TO MISS THIS STOCK

Stock Code: 6718
Potential can go up to RM2.12
Upside potential: 47.2%

I have written about Crescendo or CRESNDO on 10-Dec-2010, the full link: CRESNDO Introduction.

To recap, CRESNDO. To recap, CRESNDO is mainly involved in property development and construction related activities in Johor. CRESNDO is a pure proxy to Iskandar investment theme as the Company owns a total of 3,055 acres of land in Johor, out of which 1,735 acres of it is within the boundary of Iskandar Malaysia (as of 31-July-2010).

As usual, let's do some KISS (Keep It Short and Simple) and look at the 5 reasons not to miss this stock.


No 1. Stellar 3Q2011 result with net income up 107% y-o-y
On 29-Dec-2010, CRESNDO announced its 3Q2011 result in which net income surged 107% y-o-y to RM8.45m. However, the net income drop 7.3% q-o-q. Looking from 9-months year to date or 9MYTD perspective, net income surged 56% to RM22.38m


No 2. Consistently paid dividend of 7 sen in the past 5 years, this year dividend likely to be higher
Along with the result announcement, CRESNDO announced dividend of 2 sen per share. This is a surprise as the Company did not do so in last year. Looking at the trend in which 6 sen dividend already announced for this year, final dividend of 3 sen is likely, bringing total dividend to be 9 sen. This translates into 6.25% dividend yield based on yesterday close price of RM1.44... this is easily the highest dividend yield counter among the property stocks.


No 3. From technical point of view, price have returned to NEUTRAL level
After the good 3Q2011 result, the market has noticed CRESNDO and push the stocks to OVERBOUGHT level, causing CRESNDO to move up to as high as RM1.48 on 4-Jan-2011. With the share price retreated slightly to RM1.44 yesterday, the stock RSI has returned to 67.7, indicating it has returned to NEUTRAL level. How to play with this? Use this as a chance to accumulate this stock with deep value.


No 4. Attractive value with Price to NTA ratio of 0.48x
Considering that: i) CRESNDO has the potential of growth due to its exposure to Iskandar investment theme, ii) 3Q2011 net profit jumped 107% y-o-y and iii) consistenly paid dividend in the last 5 years with 7 sen dividend each year... the market may have given too much discount to CRESNDO with only 0.48x Price to NTA or P/NTA. 
 
No 5. Have potential to increase 47.2% to RM2.12
KSL is the nearest comparison for CRESNDO with P/NTA is 0.93x based on yesterday close price of RM1.94 and NTA of RM2.08. However, KSL has land or projects in KL while CRESNDO do not. By taking this into consideration, 25% discount to KSL's P/NTA will give fair P/NTA of 0.7x. If the market agree to 0.7x P/NTA for CRESNDO, then this stock is poised to go all the way to RM2.12, representing possible upside of 47.2%.