TA Initiate Coverage on Crescendo with TP of RM1.87

Crescendo’s FY11 net profit came in above our expectations by 15%. The variance was largely due to the lower-than-expected tax rate. At PBT level, Crescendo’s FY11 earnings were within our forecasts. For this quarter, Crescendo has declared a final gross dividend of 5sen, bringing the total YTD gross dividend to 11sen. This was higher than our projections of 10sen and the previous year dividend payment of 7sen.

YoY, Crescendo’s FY11 net profit grew by >100% driven by: 1) 34% increase in revenue; and 2) improvement in PBT margin 7.5%pts. On the quarter-on-quarter basis, Crescendo’s 4QFY11 earning was boosted by higher top-line growth, coupled with the expansion in margins and lower effective tax rate.
........

We value Crescendo at 9x CY11 EPS, which is at a discount to our sector PE of 12x for the small cap property company. This discount is to factor in the concentrated risks in relation to its sole exposures to property development in Johor.

We arrive at a target price of RM1.87/share. Given the potential upside of 33%, we re-initiate coverage on Crescendo with a Buy recommendation.

For full report, you can get it free from Bursa CBRS website at http://eresearch.bursamalaysia.com/download.aspx?id=12261&type=research