Crest Builder Holdings Berhad

@aaronyew $CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD) reports a 3rd consecutive quarter of profitability, albeit minimal profits, in spite of a large increase in revenue.

Finance costs are still putting a heavy strain on the company for now.

$CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

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Crest Builder (MktCap: RM120m): Construction sector laggard play, valuation seems cheap

Meeting takeaways
Financials
🔷 Construction outstanding orderbook stood at RM1.8bn (4.5x 2023 construction revenue). Aiming to recognise RM450-500m in 2024, 2025 target RM550-600m construction revenue
🔷 Construction division focus on high-rise building, target 5-7% PBT margin for recent external construction jobs (secured since 2022)
🔷 Construction margins expecting to recover back to 5-7% PBT margin in 2025, driven by jobs secured after 2022
🔷 Property development revenue will be supported by it RM313m unbilled sales form its Interpoint (RM642m GDV; 63% take-up rate), billing recognition is ramping up expect to reach peak recognition in 2026
🔷 Overall group: 2024 revenue RM520-530m, RM8-10m PAT. 2025 will be better as better construction margins kick in. 2025 RM20-25m PAT guidance, 2026 potentially RM40m
🔷 Borrowings will gradually taper down in the next 10 years as they pay down the c.RM300m borrowings for UITM concession project

Outlook/guidance
🔷 Construction division typically target at least RM500m orderbook replenishment annually. 2024 exceeded target by securing RM935m YTD, while mgmt is expecting another RM150-200m job in 2H24 bringing potential new wins to RM1.1bn for 2024. Looking to revise upwards replenishment target to RM600m for 2025 and RM800m for 2026
🔷 Strong clientele for construction division including SimeProp, UEM Sunrise, ParkCity, Sunway and Kiaramas
🔷 Tendering for 6 external construction jobs with a combined value of RM2.5bn
🔷 The mgmt see opportunities to capture more Sunway jobs as Suncon switch their focus away from internal high-rise residential jobs, some of the upcoming tender opportunities are Sunway Serene 2 and Sunway Flora 2
🔷 MEP division target 10% PBT margin but contract value smaller, annual turnaround around RM10-20m (under construction segmental revenue). Mainly residential MEP jobs, still trying to penetrate into industrial jobs (ie: warehousing and factories). Not aiming for DC jobs.
🔷 Prop development do not have remaining landbank, on-going projects are Interpoint@ Klang (RM642m GDV; 63% take-up rate) and Latitud8@ Dang Wangi (RM930m GDV). Property development target 10-12% PBT margin
🔷 Latitud8 (RM930m GDV) secured back in 2012 but there was some issues that dragged the progress severely. Recently appointed a turnkey developer to take over the development and construction of this project, construction just started in Jan-24. Crest Builder won’t get to enjoy property development margin of PBT 10-12%, mgmt is guiding 6% GP margin for this project under its entitled profit sharing, unlikely to have meaningful contribution to the group.
🔷 Property investment portfolio consists of 2 office towers, The Crest and Tierra Crest.
The Crest occupancy rate 32% (occupied by Crest Builder themselves), Tierra Crest occupancy rate 91% main tenant is UNITAR which occupied 80%, 20-25% PBT margin. Tenancy agreement 3+3, 10% upward revision rate
🔷Concession for UITM Tapah 2 main cost is financing, c.RM300m of the group’s borrowings are to fund this project. PAT contribution around RM1-2m annually (maintenance income + finance income)

👨‍💻 Based on the mgmt profit guidance of RM25m for 2025, this implies 5-6x forward PE, which is at a discount to industry average of 12-14x for high-rise construction peers. We believe the profit guidance of RM25m is quite achievable mainly driven by margin recovery for its construction division and gradual ramp up for its property division

$CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD) , a potential turnaround company in the making?

Crest Builder is founded in 1983 by the late Mr. Yong Soon Chow, which is the father of current managing director, Eric Yong Shang Ming. They’re holding Crest Builder Bhd through their private family vehicle, SC Yong Holdings Sdn Bhd, totalling about 43.23%.

Crest Builder in total has four (4) business segment, which are:-
i) Their bread & butter – Construction, specifically in highrise construction
ii) Concession Arrangement – UiTM Tapah maintenance works contract
iii) Property Development – Interpoint @ Bandar Bukit Tinggi 2, The Latitud8, on top of Dang Wangi LRT station, Kelana Jaya LRT Station Land Redevelopment (Currently on-hold)
iv) Investment holding – Office building & Car park management (rental service)
- Tierra Crest, PJ (85% block rented to UNITAR, from official website)
- The Crest, 3 Two Square, PJ (Cresbld’s HQ & collecting car park rental from employees working within the office building)
- Avenue Crest (Retail lots & car parks rental)

Crest Builder’s financial performance has been rather sluggish in the last 4 years, being affected by the weak market sentiment in property development market, having forced to postpone its pioneer TOD development project. In addition, it is also hit by pandemic, which affected its overall business performance. Share price wise, it has tumbled all the way down to RM 0.40 – RM 0.50 range from peak RM 1.10 at year 2017 & year 2019, indicating a market capitalization of RM 70 – 90 million.

At current juncture, Crest Builder has about RM 1.9 billion of construction order book that would keep it busy until year 2027. Its property development in Interpoint @ Bandar Bukit Tinggi 2 seems to be receiving good response from Klang’s residents, it is currently about 71% sold.

Other than that, it is already commencing the construction works of The Latitud8, Dang Wangi, which the land owner is Prasarana & they are entitled to receive 21.2% of total GDV by the way of combination of cash payment & payment in kind (completed units). They have won the land redevelopment right back then in 2012, under Intan Sekitar Sdn Bhd (51% owned by Crest Builder). The development is expected to completed in December 2027. I remain hopeful to the project to be successfully delivered as the project has been dragged for more than 10 years & market sentiment on TOD seems to be on the positive side.

The balance sheet of Crest Builder at a first glance does seem worrying, having total loans & borrowings of RM 550 million (short term – RM 216 million & long term – RM 334 million), a net gearing ratio of 1.9x.

In fact, a bulk of the loans & borrowings (RM 290 million) is under Sukuk Murabahah to finance the UITM Tapah project that is generating revenue of RM 40 million, contributing PAT of RM 6.3 million based on FY2023. Taking out this bulk of borrowings, the gearing ratio does not actually seem that bad.

Crest Builder currently is trading at RM 0.68, which implies a market capitalization of RM 120 million. With the record high construction order book, smooth-sailing property development, profitable concession arrangement & property investment backing on Crest Builder, I believe the financial turnaround is possible & share price will move back to its peak.

General Meetings: Outcome of Meeting

CREST BUILDER HOLDINGS BERHAD
Q1FYE2024 RESULTS
$CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

CREST BUILDER SWINGS BACK TO BLACK

website: https://cutt.ly/rethfHF1
FB: https://cutt.ly/PethfH8V

Bursa announcement link:
https://cutt.ly/uethfJOV

CREST BUILDER HOLDINGS BERHAD $CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

PETALING JAYA: Crest Builder Holdings Bhd is turning around nicely with its prospects supported by new job wins, a substantial outstanding order book, and positive take-up rate for its launched projects.

KUALA LUMPUR: It is projected that Crest Builder Holdings Bhd would turn a profit in the fiscal year 2024 (FY24), thanks to a number of active projects and strong real estate sales, according to Rakuten Trade Sdn Bhd.

© New Straits Times Press (M) Bhd

General Meetings: Notice of Meeting

Annual Report & CG Report - 2023

$CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

KUALA LUMPUR: Crest Builder Holdings Bhd has bagged a condominium project worth RM486 million from Kiaramas Development Sdn Bhd.

© New Straits Times Press (M) Bhd

PETALING JAYA: Crest Builder Holdings Bhd has won a RM486mil contract to build three blocks of condominiums in Mon’t Kiara.

OTHERSAWARD OF CONTRACT

$CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

KUALA LUMPUR: Stocks to watch on Wednesday include PLS Plantations Bhd, Solarvest Holdings Bhd, Crest Builder Holdings Bhd, Paramount Corp Bhd, PPB Group Bhd, Nextgreen Global Bhd and Fajarbaru Builder Group Bhd.

Crest Builder Holdings Bhd’s wholly-owned subsidiary, Crest Builder Sdn Bhd, has received a contract worth RM448.5mil from Sunway Velocity Three Sdn Bhd for the proposed commercial development of service apartments in Section 90, Jalan Shahbandar in Kuala Lumpur.

Crest Builder's Order Book Hits Record High Of RM1.8 Billion

website: https://cutt.ly/UwM3c51O
FB: https://cutt.ly/iwM3c6yz

Bursa announcement link: https://cutt.ly/iwM3c6HH

$CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

KUALA LUMPUR: Crest Builder Holdings Bhd has won a contract worth RM448.5 million from Sunway Velocity Three Sdn Bhd for the construction of the Sunway Velocity 3 commercial development (Plot A), located on Jalan Shahbandar, Kuala Lumpur. 

© New Straits Times Press (M) Bhd

KUALA LUMPUR: Crest Builder Holdings Bhd's wholly-owned subsidiary Crest Builder Sdn Bhd has received a contract worth RM448.5mil from Sunway Velocity Three Sdn Bhd for the proposed commercial development of service apartments in Section 90, Jalan Shahbandar, Kuala Lumpur.

OTHERSAWARD OF CONTRACT

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

Crest Builder Holdings Bhd has accepted a letter of award worth RM314.5mil from UEM Sunrise Bhd for the construction of 1,334 units of serviced apartments in two 53-storey blocks, in Cheras, Kuala Lumpur.

CREST BUILDER HITS 2023 ORDER BOOK TARGET WITH CONNAUGHT ONE

website: https://cutt.ly/swSponoh
FB: https://cutt.ly/swSponbg

Bursa announcement link: https://cutt.ly/XwSponHb

CREST BUILDER HOLDINGS BERHAD $CRESBLD / 8591 (CREST BUILDER HOLDINGS BERHAD)

PETALING JAYA: Crest Builder Holdings Bhd has accepted a letter of award from UEM Sunrise Bhd worth RM314.5mil for the construction of 1,334 units of serviced apartments in two 53-storey blocks, in Cheras, Kuala Lumpur.

OTHERSAWARD OF CONTRACT

OTHERSCREST BUILDER HOLDINGS BERHAD [REGISTRATION NO. 200201005719 (573382-P)] (CBHB)

Additional Information on Acquisition of Additional 49% Equity Interest in Unitapah Sdn. Bhd. by Crest Builder International Sdn. Bhd., a Wholly-owned Subsidiary of CBHB

KUALA LUMPUR: Stocks to watch on today include Pansar Bhd, Apex Healthcare Bhd, Citaglobal Bhd, Crest Builder Holdings Bhd, Axiata Group Bhd, Pavilion REIT, Bintai Kinden Corp Bhd and Willowglen MSC Bhd.

OTHERSCREST BUILDER HOLDINGS BERHAD [REGISTRATION NO. 200201005719 (573382-P)] (CBHB)

ACQUISITION OF ADDITIONAL 49% EQUITY INTEREST IN UNITAPAH SDN. BHD. BY CREST BUILDER INTERNATIONAL SDN. BHD., A WHOLLY-OWNED SUBSIDIARY OF CBHB