Frankly Speaking: Crescendo unlocks value

TheEdge Mon, Nov 20, 2023 01:00pm - 5 months View Original

This article first appeared in The Edge Malaysia Weekly on November 20, 2023 - November 26, 2023

Last Friday, Crescendo Corp Bhd announced that it would be selling three vacant parcels of land in Pulai, Johor Bahru, for a total of RM315.17 million cash to Microsoft Payments (M) Sdn Bhd. It expects to book a RM171.92 million gain from the disposal.

The Johor-based property developer previously announced the sale of nine parcels for RM111 million to Yu Ao Sdn Bhd, on Nov 15, and another two parcels for RM117.02 million to Singapore-based data centre operator STT GDC Malaysia 2 Sdn Bhd on Nov 7. Both tracts are in the vicinity of the land that it is selling to Microsoft Payments.

Crescendo has struck three land deals that will raise a total of RM543.19 million in just 10 days. This comes at a time when the Iskandar Malaysia property market is gaining momentum, thanks to the proposed revival of the Kuala Lumpur-Singapore high-speed rail (HSR) project and plans for the Johor-Singapore Special Economic Zone.

Moreover, the completion of the JB-Singapore Rapid Transit System (RTS) at end-2026 is seen as a game changer for Johor’s property market. The move to ease the conditions of the Malaysia My Second Home programme, coupled with rising rents in Singapore, has made Johor properties more attractive.

Against this backdrop, Crescendo has done the smart thing by taking advantage of market conditions and capturing gains on the disposal of land. It will be interesting to see if the company declares a special dividend upon completion of the land sales.

Crescendo is 70% owned by the founding Gooi brothers, who also have a controlling stake in plantation group Kim Loong Resources Bhd. The Gooi family is renowned for their discreet and conservative approach to overseeing their business affairs, having a low-profile management style.

In fact, Crescendo has adopted a prudent and cautious approach to its property launches and remains resilient and agile. In its financial year ended Jan 31, 2023 (FY2023), the company launched just eight factories with a gross development value (GDV) of RM58 million in Taman Perindustrian Cemerlang. Next, the company plans to launch 115 landed residential units in Bandar Cemerlang and 258 affordable houses in Taman Dato’ Chellam, with a total GDV of RM146 million.

Crescendo’s 2023 annual report shows that the company owned 20 properties in Johor, including industrial plots, factory buildings, vacant land parcels and an oil palm estate approved for residential and commercial development. These properties, which are mostly on freehold land, were acquired in the 1990s and early 2000s.

Will Crescendo continue to reduce its land bank to pocket the gains?

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