This article first appeared in The Edge Malaysia Weekly on August 5, 2024 - August 11, 2024

Crescendo Corp Bhd’s (KL:CRESNDO) land bank in Johor has put it in a sweet spot to benefit from the influx of data centre investments into the state.

In November 2023, the property developer sealed three land sale deals that fetched gross cash proceeds of RM543.19 million. The costs incurred for the acquisition, development and financing of the land were just RM69.4 million. Microsoft Payments (M) Sdn Bhd, a wholly-owned subsidiary of Microsoft Ireland Operations Ltd, was among the purchasers.

The divestments grabbed investors’ attention and provided a buying impetus that lifted Crescendo’s share price, as news flow on foreign investors wanting to build data centres in Malaysia continues in 2024.

Crescendo’s adjusted share price had nearly tripled over the one-year period to RM3.03 as at March 31, 2024.

In the three-year period under review, from March 31, 2021, Crescendo achieved a compound annual growth rate of 35.34% on shareholders’ returns, making it The Edge Malaysia Centurion Club Corporate Awards 2024 winner in the Highest Returns to Shareholders Over Three Years for the property sector.

Crescendo’s regular dividends in the three financial years ended Jan 31 also contributed to its shareholders’ returns. It paid out a dividend per share of six sen in FY2021, four sen in FY2022 and five sen in FY2023, for a total of 15 sen in the three financial years.

The company’s divestment spree continues in 2024. Between last November and June this year, the developer sold over 150 acres of land for data centre-related development, bringing in cash proceeds of more than RM790 million.

The high-margin industrial land sales gave Crescendo’s earnings a big boost. It posted a net profit of RM21.6 million for the fourth quarter ended Jan 31, 2024, compared with a loss of RM3.6 million a year ago.

For the full financial year ended Jan 31, 2024 (FY2024), its net profit more than doubled to RM57.06 million — the highest since FY2017 — from RM24.53 million in FY2023.

Its annual revenue surged 58.24% to an all-time high of RM341.35 million in FY2024 from RM215.72 million in FY2023.

Given the strong set of financial results, Crescendo declared an interim dividend of five sen a share plus a special dividend of 13 sen, bringing the total dividend to a record 18 sen for FY2024. This translated into a 12-month dividend yield of some 5.5%.

Crescendo’s robust growth is gathering steam in 2024 thanks to the land sales. Its net profit for the first quarter ended April 30,2024 (1QFY2025) swelled to a record high of RM289.03 million, a jump of 22 times from RM13.2 million in the previous corresponding quarter, which it attributed to land sales of RM219 million.

Looking ahead, the group is positive about its prospects and upcoming new property development projects.

“Based on the committed property sales of RM486 million as at June 25, 2024, including land sales at Nusa Cemerlang Industrial Park of RM335 million, out of which RM219 million has already been completed to date, the board expects the group to have an exceptional year in FY2025,” it said when announcing its latest quarterly financial results.

As at end-April 2024, Crescendo had a total land bank of 2,529 acres. Apart from the land disposal exercise, it is also leveraging the Johor Bahru-Singapore Rapid Transit System (RTS) Link, which was 77.61% complete as at end-May this year.

Last September, it acquired two plots of land measuring over three acres near the RTS station in Johor Bahru for RM72 million to build serviced apartments.

“With the influx of foreign direct investments to Johor, demand for industrial properties remains strong and is expected to grow in the coming years. The ongoing RTS project will serve as a catalyst to revitalise Johor Bahru city centre development and the property development in the vicinity of the terminal at Bukit Chagar will benefit,” the group notes.

Crescendo’s substantial shareholder is the Gooi siblings, through Sharikat Kim Loong Sdn Bhd, with a 68.62% stake. The family also owns 63.84% of Bursa-listed plantation firm Kim Loong Resources Bhd (KL:KMLOONG).

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