CREST Builder Holdings Bhd (CBHB) will need to increase its work shifts to clear backlogged work due to the Movement Control Order (MCO), says AmBank Group Research.
In a note today, the research house said the progress of the company’s construction projects is between 10 and 15% ahead of schedule on average prior to the introduction of the MCO.
“We believe CBHB’s construction division will remain profitable in the financial year ending Dec 31, 2020 (FY20) to FY21, with a strong outstanding order book of RM1.24 bil,” it said.
On the company’s engineering division, AmBank Research said it had secured some small projects during the MCO.
“Although small in amount, the revenue will be able to cover some of CBHB’s costs during the MCO,” it added.
For the property development division, the research house said CBHB is planning a mixed commercial development with a gross development value (GDV) of about RM1.1 bil, which is scheduled for launch by end-2020.\
CBHB is also planning another mixed development in Kelana Jaya, with a GDV of about RM1.0 bil and targeted to be launched in 2021, it said.
“We made no changes to our FY20-22 earnings forecasts at this juncture,” it said.
AmBank Research had earlier cut the company’s FY20-21 earnings forecast by 6.8% to reflect the impact of the MCO and its spillover effects on the economy, which may result in lower revenue recognition.
“We believe CBHB’s medium-term outlook is positive, anchored by several construction wins in the past few months while the upcoming launches will be among its major earning contributors beyond FY21,” it said.
The research house maintains its buy recommendation on CBHB with an unchanged fair value of RM1.76. — April 15, 2020, Bernama
