Crest Builder falls 2.01% after downgrade by JF Apex

-A +A

KUALA LUMPUR (Oct 3): Construction and engineering contractor Crest Builder Holdings Bhd dropped 2.01% to RM1.46 in mid-morning trade, after JF Apex Securities Bhd downgraded the former to a “hold” rating with a target price of RM1.33.

At 11:17am, Crest Builder fell 0.03 sen to RM1.46, with some 191,000 shares done.

JF Apex explained in a note today that it had recently attended the 2Q2014 results briefing by Crest Builder and it foresees a challenging outlook for the group, “as it may face a tough transition from contractor to developer”.

The research house said, “We revised downwards our earnings forecasts following the 2Q14 results by adjusting downwards of our order book assumption. Our 2014F and 2015F net earnings are now at RM16.2million and RM27.7million respectively.”

It noted that as of to date, the group has an outstanding order book of RM70 million carried forward from last year and new job win of merely RM63.9 million this year.

“As year end approaches, Crest Builder is only in the running to secure RM150 million jobs.”

“We are concerned about the groups depleting construction order book and the challenging property market outlook ahead, especially the impact on its soon-to-be-launched Transit-Orientated-Development (TOD) projects next year,” added JF Apex.

It said the group only managed to chalk up approximately RM10 million in new sales as of 1H14. “However, the group still enjoys healthy unbilled sales of RM103 million mainly from its Avenue Crest & Alam Sanjung projects, which could sustain its segmental revenue till mid 2015.”