Crest Builder Holdings Bhd may go ahead and launch its three new property development projects in Klang Valley, worth about RM2.5 billion collectively, albeit cautiously. This includes the long-delayed mixed commercial project, Latitud8, a joint-venture (JV) development with Prasarana Malaysia Bhd.
Crest Builder, whose maiden project is 3 Two Square, launched 13 years ago in Petaling Jaya, has said that Latitud8 is scheduled for launch in the second half of 2020.
According to company sources, the company is looking at the possibility to launch Latitud8 towards the end of the year, subject to the outcome of the Covid-19 situation and also market conditions. Crest Builder officials were not immediately available for comment due to the ongoing Movement Control Order (MCO) to curb the Covid-19 virus spread.
Latitud8 will be developed on top of the Dang Wangi LRT station, codenamed "The Bank", at Jalan Ampang, Kuala Lumpur. It has a gross development value (GDV) of about RM1.1 billion, marking Crest Builder's first billion-ringgit property development project.
Crest Builder entered into a joint venture (JV) with Prasarana and Detik Utuh Sdn Bhd to develop Latitud8 in 2016. The project was touted as the city’s first TOD when it was unveiled then.
During the project's groundbreaking ceremony, Crest Builder group managing director Eric Yong said the 44-storey single tower will feature a lifestyle retail mall, 17 floors of office space (340,000 sq ft), as well as 418 units of small office/flexible office (SoFo), small office/home office (SoHo) and duplexes.
The estimated selling price for the residential units was set from RM1,359 per square ft (psf) to RM1,650 psf.
In September 2018, Crest Builder teamed up with T7 Global Bhd's subsidiary T7 Kemuncak Sdn Bhd to jointly construct the tower. However, according to a filing with Bursa on 28 November 2019, T7 Global said there is no material development on the collaboration between T7 Kemuncak and Crest Builder concerning the construction of Latitud8.
"There have been some changes to the original development plan, factoring in the demand and supply of residential and commercial offerings in Kuala Lumpur.
"Crest Builder and its JV partners want Latitud8 to be a luxury and unique development as it sits on top of a transport hub, to attract foreign property buyers. They will be setting a new price for the residential units, which have multiple sizes," the source said.
According to the company's website, Latitud8 will have serviced residence ranging from 582 sq ft to 1,221 sq ft and duplexes starting from 927 sq ft to 2,178 sq ft, complemented with an urban transit mall and Grade A offices.
Two confirmed projects in 2021
Crest Builder's second launch is a mixed development in Kelana Jaya, which has an estimated GDV of about RM1 billion. This is also a JV project with Prasarana to develop 1.98-ha of land around the Kelana Jaya LRT Station.
The project consists of retail units, serviced residential suites and offices. It may be launched in the middle of 2021.
The third launch is a residential project in Klang, with an estimated GDV of RM450 million. The launch had been scheduled for the first quarter of its financial year 2021, but will now be subjected to market conditions.
Crest Builder acquired 2.646ha in Bukit Tinggi, in December 2019 for RM55 million to develop the project.
"The focus currently is on selling the remaining unsold units within its existing development. The company is also looking to acquire more land to expand its property development division to improve future earnings," said the source.
Crest Builder's income is mainly derived from four segments — construction, property development, property investment and management, and concession arrangement.
For the fourth quarter ended December 31, 2019, the property development division’s revenue and pre-tax loss amounted to RM200,000 and RM5.8 million respectively as compared to the corresponding fourth quarter of the preceding year of revenue of RM49.2 million and pre-tax profit of RM12.6 million.
In a Bursa filing, Crest Builder said the decrease in revenue and the increase in pre-tax were mainly due to the completion of its Batu Tiga Phase 2 (Residensi Hijauan) project in Shah Alam, in the first quarter of 2019.
Crest Builder expects with the recent acquisition of land in Bukit Tinggi, this will make a positive contribution to the company going forward.
In terms of investment properties, Crest Builder has The Crest, located in Seksyen 19, Petaling Jaya and Tierra Crest, which is in Kelana Jaya. Both properties are receiving RM8 million and RM9 million yearly rental respectively.
The investment division recorded revenue of RM2.6 million and a pre-tax loss of RM700,000 as compared to the corresponding fourth quarter of the preceding year of RM4 million and RM2.4 million respectively. The decrease in revenue and pre-tax loss were mainly attributable to the decrease in the occupancy rate of certain investment properties.
No changes to earnings forecast
AmBank Group Research (AmBank Research) is making no changes to its FY20–FY22 earnings forecasts for Crest Builder's property development division at this juncture, taking into account the scheduled launches this year.
In a note yesterday, the research house said during a recent engagement with Crest Builder, the management updated analysts on its latest development and the impact of the MCO and Covid-19 to the company's business.
Crest Builder said, for the property development division, Latitud8 and the development in Kelana Jaya are scheduled for launch this year and in 2021, respectively.
AmBank Research had earlier cut the company’s FY20–FY21 earnings forecast by 6.8 per cent to reflect the impact of the MCO and its spillover effects on the economy, which may result in lower revenue recognition.
“We believe the company'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.
AmBank Research said what Crest Builder will need to do is to increase their work shifts to clear its backlogged work (construction division) due to the MCO.
According to the firm, the progress of Crest Builder's construction projects is between 10 to 15 per cent ahead of schedule on average before the introduction of MCO.
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