Monday 22 January 2024

KENANGA (6483) – A Growth Stock With Decent Dividend Yield?

Reason for the significant earnings improvement

Based on the performance of FBMKLCI and Average Daily Value of KLSE, 2022 and 2023 were lackluster years for the local stock market.

However, despite the weak market sentiment in FY22 and 9M23, KENANGA has reported significantly improved earnings in FY22 and 9MFY23 compared to years before the onset of the Covid-19 pandemic. The key driver behind this growth is the investment and wealth management segment.

The segment struggled in 2016 and 2017 but managed to turn things around in 2018 with minimal profit before tax.

It has since grown significantly and now contributes the most to the company's profits.

This success can be attributed to the rapid growth in the group's assets under management (AUM). In just 10 years, the AUM has surged from RM3.13 billion to over RM20 billion as of the end of 2022.



Assets under Management (RM'm)


> 20,000





















In the third quarter of 2019, Kenanga Investors Berhad (KIB), the asset management subsidiary of Kenanga Group, completed its acquisition of 100% equity share in Libra Invest Berhad, a fund management arm of ECM Libra Financial Group Berhad. The acquisition, has increased KIB’s total AUM to RM13.5 billion, solidifying its position as one of Malaysia’s leading unit trust and asset management companies. (Annual Report 2019)

Are the improved earnings in FY22 and 9M23 sustainable?

The key earnings contributor, the investment and wealth management segment generates income from management fees. Unless there are significant fund withdrawals or a market crash, the earnings from this segment is likely to be recurring and sustainable.

Decent dividend yield

With improving financing performance, KENANGA has consistently paid dividends since FY15 and maintained a generous payout ratio ranging from 60.4% to 89.6%.





Payout (%)









































With a PATAMI of RM50.6m in 9M23 (full-year FY22: RM54.5m), KENANGA is likely to achieve better full-year results than in FY22. The Company paid a dividend of 6sen/share for FY22.

To be conservative, assuming KENANGA maintain a dividend of 6sen/share for FY23, based on current share price of RM1.01, this translates into a decent dividend yield of about 6%.

  • A decent dividend yield of 6% could limit the downside of the share price. Given the expected better profit in FY23 and potentially FY24, it is not unreasonable to expect a dividend yield of 6% or more.
  • Stockbroking and asset management businesses are highly scalable and have low marginal costs, resulting in faster bottom-line growth when revenue improves. A fund manager who manages a portfolio of RM100m can easily handle a larger portfolio, such as RM200m or even RM500m, as fund management is scalable. For this reason, the bottom line grows at a faster pace when revenue improves. The revenue for FY20 and FY21 were roughly about 50% higher than FY19 but the bottom line quadrupled.
  • It is a bonus to shareholders of KENANGA if there is a bull market. A bull market would benefit KENANGA through higher brokerage for stockbroking, increased AUM from portfolio appreciation and net inflow of funds, and significant margin expansion due to economies of scale and low marginal costs.
  • The market may not be fully aware that the significant improvement in KENANGA's earnings in FY22 and 9M23 (>100%) compared to previous years (FY16, FY17, FY18 and FY19) was primarily due to the recurring contribution from the investment and wealth management segment.


CONCLUSION: With a decent dividend yield, KENANGA is worth monitoring as it offers limited downside potential and good upside potential based on historical growth of AUM growth and the scalability of its core businesses.

Tuesday 12 December 2023

CRESNDO - Potential Beneficiary of Data Center, JB-Singapore RTS

  As we approach the end of 2023, a wave of good news is buoying the stock market.

Johor is rapidly becoming a major hub for data centers in Malaysia, offering a viable alternative for Southeast Asia. This surge in interest is driven by several factors:

              Capacity Constraints in Singapore: Overflowing demand due to limited space has companies seeking alternative locations.

              Favourable Conditions in Johor: Close proximity to Singapore, supportive local authorities, and lower land and power costs make Johor highly attractive.

              Land Cost Advantage: Johor offers significantly cheaper land compared to Cyberjaya

Nusajaya Tech Park, Sedenak Tech Park, YTL Green Data Centre Park, and Nusa Cemerlang Industrial Park are poised to become major data center hotspots in Johor.

Access to reliable land, facilities, and power is key to a successful computing infrastructure, as Nvdia CEO Jensen Huang emphasises.

Case Study: Crescendo Corporation Berhad (CRESCENDO)

This low-profile Johor-based property developer is positioned to benefit significantly from the data center boom. Last month, within a span of 10 days, CRESCENDO announced three proposed land disposals to data center players (including Microsoft), totaling RM543.19m - nearly its entire market capitalisation. This translates to a potential gain of RM310.26m.

7 Nov 2023: Proposed disposal of 975,173 sqft of land to STT Singapore-based data centre operator STT GDC Malaysia 2 Sdn Bhd for RM117.02m

15 Nov 2023: Proposed disposal of 887,984 sqft of land to Yu Ao Sdn Bhd for RM111m

17 Nov 2023: Proposed disposal of 2.62m sqft to Microsoft for RM315.7m

After selling approximately 100 acres of lands, CRESCENDO still has about 100 acres of land in Nusa Cemerlang Industrial Park. Based on market value of RM120 psf, the 202 acres of land in Nusa Cemerland Industrial Park alone carries a gross value of more than RM1b, about double of CRESCENDO’s current market cap.

Based on its current market cap of RM555m and a net debt position of RM216.691m, its enterprise value stands at RM771.691m. In other words, if the group divests its 202 acres of lands in Nusa Cemerlang Industry Park, it would essentially be giving the remaining 2,385 acres of landbank and properties for free. Of the 2,385 acres of lands, about two-thirds of them are located within 20km of Johor Bahru.

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. (The Edge

The 20 properties listed in the latest annual report carry a total book value in excess of RM1.1b.

Major landbanks like Bandar Cemerlang (1269 acres), with majority of them are oil palm estates currently, haven't been revalued since 2001, resulting in an undervalued book value of RM5.23 psf. More than 500 acres of lands in Bandar Cemerlang are intended for industrial development.

Similarly, the 216-acre water-fronting lands at Tanjung Senibong, with a carrying value of RM18.57 psf, has not been revalued since 2006.

Meanwhile, its 794 acres of unconverted lands at Ambok Resorts, located within a 20 minutes’ drive from RAPID Pengerang and have not been revalued since 2005, carry a book value of only RM1.30 psf.  

Other factors that could bode well for land value within the Iskandar Malaysia region include:

i) The revolutionary Johor Bahru-Singapore Rapid Transit System

The Johor Bahru and Singapore sections of the RTS Link are expected to be physically connected on 11 January 2024.

ii) Potential revival of KL-Singapore High Speed Rail

iii) High rents in Singapore

It costs RM5,000 a month to rent a room in Singapore, while the entire condo unit across the strait can be rented for RM2,000  a month. (

iv) The Gemas-JB electrified double track, which is expected to be completed by 2025, will connect Johor Bahru to Kuala Lumpur and all the way to Padang Besar in northern Malaysia.

Recurring incomes

While its core property development business is cyclical, CRESCENDO’s recurring income streams from property investment and education businesses provide earnings stability. There are 14 units of factories with GDV of RM279m that are currently fully tenanted and expected to generate approximately RM14m of annual rental income. The property investment, management services, investment holding, providing education services and cultivation of oil palm contributed about 23% and 28% of the group’s operating profit in FY22 and FY23 respectively.


Except for FY20, during the Covid-19 pandemic, the company has consistently paid out at least 50% of its earnings as dividend in recent years.


Calculating the precise RNAV is challenging due to outdated land valuations. As majority of the lands have not been revalued for years, and if we assume a net gain of RM600m from the remaining 202 acres of industrial land in Nusa Cemerlang Industrial Park and a RM1b revaluation surplus for its remaining landbank and properties, this will bump up its net asset per share to RM9, versus its current share price of below RM2 per share.

The market typically applies a discount on RNAV of property stocks, which could range from 50% to 80%, depending on management quality, dividend yield, earnings and growth potential.

During the Iskandar Malaysia rush 10 years ago, Crescendo's share price surged to RM3.80. I believe we have even more real and sustainable catalysts now to support further appreciation of land prices in Iskandar Malaysia, including the RTS and data centers.  

Johor is a rising star in the data center landscape, and CRESCENDO is well-positioned to capitalise on this growth. Coupled with the company's undervalued landholdings, partial recurring incomes, and decent dividend history, do these factors make CRESCENDO an attractive stock for investors seeking exposure to growing data center industry in Johor and RTS Link, the potential game-changer for property market in Johor Bahru?

Tuesday 17 October 2023

SMETRIC - A dark horse in the digital security space?



Why Securemetric Berhad?

  • In the right industry. Growth opportunities in digitalisation and increasing demand for digital security solutions.
  • A leading and prominent digital security solutions provider in ASEAN.
  • Being a small-base microcap company, with a current market cap of merely RM89m, smaller than some LEAP market-listed tech companies, there could be significant room for growth.
  • Healthy balance sheet with a net cash position of RM24.24m and zero borrowing.
  • Increasing revenue from recurring maintenance services.

About Securemetric Berhad (SMETRIC)

Securemetric is one of Southeast Asia’s leading regional players in the field of digital security solutions with a core focus in Software Licensing Protection (Software License Dongle, Software Protection Dongle), 2-Factor Authentication (2FA), Advance Identity & Access Management, Public Key Infrastructure (PKI) solutions and Cryptography.

Securemetric IPO Prospectus

Securemetric’s key markets include Malaysia, Indonesia, Philippines, Singapore and Vietnam, with customers ranging from public sector to large regional and multinational companies.

A Potential Beneficiary of Budget 2024?

Budget 2024

In Budget 2024, the government will accelerate the development of the National Digital Identity to improve the efficiency of the civil services.

Malaysia’s National Digital ID project aims to create a Verifiable Platform of Trust that will be utilised by the public and private sectors to verify the identity of their respective users when conducting digital transactions. The government of Malaysia is implementing targeted subsidies, and the rollout of the National Digital ID, which can be used to authenticate a person's identity, may be crucial for the successful implementation of the targeted subsidies.

“Apart from that, Rafizi said, Padu serves not only as a tool for targeted subsidies but also for optimising social assistance, ensuring accurate allocation and preventing benefit dilution or unfair distribution. Additionally, it provides a foundation for advancements in GovTech, Digital ID, and product-building.”


Digital identity requires PKI to function. The solutions offered by Securemetric have empowered countries to digitise their identities,  enabling a complete mobilisation of their citizen’s electronic services.

Digital Signature – Another Growth Driver for Securemetric?

What is SigninigCloud

In an era where digital interactions have become the norm, the need for secure and efficient online transactions has never been more crucial.

SigningCloud is a Signing as a Service (SaaS)-based digital signing solution powered by Securemetric Technology Pte Ltd, a wholly-owned subsidiary of Securemetric Bhd.

SigningCloud makes document signing easy. Sign your documents anytime, anywhere with almost any device, be it your personal tablet or your work computer. The secured and cost-effective electronic signature solution simplifies workflows, eliminates paperwork, and ensures compliance.

All signatures created via the platform can be recognised as effective, valid and enforceable under the Electronic Commerce Act 2006 and also the Digital Signature Act 1997 if the signature is verifiable by a valid digital certificate issued by any licensed certification authority in Malaysia.

Recently, it has announced its partnership with SingPass, Singapore’s trusted authentication gateway, to revolutionise the security landscape and offer Singaporeans and advanced solution for secure and efficient online transactions. (Source: SigningCloud Collaborates with Singpass to Safeguard Digital Transactions with Advanced Security Measures in Singapore)

What is SingPass

SingPass ( is every Singapore resident’s trusted digital identity for easy and secure access to over 2,000 government and private sector services online and in person.

Of the 4.5 million residents on SingPass, more than 3.5 million users are on the SingPass app. Users can log in to digital services, prove their identity over counters, digitally sign documents and do more with the SingPass app.

SingPass is managed by the Government Technology Agency (GovTech) and is one of eight strategic national projects that drive Singapore’s Smart Nation vision. 

Digital signatures play a vital role in ensuring the authenticity and integrity of electronic documents and transactions. Through this collaboration and as one of Singpass’ signing partners, SigningCloud empowers SingPass users in Singapore to sign documents digitally, eliminating the vulnerability of traditional paper-based signatures. Backed by SingPass’s high-security authentication measures, SigningCloud’s digital signatures are legally binding and recognised under Singapore’s Electronic Transactions Act.

What sets SigningCloud apart is its seamless integration with Singpass, the gold standard in authentication gateways. Singpass, leveraging signing certificates issued by the National Certification Authority, empowers businesses and their customers to digitally sign agreements securely. By utilising SingPass's robust infrastructure, SigningCloud ensures that each signature is cryptographically linked to the signer, providing an additional layer of security.

The collaboration serves as an endorsement of SigningCloud’s product and services, particularly due to its partnership with the Government of Singapore. As a partner of a Singaporean government agency in the field of digital signatures, SigningCloud’s market awareness and confidence will greatly benefit. Consequently, the company will find it easier to market its products and services.

Also, the collaboration will Increase the likelihood of SigningCloud realising its vision of cross-border signing and playing a significant role in the digital signing ecosystem in the ASEAN region.

The collaboration will expand SigningCloud’s recurring revenue. According to its website (, the service is billed on a monthly basis. 

More about SigningCloud (

Learn more about SigningCloud and its benefits:


Signing Cloud Your Trusted Signing Platform


 Existing customers

SigningCloud’s customers include industry leaders such as Atlantic Blue, a wholly-owned subsidiary of Solarvest, as well as prominent property developers such as Gamuda Land, S P Setia and Sunway. Undoubtedly, these companies have compelling reasons for incorporating digital signatures into their business operations.


Product testimony by Solarvest

(page 98 of Solarvest’s Sustainability Statement 2023)


Growing Recurring Income

While the revenue has remained relatively flat for the past 5 years and the group has yet to report a meaningful bottom line, it should be noted that the contribution from the Others segment, primarily from recurring maintenance service charges, has been increasing.

The contribution of the Others segment to the group’s total revenue has progressively increased from 5.5% in 2015 to over a third currently.

Moving forward, as the group completes more projects, we can expect to see an increasing contribution from the recurring maintenance service charges.

Once Securemetric reaches a critical mass, coupled with the recurring income from the maintenance service charges, we may start to see the group reporting meaningful earnings.

Given the rise of the digital economy and the growth potential in the tech sector, tech companies listed in Bursa Malaysia command a premium in valuation. With a current market cap of merely RM89m, this company is smaller than some LEAP market-listed tech companies. Will the rollout of the  National Digital Identity project and increasing adoption of digital signature help this net cash microcap company leapfrog to become a significant player in the ASEAN market for digital security solutions? Perhaps this stock deserves a place on your radar screen.