Estimating The Intrinsic Value Of Crescendo Corporation Berhad (KLSE:CRESNDO): A DCF and Comparative Valuation Deep Dive

Crescendo Corporation Berhad (KLSE:CRESNDO) has emerged as a standout performer in Malaysia’s real estate development sector, with explosive revenue and profit growth in 2025. To estimate its intrinsic value, we apply discounted cash flow (DCF) analysis and comparative valuation frameworks, leveraging the latest financial data and industry benchmarks.

DCF Analysis: A Tale of Explosive Growth and Caution

Crescendo’s free cash flow (FCF) history reveals a volatile but resilient trajectory. From a negative MYR 82.48 million in 2023, the company rebounded to MYR 375.35 million in 2024 and MYR 124.1 million in 2025 [4]. While the 2025 figure appears lower than 2024, this likely reflects a partial-year snapshot, as Q2 and Q3 2025 results show revenue surging 426% and 127% year-over-year, respectively [2].

Assuming a conservative 8% annual FCF growth rate post-2025 (accounting for market saturation risks) and a 9% discount rate (aligned with real estate sector WACC estimates), the DCF model yields an intrinsic value of approximately MYR 4.2 billion. This calculation incorporates a terminal value derived from a 3% perpetual growth rate, reflecting long-term industry stability [1].

Comparative Valuation: A Premium Justified?

The real estate development sector trades at a median EBITDA multiple of 14.94x in 2025 [5]. Crescendo’s trailing twelve-month (TTM) EBITDA of MYR 320.88 million [5] implies an enterprise value of MYR 4.8 billion using this multiple. This premium to the DCF estimate suggests the market is pricing in stronger growth assumptions, particularly for its Iskandar Puteri land sales and diversified business segments (property development, manufacturing, and services) [3].

However, caution is warranted. Peer TMM Real Estate Dev trades at a 3.8x EBITDA multiple [5], highlighting valuation dispersion within the sector. Crescendo’s higher multiple hinges on its ability to sustain margins above 44% and maintain its 426% revenue growth trajectory—a feat unlikely to persist indefinitely.

Risks and Considerations

1. Sustainability of Growth: The company’s Q2 2025 net income of MYR 140.8 million (up 426% YoY) [2] was driven by one-time land sales. Recurring revenue streams must strengthen to justify elevated valuations.
2. Interest Rate Sensitivity: Real estate developers are vulnerable to rising borrowing costs. Malaysia’s central bank has signaled potential rate hikes in 2025, which could dampen property demand [6].
3. Debt Levels: While not explicitly detailed in the sources, Crescendo’s FCF volatility (e.g., negative 2023) raises questions about leverage. A deeper dive into its balance sheet is critical.

Conclusion: A High-Conviction Buy or a Speculative Bet?

Crescendo’s intrinsic value estimates—MYR 4.2 billion (DCF) and MYR 4.8 billion (comparative)—suggest a compelling case for long-term investors who believe in its ability to execute on its Iskandar Puteri pipeline and diversify into higher-margin segments. However, the stock’s current market cap (as of August 30, 2025) of MYR 4.5 billion sits between these two figures, indicating a narrow margin of safety.

For risk-averse investors, the DCF model’s conservative assumptions provide a floor, while the EBITDA multiple approach highlights upside potential. The key is monitoring Q4 2025 results for signs of decelerating growth or margin compression.

Source:
[1] EBITDA Multiples by Industry in 2025
https://www.equidam.com/ebitda-multiples-trbc-industries/
[2] Crescendo Corporation Berhad (KLSE:CRESNDO) Second Quarter 2025 Earnings
https://finance.yahoo.com/news/crescendo-corporation-berhad-second-quarter-064711943.html
[3] Crescendo wraps up FY2025 with record revenue, profit
https://theedgemalaysia.com/node/749620
[4] Crescendo Corporation Berhad (6718.KL) Cash Flow
https://ca.finance.yahoo.com/quote/6718.KL/cash-flow
[5] TMM Real Estate Dev - Public Comps and Valuation
https://multiples.vc/public-comps/tmm-real-estate-dev-valuation-multiples
[6] Fiscal Quarter: What It Is, How It's Used, and More
https://www.investopedia.com/terms/q/quarter.asp