Matrix Concepts Holdings (MCH) announced that its subsidiary Megah Sedaya Sdn Bhd has inked a land development agreement with NS Corp for a 1,000-acre land in the (Malaysia Vision City) MVV 2.0 development corridor. NS Corp, we understand, will grant development rights (DRA) to Megah Sedaya, a special purpose vehicle that shall act as the master developer of the new land, for RM435.6m or about RM10psf. Concurrently, MCH and NS Corp also signed a strategic joint venture agreement, which gives 85% equity of the project to MCH and the remaining 15% to NS Corp. The new landbank is located adjacent to the recently-acquired land (measuring 1,382 acres). Combined, these said plots of land are estimated to have a gross development value (GDV) of RM12bn. The purchase is expected to increase its net gearing from 0.1x to 0.3x and to be completed in 18 months plus 4.5 months calculated from the execution of the DRA. As such, we keep our earnings and maintain our Neutral call with book-value based target price (TP) of RM1.80. That said, the stock is currently offering attractive dividend yield of about 5.6%.

• Expanding its landbank in MVV. The new landbank is locatedadjacent to the recently-acquired land (measuring 1,382 acres).Combined, these said plots of land are estimated to have a grossdevelopment value (GDV) of RM12bn, comprising a mix ofresidential, commercial, industrial, institutional, recreational andretail elements. We understand that the Group is banking on thetransformative potential of the proposed High-Speed Rail project,which, if realized, will significantly enhance the appeal and demandfor transit-oriented developments in the area. Total Group landbankis estimated to expand to about 4.4k acres with potential GDV inexcess of RM20bn with the addition of these new plots of land.

• FY25 launch target worth RM1.65bn, which will largely includenew phases within its flagship Sendayan Developments. Elsewhere,the Group’s Indonesian development, Menara Syariah in PantaiIndah Kapuk 2, Jakarta, Indonesia has also been successfullycompleted end-2023. As reported earlier, MCH is looking to eitherdispose one block or keep both for recurring income. Weunderstand that MCH had initially expected at least 20% margins if itdisposes the two towers outright. Now, we believe the value couldbe higher, given the land value alone is already transacted at 3x itsoriginal cost (MCH’s initial investment of USD31.75m for a 30%stake).

Source: PublicInvest Research - 20 Jun 2024