• Matrix Concept 1QFY18 net profit of RM45.6m came in-line with ours and consensus estimates making up 21% of full year estimates.

• The group delivered RM295.1m new sales on the back of RM630.2m worth of new launches for 1QFY18 alone. The stellar sales performance is due to encouraging take-up rate averaging 56% from the projects launched under affordable segment.

• As expected, Bandar Sri Sendayan, the group’s jewel township in Seremban contributed the lion share to total new sales making up 90%.

• Maintain BUY with new TP: RM3.30 as we roll-over our valuation to FY19E. The TP is based on blended valuation of PER and PBV of 10.0x and 1.46x respectively.

Set to achieve RM1.0bn new sales for FY18

For FY2018, we expect Matrix Concept to deliver total new sales of RM1.0bn. To recap, the group raked up a total of RM1.03bn new sales a record for FY2017 as promised (FY15/16: RM974m and FY14:RM629m). We attribute the stellar performance on the group’s star township, ie Bandar Sri Sendayan (BSS) which contributed 90% of the sales. Meanwhile, the average take-up rate for the new projects launched was strong at 56% for 1Q18.

Declared 1st interim dividend of 3.25 sen

For FY18 we expect Matrix Concept to declare total dividend of 14.4 sen (FY17 - 13.75 sen) translating to payout of c.40% out of net profit. The dividend yield still look attractive at 5.0% based on yesterday closing price despite the recent run in its share price.

Earnings outlook remains positive

As of 1QFY18, the group’s unbilled sales remain strong at RM933.3m which is 50.2% higher in comparison to RM621.4m achieved a year ago. The unbilled sales are expected to provide earnings visibility to the group at least for the next 2 years. Meanwhile, we are encouraged that BSS makes up 70% of the group’s total undeveloped landbank of 1,902.5 acres with potential GDV of RM10bn. We remain positive on the long-term potential of the group as BSS is a prime landbank in Seremban and in our view, things can only improve.

Sales momentum remains intact.

We maintain our BUY call with new TP of RM3.30 (previous RM2.91) as we roll-over our valuation to FY19E. Our TP of RM3.30 is based on blended valuation of PER and PBV of 10.0x and 1.46x respectively. We believe the stock is a proxy for affordable homes and a defensive play due to its stable earnings and dividend payout.

Source: BIMB Securities Research - 25 Aug 2017