News

MCHB, via its wholly-owned subsidiary Matrix Global Education Sdn Bhd (“MGE”), has entered into an Affiliation Agreement (“AA”) with Ellesmere College Ltd (“ECL”) from the UK.

Under the AA, both parties will affiliate the following for a period of 3 years: (1) Sports affiliation, whereby ECL and Matrix Global Schools (MGS) will exchange sports skills via exchanges of students and their related activities; (2) Student exchange and staff immersion programmes; (3) ECL will be allowed to use interactive curriculum designed by MGS without payment, based on the Cambridge curriculum; and (4) Both parties will allow each other to use without payment the names of ECL and MGS and their respective logos.

Financial impact

No direct financial impact, but this will be long-term positive for Matrix Global Schools and the sales and property prices in Bandar Seri Sendayan.

Pros / cons

Allows MGE to leverage on the experience and branding of ECL to further enhance the quality and curriculum of its MGS group of schools, comprising Matrix Private School, Matrix International School and Matrix International Pre-School.

We expect the schools to add value to BSS over the long-term, which bodes well for future sales and house prices.

Risks

Slowdown in sales; escalation in construction and raw material costs; downturn in Seremban and Johor.

Forecasts

Maintained.

Rating

BUY 

Positives: Offers great exposure to the thriving satellite town of Seremban.

Negatives: Lack of landbank diversification means the company’s fate is completely tied to that of Seremban.

Valuation

Maintain TP at RM4.49 (35% discount to RNAV).

We continue to favour MCH as one of our sector top picks on back of: (1) Our conviction that further upside remains thanks to escalating land prices in Seremban as more Greater KL residents continue to migrate to Seremban; (2) Undemanding FY15E PER of 5.9x vs. more than 10x for mid to large-cap developers; and (3) Still attractive

Source: Hong Leong Investment Bank Research - 21 Mar 2014