Highlights   

We  attended  MCHB’s  briefing  and  below  are  the  key takeaways:

Bandar  Sri  Sendayan  (BSS):  Hijayu  1B  was completed  in  3QFY14,  launched  Hijayu  3A  (phase  3) with GDV of RM82m in Aug ’14  (take up of >30%)  and is   launching  phase 4 (GDV: RM98m)  in 4QFY14.

Matrix  International  School  have  opened  for  its  first intake  in  3QFY14  with  very  encouraging  enrolments. The  development  for  Matrix  Private  School  and d’Tempat Country Club is still  ongoing and is expected to complete by year-end.

Sendayan  TechValley  (STV):  YTD,  10.5  acres  of industrial  plot was sold at an average of  RM40 psf.  In Oct,  it  has  sold  an  additional  29.6  acres  for  circa RM51.6m  and  is  currently  negotiating  deals  to  sell another  55 acres. Should the  deal come true by yearend,  the  group  could  easily  surpass  its  RM100m  land sales  target  for  FY14.  Going  into  FY15,  Matrix remained  conservative  with  unchanged  land  sales target of RM100m.

Sendayan TechPark (STP): STP will be developed on its  latest  acquired  land  (164  acres;  net  sellable  are  of 75%)  back  in  Sept  ’14  with  estimated  GDV  of RM170m.  The  purchase  is  expected  to  complete  by early- 2015.  Partial  of  the  land  (80  acres )  have  been carved  out  for  an  automobile  investor  and  we  believe that the deal is currently in negotiation.

Taman  Seri  Impian  (TSI):  Launched  Impiana  Height (phase  1)  with  GDV  of  RM63.5m  with  take- up  rate  of 37.8%.

FY15:  Despite  the  challenging  environment  next  year from  GST  implementation,  stringent  policy  and competition,  the  group  remained  positive  given  its competitive  advantage  on  low  land  costs  and remaining launched are skewed more to mid -  to  highend developments.

Matrix is targeting to have as muc h as RM1bn worth of projects  to  be  launched  in  FY15,  in  addition  to  its RM100m target  of land sales. 20%  of the launched is likely to comprise of commercial properties (excl. STV) and the remaining  would  be coming from  residential.

Rating

BUY

• Positives :  1)  Further  upside  from  escalating  land prices  in  Seremban  as   more  Greater  KL  residents continue  to  migrate  to  Seremban;  (2)  Optimism  on  its land  replenishment  for  STV  3;  (3)  Undemanding FY15E  P/E  of  7.2x  vs.  more  than  12 -18x  for  mid  to large-cap developers; and (4) Still attractive FY14E DY of 5.0%, based on 40% payout ratio.
• Negatives: Lack of landbank diversification means the company’s fate is completely tied to that of Seremban.

Valuation

• We  maintain  our  TP  at  RM3.74  (20%  discount  to RNAV), which implies FY15E P/E of 7.2x.

Source: Hong Leong Investment Bank Research - 19 Nov 2014