Highlights

• We went for a site visit to Matrix’s flagship development, Bandar Sri Sendayan (BSS) and continued to remain positive about the group.

• Out of the total 5,233 acres of land in BSS (excluding Sendayan TechValley, STV and Sendayan TechPark, STP), we understand that remaining one-third is undeveloped (approximately 1,750 acres). The estimated GDV for the undeveloped area is RM4bn.

• We believe the remaining GDV of RM4bn mainly comprises of properties which are skewed more towards high-end developments such as semidetached houses and bungalows.

• Their latest residential launch is Dextora, a 2-storey link homes with built-up of 2,615 sf in mid-FY14. Management highlighted that Dextora is selling for RM478k or RM182 psf with latest take-up rate at 80%. We gathered that the price tag for properties at the surrounding areas are fetching approximately RM230- 300 psf.

• Matrix will be launching their semi-detached houses and bungalows in the middle of the year (mid-FY15). There will also be more double-storey houses to be launched going forward.

• Icon Park (approximately 11 acres) is at the final phase of the entire development in BSS. Icon Park will be an integrated commercial centre with no residential developments.

• As for STV, out of the total 685 acres, there are only approximately 200 acres unsold. This is excluding the group’s latest purchase of 79 acres of agriculture land for RM27.5m in Labu, Negeri Sembilan. We understand that the group intends to include this parcel into STV and will be actively on the lookout for more land in the vicinity.

• Total land costs in STV after conversion would stand at approximately RM9 psf and selling prices are fetching up to a range of RM40-45 psf. We understand that STV was sold within RM10-20 during the early days.

Risks

• Slowdown in sales;
• Escalation in construction;
• Raw material costs; and
• 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 of RM3.30 (30% discount to RNAV), which implies FY15E P/E of 7.9x. This remained undemanding vs. mid to large-cap peers who are currently trading at 12-18x. Maintain BUY.

Source: Hong Leong Investment Bank Research - 8 Apr 2015