Highlights

• We attended MCHB’s briefing and bel ow are the key takeaways:
• Bandar Sri Sendayan (BSS) remains the largest contributor to the group. The township sold RM131.7m worth of new properties during the quarter, of which RM68m came from Sendayan Merchant Square 1 (Phase 1).
• To note, Sendayan Merchant Square 1 (Phase 1) was launched during the quarter (GDV of RM135m), comprising of 163 units of double-storey shop offices. The development saw satisfactory take-up rate of 40% within two months of launch.
• For Sendayan TechValley (STV) and Sendayan TechPark (STP), the outstanding industrial properties now stands at RM446m, comprising of RM276m worth of industrial properties in STV and STP, while the remaining RM170m in STP is currently under planning.
• Revenue from education segment almost doubled qoq (RM1.4m vs. RM0.7m in 4QFY14) as the enrolment of students to its international and private schools increases. As at 1QFY15, total students enrolled reached 430 students and is still on track to reach targeted 800 students by end-FY15.
• The quarter also experienced the maiden contribution for its clubhouse which was partially commenced in 1QFY15. It is expected to be fully operations by 1QFY15. Matrix targets these two segments to have circa 10% revenue contribution to the group over the long-term.
• We believe Mat rix’s future earni ngs growth is sustainable given its large landbank of more than 1,647 acres to be developed across 8 years (est. GDV of RM6.3bn) with right product segment and booming satellite town.
• With a healthy balance sheet and net gearing of only 0.04x, we believe the group would take the initiative to carry out landbanking exercises should any opportunity arises. We understand that Matrix’s internal net gearing appetite is 0.3x, which allows the group to stretch its borrowing ability of another RM200m.

Forecasts

• Maintained.

Rating

HOLD

• 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) Still attractive FY15E DY.

Negatives

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

Valuation

We maintain our TP at RM3.30 (unchanged 30% discount to RNAV), which implies FY15E P/E of 7.9x. Maintain HOLD.

Source: Hong Leong Investment Bank Research - 14 May 2015