Results

• Above Expectations: Matrix’s 3QFY15 reported PATAMI of RM31m took 9MFY15 to RM176m, accounting for 92% and 90% of ours and consensus’ full year earnings, respectively.

Deviations

• 1HFY15 PATAMI al ready accounting for 76% of our full year forecast mainly due to higher revenue recognition from industrial properties sales and we expected weaker 2HFY15 on absence of land sales. 3QFY15 result was better than expected due to sustain contribution from property development and additional industrial land sales.

Dividends

• Declared thi rd interim dividend of 3.5 sen/share, bringing 9M15 total dividend to 11.25 sen/share (versus our full year forecast of 14 sen/share).

Highlights

• 9MFY15 revenue surged by 25% YoY mainly due to substantial increase in sales of industrial properties. Industrial property and land sales accounted for 22% of 9MFY15 total revenue.
• Education revenue doubles QoQ from RM1.2m to RM2.4m (2% of total revenue) with number of student enrolment also increased from 450 to 490.
• Despite challenging property market outlook, new sales for 3QFY15 remain strong and grew by 16% QoQ. This took 9MFY15 new sales to RM612m, accounted for 87% of RM700m full year sales target.
• Suriaman 1 Phase 1 (average selling price of RM560k onwards) which was launched in 3Q15 enjoy good take up rate of 65% and Hijaya 3B has increased from 37% to 83%. We continue to expect sustained demand for affordable houses especially those priced below RM600k which will continue to enjoy good take up rate.
• Unbilled sales also surged by 19% QoQ to RM640m representing 1.1x of FY14’s property devel opment revenue.

Forecasts

• Unchanged pending analyst briefing later today.

Rating

HOLD

• Posi tives: 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; and (3) Still attractive FY15E DY of 6.3%, based on 40% payout ratio.

Negatives

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

Valuation

• Target price remained unchanged at RM2.52 based on unchanged 30% discount to RNAV. Maintain HOLD with dividend yield of 6.3%.

Source: Hong Leong Investment Bank Research - 18 Nov 2015