Results

• Slightly Above Expectations: Matrix’s 12MFY15 PATAMI increased 17% YoY to RM213m, accounting for 104% and 101% of ours and consensus’ full year earnings, respectively.

Deviations

• Better than expected billing recognition.

Dividends

• Declared final dividend of 3.75 sen/share, bringing 12MFY15 total dividend to 14.4 sen/share, translating to 6% yield.

Highlights

• Despite challenging property market outlook, new sales for 4QFY15 amounted to RM194m, bringing 12M15 sales to a record high of RM806m (+28% YoY), beating our full year sales estimate of RM720m.
• Matrix is one of the few developers that manage to exceed their full year sales target. We attribute this to the focus on affordable mass market with pricing range below RM600k coupled with the trend of property development migrating towards KL South region due to scarcity of land in KL Central.
• Suriaman 1 Phase 1 & 2 (average selling price of RM560k onwards) which was launched in 3Q15 and 4Q16 respectively enjoyed good take up rate of 58%. Hijaya 3B also achieved a commendable take up rate of 92% since launched in 2Q15.
• Going into 2016, Matrix targets to launch RM1bn worth of new projects. Kota Gadong Perdana project which comprises of 3200 units of affordable house priced below RM400k to be launched in 3Q16 will help to sustain sales.
• Unbilled sales remain healthy at RM633m representing 0.9x of FY15’s property development revenue.

Forecasts

• FY15 earnings were increased by 18% to factor in 15M of financial results due to change in the financial year end from Dec to March.

Rating

BUY

• 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 FY16E DY of 7.2%.

Negatives

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

Valuation

• Our TP is maintained at RM2.90 (unchanged 20% discount to RNAV). Maintain BUY. Dividend yield is one of the highest in the sector at 7.2%.

Source: Hong Leong Investment Bank Research - 25 Feb 2016