Results

• Slightly Above Expectations: Matrix’s 15MFY16 core PATAMI (excluding RM6.5m one off adjustment on higher interest income) achieved RM255m, accounting for 104% of ours and consensus’ full y ear earni ngs. To note, the company has changed the financial year end from Dec to Mar, which FY16/03 result will incorporated 15 months of result.

Dividends

• Declared dividend of 4.4 sen/share, bringing 15MFY16 total dividend to 18.8 sen/share, translating to 7.3% yield.

Highlights

• With the change of financial year end, 15MFY16 was a record profit of RM261m amidst challenging property outlook. New sales amounted to RM169m in 5QFY16 (on the back of new launching of RM175m), up 8% YoY, bringing 15MFY16 total sales to RM973m (versus RM630m in FY14). We attribute the record high sales to the focus on affordable mass market with pricing range below RM600k.
• Take up rate for ongoing project remained healthy at average of 74%. Hijayu 3 (Phase 1 and 2) which was launched 1-2 quarters ago has achieved encouraging take up rate of 51%.
• With the increasing population in Bandar Sri Sendayan (BSS) hitting 28k this year, Matrix is targeting sales of commercial properties to make up 15% (versus 7% currently) of total revenue for next two years. This is shown by the launching of Sendayan Merchant Square (Phase 1& 2) which achieved a commendable take up rate of 67%.
• Matrix is targeting to launch RM1.5bn worth of project in FY17 (versus RM876m a year ago) with sales target of RM1bn (versus our estimate of RM800m).
• Unbilled sales remain healthy at RM621m representing 1.04x of FY15’s property development revenue.

Forecasts

• Unchanged.

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; 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 RM2.91 (unchanged 20% discount to RNAV). Maintain BUY. Dividend yield is one of the highest in the sector at 6.9%.

Source: Hong Leong Investment Bank Research - 20 May 2016