Highlights

• We attended MCHB’s briefing and walked away feeling positive. Below are the key takeaways:

• Looking to exceed sales target of RM1bn (+22% YoY)… Overall, Matrix remains bullish on the prospects of BSS. As of 15 Nov 16, year-to-date sales already achieved RM700m (versus RM500m as of end of Sep- 16) and on track to exceed its full year sales target of RM1bn (versus our estimate of RM800m).

• Affordable pricing continues to drive sales in BSS… With affordable pricing range of below RM600k, recent launches from BSS remained encouraging. The launch of Suriaman 3 @ BSS in 1QFY17 had received well response with take up rate of 76% while Hijayu 3 (RM628k onwards) also experienced healthy take up rate above 65%.
   
• Targeting RM50m from industrial land sales... The company had sold 2 pieces of industrial land with the recent 11.5 acres sold at RM40+ psf. Total industrial land sales in 1HFY17 amounted to RM25.6m versus company full year target of RM50m.
• Breakeven from investment properties… Matrix Global School is targeting to surpass 1,000 students in early 2017 as compared to 700 students currently. Both Club and Global School are expected to be operating breakeven in FY18.

• Update on the PWTC (GDV: RM400m) and Puchong lands (GDV: RM500m)… Matrix is looking for strategic partner to jointly develop the 1.1 acres land near PWTC while looking to launch the Puchong land by end of 2017.

• HSR – long term catalyst… With the signing of MoU, the 350km HSR with 8 stations is expected to be completed by 2026. As one of the stations will be located at Seremban (circa 7km to Matrix’s land), this will undoubtedly enhance land values and benefit land owners like Matrix, which has remaining 1,200 acres of landbank (remaining GDV: RM5bn).

Forecasts

• Unchanged.

Rating

BUY ( ↔ )

• Well positioned to ride on the affordable housing theme (majority products are below RM600k). HSR is a long term catalyst. Dividend yield is one of the highest in the sector at 6%.

Valuation

• Maintain BUY with unchanged TP of RM2.89 (unchanged 20% discount to RNAV of RM3.61). Dividend yield remains attractive at 6.0%.

Source: Hong Leong Investment Bank Research - 17 Nov 2016