Results

• Within expectations: Matrix’s 1HFY18 core earnings came in at RM97.4m (-1.0% YoY), accounting for 45.6% of ours and consensus full year earnings forecasts, respectively.

Deviation

• None.

Dividends

• Declared interim dividend of 3.25 (2QFY16: 2.60) sen per share, going ex on 20 Dec, bringing YTD dividend to 5.85 (1HFY16: 5.20) sen per share.

Highlights

• QoQ: 2QFY18 revenue increased by 17.4% due to higher revenue recognition from both residential and commercial properties. Core PATAMI grew by 13.8% in tandem with higher revenue.
• YoY: Revenue declined by 9.8% due to slower revenue recognition from sales of industrial development. However, core PATAMI increased by 11.5% thanks to higher margin achieved from higher premium residential properties.
• YTD: Revenue declined by 10.8% due to slower revenue recognition from sales of industrial development. However, core PATAMI was flat (-1.0%) cushioned by higher margin from better product mix.
• New property sales in 2QFY18 achieved RM349.6m (vs RM250.4m 2QFY17), bringing YTD sales to RM644.7m, on course to meet FY18 sales target of RM1.1bn.
• Total unbilled sales remains healthy at RM1.1bn, improved from RM933.3m last quarter, representing 1.5x over FY17 property development revenue.
• More than RM700m GDV worth of project is expected to be launched in FY18, lifting the total ongoing developments from the current RM2.4bn to exceed the RM3.0bn mark.

Forecasts

• Unchanged.

Rating

BUY (↔)

• We continue to like Matrix as it is well-positioned to ride on affordable housing theme (majority products are below RM600k) within its successful township. HSR is a long- term catalyst and its dividend yield is one of the highest in the sector.

Valuation

• Maintain BUY with unchanged TP of RM2.36 based on unchanged 20% discount to RNAV of RM2.95.

Source: Hong Leong Investment Bank Research - 24 Nov 2017