Results

• Within expectations: Matrix’s 9MFY18 core earnings came in at RM167.9m (5.7% YoY), accounting for 78.7% of ours and 79.6% of consensus full year earnings forecasts, respectively.

Deviation

• None.

Dividends

• Declared a third interim dividend of 3.50 (3QFY17: 2.80) sen per share, going ex on 21 st Mac, bringing YTD dividend to 9.35 sen (9MFY16: 8.0 sen) per share.

Highlights

• QoQ: 3QFY18 revenue increased by 31.2% with higher recognition from both townships in BSS and BSI as well as industrial properties. Core PATAMI grew by 36.1% in tandem with higher revenue.

• YoY: Similarly, revenue was up 34.4% due to higher revenue recognition from the sales of all types of development properties. Core PATAMI increased by slower pace of 16.7% due to lower margin of product mix.

• YTD: Revenue improved by 3.7% due to improved contribution from all product segments in residential, commercial, investment properties and industrial & land. In turn, core PATAMI was higher by 5.7% from better blended margin from premium residential properties and industrial properties.

• New property sales in 3QFY18 hit RM294.5m (vs RM349.6m 2QFY18), bringing YTD sales to RM939.2m, on course to exceed FY18 sales target of RM1.1bn.

• Total unbilled sales remains steady at RM1.1bn, representing 1.5x over FY17 property development revenue. Average take-up of 86.5% for the ongoing developments is another positive sign.

• Another RM584m GDV worth of project is expected to be launched in 4QFY18 on top of the RM828.8m GDV launched in 9MFY18, 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 within its successful townships with cheap land cost and sustained property sales. HSR is a long-term catalyst and its dividend yield is one of the highest in the sector at circa 6%.

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 - 1 Mar 2018