Matrix’s FY18 core PAT of RM212m (+12.8% YoY) was within expectations. The all-time high earnings were attributed to higher contribution from larger scale developments with better margin mix and lower finance cost. New sales of RM1.2bn (+15% YoY) exceeded full year target of RM1.1bn while unbilled sales remained healthy at 1.35x cover. We expect FY19 earnings to scale new high with overseas contribution and sustainable strong sales. Maintain BUY with unchanged RNAV-based TP (20% discount) of RM2.36.

Within expectations. FY18 revenue of RM812.3m translated into core PATAMI of RM211.8m, accounting for 99.2% and 97.8% of HLIB and consensus full year forecasts, respectively.

Dividend. Declared 4th interim dividend of 3.5 sen per share (4QFY17: 3.0 sen) going ex on 20 Jun 2018, bringing FY18 dividend to 12.85 sen per share (FY17: 11.0 sen), yielding 6.7% at current price.

QoQ. 4QFY18 revenue declined by 36.0% mainly undermined by the higher recognition of sales from industrial and commercial properties in 3QFY18. In the meantime, core PAT dropped by 37.8% in tandem with lower revenue.

YoY. Revenue for 4QFY18 grew by 5.6% attributed to higher progress billing and better property sales. Meanwhile, core PAT improved by greater magnitude of 12.6% thanks to lower SG&A and finance costs.

FY18 earnings at a new high. FY18 earnings of RM211.8m (+12.8%) achieved was at a new high on the back of higher revenue (+4.1%), driven by higher contribution from larger scale of developments with better margin mix and lower finance cost.

Exceeding sales target. FY18 total sales achieved RM1.2bn (up from RM1.0bn in FY17), exceeded the full year target of RM1.1bn. Unbilled sales remained healthy at RM1.1bn (3QFY18: RM1.1bn), representing a cover ratio of 1.35x.

Outlook. We expect FY19 earnings to scale new high with the recognition of its Carnegie project in Australia and strong unbilled sales. Besides, higher new sales are expected underpinned by RM1.6bn worth of launches (FY17: RM1.2bn), including the new launch of Chambers KL project.

Forecast. Unchanged as the results were in line. Maintain BUY with unchanged TP of RM2.36 based on unchanged 20% discount to RNAV of RM2.95. 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. Dividend yield of circa 6% is one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 24 May 2018