Matrix’s FY19 core PAT of RM217.6m (+2.7% YoY) was within expectations. Declared dividend of 3.0 sen per share and special dividend of 0.25 sen per share. YTD sales of RM1.3bn has surpassed the full year target of RM1.2bn. FY20 sales target has been set at RM1.3bn while GDV launches at RM1.35bn (ex-Australia). Earnings visibility will continue to be supported by the strong new sales and unbilled sales of 1.2x cover. We maintain our forecasts and BUY recommendation with an unchanged RNAV-based TP of RM2.25.

Within expectations. FY19 core PATMI of RM217.6m came in within expectations, accounting for 105% of HLIB and consensus full year forecasts, respectively.

Dividend. Declared 4th interim dividend of 3.0 (4QFY18: 3.5) sen per share and special dividend of 0.25 sen per share both going ex on 20 Jun 2019, bringing YTD dividend to 12.75 sen per share.

QoQ. 4QFY19 revenue was relatively flat (-2.3%) at RM278.9m (from RM285.7m). On the other hand, core PATMI increased 35.5% to RM65.9m (from RM48.6m) largely due to a favourable sales mix coupled with higher expenses incurred in the preceding quarter from bonus payment.

YoY. Revenue increased 63.7% from RM170.4m largely attributed to higher progressive billings recognition from projects in Bandar Sri Sendayan. Consequently, core PATMI increased 50% in tandem with revenue but was slightly offset a lower margin product mix.

YTD. RM1bn revenue (+29%) was recorded thanks to higher progress billing from the ongoing projects and recognition of the completion of M.Carnegie. Core PAT remained relatively flat (+2.7%) despite the increase in revenue largely due to a lower product margin mix.

Strong sales continue. 4QFY19 new sales came in at RM157.7m, bringing YTD sales to RM1.3bn, surpassing the full year target of RM1.2bn. Meanwhile, unbilled sales remained healthy at RM1.2bn (4QFY19: RM1.4bn), representing a healthy cover ratio of 1.2x.

Greenvale, Australia in the pipeline. Matrix will be launching its Greenvale project sometime by 2HFY20, with an estimated GDV of AUD24m. The project will consist of 70 residential lots available for sale on its own, spanning over 10 acres. We note that that the estimated GDV has not taken into account the additional profit should buyers opt to use Matrix’s partnered home builder.

Outlook. Earnings visibility will continue to be supported by new sales and unbilled sales of 1.2x cover. We understand that over RM1.35bn (ex-Australia) worth of GDV will be launched in FY20. With regards to sales target, management has decided to set a flat target of RM1.3bn for FY20.

Forecast. Unchanged pending further details on the Greenvale project in the upcoming analyst briefing on 3 Jun 2019. Maintain BUY with an unchanged TP of RM2.25 based on unchanged 25% discount to RNAV of RM3.00. 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. This is supported by an attractive dividend yield of 6.5% for FY20 and 7.3% for FY21, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 3 Jun 2019