To recap, FY19 core PATMI of RM217.6m came in within expectations, accounting for 105% of HLIB and consensus full year forecasts, respectively. Matrix will be launching its Greenvale project by 2HFY20, with an estimated GDV of AUD24m commanding c.15% PAT margin. Profit recognition of this project will be upon completion (i.e. after the infrastructure of the land has been completed), which is estimated to be in FY21. Management is expecting to launch projects worth up to RM1.3bn GDV in FY20 (ex-Australia). As such, we believe the FY20 sales target of RM1.3bn to be achievable upon the launch of these projects. We maintain our forecasts and BUY recommendation with an unchanged RNAV-based TP of RM2.25.

FY19 within expectations. To recap, FY19 core PATMI of RM217.6m came in within expectations, accounting for 105% of HLIB and consensus full year forecasts, respectively. YTD dividend amounted to 12.75 sen per share.

Greenvale, Australia in the pipeline. Matrix will be launching its Greenvale project by 2HFY20, with an estimated GDV of AUD24m commanding c.15% PAT margin. The project will consist of 70 residential lots available for sale on its own, spanning over 10 acres. Upon purchasing the plot of land, buyers have the option of using any home builder of their choice including the developer’s partnered home builders (Orbit Homes and Burbank). We note that that the estimated GDV has not taken into account the additional profit obtained, should buyers opt to use Matrix’s partnered home builder.

Australia’s foreign purchaser’s stamp duty. Foreign purchasers in Australia are imposed with a 12.5% stamp duty on the purchase price of houses. With regards to the M. Greenvale project however, the “land and house” contracts are separated, allowing foreign buyers to bypass the 12.5% stamp duty charge towards the house price i.e. stamp duty will be imposed only towards the land price (excluding the house price).

Upcoming launches. Management is expecting to launch projects worth up to RM1.3bn GDV in FY20 (ex-Australia). The breakdown of the projects is as follows:(i) Hijayu Resorts Homes, RM146m; (ii) Hijayu Residence, RM419m; (iii) Hijayu Aman, RM216.6m; (iv) Ara Sendaya, RM39m; and (v) Tiara Sendayan, RM483.2m. As such, we believe the FY20 sales target of RM1.3bn to be achievable upon the launch of these projects.

Forecast. Unchanged. 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 - 4 Jun 2019