To recap, Matrix reported 1Q20 core PATMI of RM54.5m (-10.9% QoQ, +8% YoY), forming 24% and 23% of our and consensus full year forecasts, respectively. The Greenvale project has garnered a take up of 30% as of now and the official launch will take place closer to end-FY19 in Melbourne. Management has indicated that the launch for the Indonesian Twin Towers project is targeted to be in Nov 2019, pending confirmation from Indonesia. We maintain our forecasts and BUY recommendation with an unchanged RNAV-based TP of RM2.25.

1Q20 recap. To recap, Matrix reported 1Q20 core PATMI of RM54.5m (-10.9% QoQ, +8% YoY), forming 24% and 23% of our and consensus full year forecasts, respectively. 1QFY20 new sales came in at RM319.2m (25% of the full year target) while unbilled sales remained healthy at RM1.2bn (cover ratio of 1.2x). With regards to GDV launches, RM384.1m worth of GDV was launched with RM989.9m of planned launches in the pipeline for the remaining FY20.

Greenvale, Australia. Matrix will officially launch its Greenvale project sometime by end-FY19, with an estimated GDV of over AUD24m. 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. The project will consist of 72 residential lots available for sale on its own, spanning over 10 acres. Management is in the process of getting approval to increase the land to be divided into 79 lots. The soft launch for the project has already been carried out through roadshows regionally, garnering a take up of 30% while the official launch will take place closer to end-2019 in Melbourne.

Twin Towers in Indonesia. Management has indicated that the launch for the twin towers of the project is targeted to take place in Nov 2019, pending confirmation from Indonesia. Occupying 1.4 ha of land, the iconic twin towers will be constructed over a period of 4 years and command an estimated GDV of USD200m.

Bandar Sri Sendayan (BSS). Matrix’s flagship township development, located in Seremban, commands an estimated GDV of RM11.2bn spanning across 3,109 acres. Note that this has not included the potential GDV of over RM6bn for Sendayan Icon Park i.e. the commercial component of the township to be developed later on. As of now, RM4.6bn worth of GDV has been developed while ongoing development comprises c.RM2bn. Bulk of FY20 GDV launch targets will stem from BSS notably from the Hijayu range (i.e. mid-ranged pricing) (Figure #1).

Outlook. Management is open to landbanking in the Klang Valley albeit at a small scale. 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. 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 6.8% for FY20 and 7.6% for FY21, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 4 Sept 2019