Menara Syariah (est. GDV of USD250m) will be built on 1.4 ha of land and is expected to complete in 2021 with over 800k sqft of NLA. The iconic building is the first development within a 12 ha IFD development located in PIK 2. PIK 2 is a collaboration project between two major Indonesian corporations, the Salim Group and the Agung Sedayu Group, which also own a stake in the JV to develop the IFD. We remain positive on Matrix’s venture into Indonesia as the partnership with the esteemed companies may open doors for future developments within Indonesia. We maintain our forecasts and BUY recommendation with an unchanged RNAV-based TP of RM2.25.

We attended the ground breaking ceremony for the Menara Syariah in Jakarta. Below are the key takeaways.

Menara Syariah. Menara Syariah (est. GDV of USD250m) will be built on 1.4 ha of land and is expected to complete in 2021 with over 1m sqft of gross floor area (est. NLA 800k sqft). Going as high as 29 storeys, Menara Syariah will comprise of a retail podium with two office towers above which will provide workspaces for 5,000 office workers. The iconic building is the first development within a 12 ha Islamic Financial District (IFD) development located in Pantai Indah Kapuk 2 (PIK 2) which will be undertaken by the JV (Matrix stake: 30%). To recap, 3.6 ha of land have already been paid for while the remaining land will be purchased at a later stage. The remaining 2.2 ha of land which was bought will be reserved for future development, which will be funded via the proceeds from the Iconic Twin Towers; management does not foresee the need to further raise funds. On a side note, the development of the IFD in PIK 2 has received endorsement from Indonesia’s National Islamic Finance Committee and the Indonesian Association of Islamic Economist.

PIK 2. Spanning across 2,650 ha, PIK 2 is a mixed-development international waterfront city situated by the Coastal Growth Corridor in North Jakarta. The township is a collaboration project between two major Indonesian corporations, the Salim Group and the Agung Sedayu Group, which also own a stake in the JV (via PT Bangun Kosambi Sukses) to develop the IFD. Note that the Salim Group is one of Indonesia’s biggest conglomerates with global presence (e.g. ASEAN, China, North America) while the Agung Sedayu Group is a leading property development company based in Jakarta. Following the success of PIK 1 (currently 80-90% developed), PIK 2 will offer over 120k high-rise residential units and over 20k landed residential units. Note that its initial phase of high-rise residential previously launched in 2016, has a take total of 20k units and a take-up rate of 70%. Accessibility to the region is supported by a network of toll access and interchanges, and is only a 15-minute drive away from the Soekarno-Hatta Airport.

Outlook. We remain positive on Matrix’s venture into Indonesia as the partnership with the esteemed companies may open doors for future developments within Indonesia. 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 as the event was in-line with expectations.

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 6.7% for FY20 and 7.5% for FY21, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 23 Dec 2019