Matrix reported FY20 core PATMI of RM231.5m (+6.4% YoY), within expectations. 4QFY20 core PATMI fell QoQ/YoY largely due to a lower margin product mix. 4QFY20 new sales came in at RM87.3m, bringing FY20 sales to RM1bn. Both FY21 sales and GDV launch targets are set at RM1.1bn which will likely be achieved given that over RM700m worth of property bookings were made during the MCO period. We maintain our forecasts and BUY recommendation with an unchanged RNAV-based TP of RM2.06.

Within expectations. Matrix reported 4QFY20 core PATMI of RM52.9m (-19% QoQ, -19.7% YoY), bringing the FY20 amount to RM231.5m (+6.4% YoY) which formed 101% and 103% of our and consensus full year forecasts, respectively. No EIs were excluded from the reported earnings.

Dividend. Declared interim dividend of 2.5 sen (4QFY19: 3.0) per share going ex on 23 Jul 2020, bringing YTD dividend to 11.5 sen per share.

QoQ/YoY. 4QFY20 revenue increased +69.2%/+69.3% to RM472.1m on the back of higher recognition from the sales of Sendayan Development residential properties. On the other hand, core PATMI fell -19%/-19.7% to RM52.9m due to a higher effective tax rate due to non-deductibles coupled with lower margin product mix (i.e. more affordably-priced houses compared to more commercial and industrial properties in the previous quarters)

YTD. Revenue rose +22.4% to RM1282.3m from higher revenue recognition from progressive billings. Similarly, core PATMI improved 6.4% to RM231.5m in tandem with revenue coupled with a lower margin product mix.

Ending strong. We view Matrix’s recent quarterly results positively as the earnings did relatively better in comparison to its property peers (which registered much wider decreases). 4QFY20 new sales came in at RM87.3m, bringing FY20 sales to RM1bn which is below its full year target of RM1.3bn largely due to the Covid-19 impact. Both FY21 sales and GDV launch targets are set at RM1.1bn which will likely be achieved given that over RM700m worth of property bookings were made during the MCO period. Earnings visibility will continue to be supported by new sales and unbilled sales of 0.8x cover (RM1bn).

Forecast. Unchanged. Maintain BUY with an unchanged TP of RM2.06 based on a 30% discount to RNAV of RM2.94. 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 5.7% for FY21 and 6.8% for FY22, being one of the highest in the sector

Source: Hong Leong Investment Bank Research - 10 Jul 2020