For 2HFY21, RM787m worth of products will be launched (BSS township: RM649m and BSI township: RM138m). Over in Indoensia, operations remain halted due to the Covid-19 outbreak and the initial guidance of a 6-month delay in the project will likely be prolonged. Earnings visibility will continue to be supported by new sales and unbilled sales of 0.9x cover (RM1.1bn). Maintain forecast and BUY rating with an unchanged TP of RM2.11 based on 35% discount to RNAV of RM3.24.

1HFY21 recap. To recap, Matrix reported 1HFY21 core PATMI of RM106.1m (-6.3% YoY) which were within expectations. 2QFY21 saw strong earnings recognition largely attributed to the company carrying out construction works at c.120% capacity to make up the loss of operations during the MCO period by year-end. 1HFY21 sales of RM602m (50% of full year target) was recoded while launches worth RM353m were carried out.

Launches. Given the current market conditions, management continues to focus its efforts on launching affordably priced products e.g. Laman Sendayan 1 which consists of 1 & 2 storey terrace houses priced below RM500k per unit. Notably, the launches have been well received with the most recent one in 2QFY21 (i.e. first phase of Laman Sendayan) being fully booked on first day of launch. Following its success, we remain confident on the upcoming 2HFY21 launches given that over RM440m of the pipeline launches stem from Tiara Sendayan and Laman Sendayan. For 2HFY21, RM787m worth of products will be launched (BSS township: RM649m and BSI township: RM138m).

Foreign projects. Over in Indoensia, operations remain halted due to the Covid-19 outbreak and the initial guidance of a 6-month delay in the project will likely be prolonged (initial completion date was targeted for 2021). In Australia, the M.Greenvale project currently has a take up of 62% as of Sep 2020. Meanwhile, M.St.Kilda is still slated for a launch in 2021 for now, pending further updates.

Earnings visibility. Earnings visibility will continue to be supported by new sales and unbilled sales of 0.9x cover (RM1.1bn). Unbilled sales should see in increase moving forward with the upcoming launches. Furthermore, we remain positive on management’s efforts to make up for the loss of operations during the MCO period.

Forecast. Unchanged.

Maintain BUY with unchanged TP of RM2.11 based on 35% discount to RNAV of RM3.24. 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 6.4% for FY21 and 7.0% for FY22, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 20 Nov 2020