For FY22, Matrix is looking to set a flattish sales target of RM1.1bn alongside RM1.2bn GDV to launch with the bulk of it coming from the BSS development. Matrix’s local operation remains on track to its schedule while its international projects will have a bit of delay due to previous halt in operations. Earnings visibility will continue to be supported by new sales and unbilled sales of 0.8x cover (RM963m). Maintain forecast and BUY rating with an unchanged TP of RM2.12 based on 35% discount to RNAV of RM3.27.

Launches. For 4Q21, management is targeting to launch RM252.4m worth of GDV coming from Tiara Sendayan 7, Nusari Bayu 2 and Laman Sendayan 3. Meanwhile, for FY22, management is looking to launch RM1.2bn worth of GDV with 55% coming from Bandar Sri Sendayan (BSS), 7.8% from Bandar Sri Impian (BSI), 31.2% from Cheras land whilst the rest from Taman Anggerik Tengara. Notably, 9MFY21 launches of RM773.2m have been decent with an average take up rate of 58.4%. As of 31st Dec 2020, BSS’s ongoing project have a take up rate of 75.4% while BSI and other projects has a take up rate of 32.7% and 80.2%, respectively.

Foreign projects. Over in Indonesia, since the construction of Menara Syariah has only resumed on Dec 2020, management is expecting the completion to be delayed to 2HFY22. In Australia, M.Greenvale project currently has a take up of 81.3% as of 31st Dec 2020. While sales and construction activity have resumed, management is expecting a delay in the timeline of completion due to the lockdown in Victoria previously. Meanwhile, M.St.Kilda is still slated for a launch in early 2022, a slight delay from its initial target.

Earnings visibility. Earnings visibility will continue to be supported by new sales and unbilled sales of 0.8x cover (RM963m). Unbilled sales should increase moving forward with the upcoming launches.

ESG update. To beef up its “Social” aspect on ESG roadmap, Matrix has embarked on a series of societal engagement and commitment. Matrix has donated a sum of RM7m worth of programs and events for FY21 CSR activities that includes RM1.9m for the community, RM5m for the sports activities and the rest on education. Such notable gestures were providing groceries for Orang Asli nearby BSS and for Matrix’s own on-site workers alongside with some protective gears for media. Matrix has also donated RM1m to the Covid relief fund during the beginning of the pandemic.

Outlook. For FY22, management is looking to set a flattish sales target as recovery of the economy remains fluid. Notably, 3Q21’s core earnings was a new quarterly high for the company in the last 5 year. Matrix has been providing at least 40% dividend payout to shareholder and maintained so even during this tough time. In terms of dividend, we projected Matrix to be able to pay at least 11 sen per share for FY21 (40% payout) which translates to a yield of 6.1%. Furthermore, Matrix’s healthy balance sheet of 0.04x net gearing (3Q21) will provide the buffer to sustain through this challenging environment

Forecast. Unchanged. Maintain BUY with an unchanged TP of RM2.12 based on 35% discount to RNAV of RM3.27. 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 6.1% for FY21 and 6.9% for FY22, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 8 Mar 2021