Period  4Q13 / FY13

Actual vs. Expectations Matrix Concepts (MATRIX)’s FY13 net profit of RM153m came in within our estimates and street’s consensus; at 104% and 103% fulfilment rate, respectively.

 Sale for the year was RM788m, which was 10% ahead of our assumption, which we believe is due to better than-expected industrial properties sales. Further details will be furnished post their result briefing.

Dividends  A fourth interim single tier dividend of 5 sen was announced. For the year, MATRIX had announced a total net dividend of 30.5 sen (7% yield) which is in line with our estimates.

Key Results Highlights QoQ, MATRIX’s 4Q13 net earnings grew 12% from RM36.2m to RM40.7m underpinned by 13% growth in revenue. The growth in revenue was primarily driven by higher recognition from its residential property projects namely Nusari Bayu and the Hijayu series located in Bandar Sri Sendayan. Its operating margin also saw an improvement of 4.6ppt mainly due to its Hijayu 3D series which contributed higher profit margin.

 The stock was listed in May-2013 and thus FY12 may not be fully comparable. Nonetheless, FY13 earnings grew 48% YoY from FY12 (pre IPO) net profit of RM103.5m.

 As of 4Q13, MATRIX remains in a very comfortable net cash position of RM65m, which would provide ample room to further gear up for land banking activities in the future.

Outlook  For FY14, MATRIX plans to launch GDV amounting to RM646m (pending confirmation from tomorrow’s briefing), namely the Hijayu series in Bandar Sri Sendayan, Impiana series in Taman Seri Impian and Third 9 Residence in Seremban. As an affordable housing developer that targets the owner-occupiers market, we believe its Seremban property projects are set to enjoy the spill-over effects from the significant price appreciation in the Klang Valley.

 Its Matrix Global School in Bandar Sri Sendayan is expected to be completed by this year with first intake by September, which would further complement its residential project in that area.

Change to Forecasts Maintain earnings estimates for now, pending their upcoming briefing on 26th January 2014. Unbilled sales of RM437m provide at least one-year visibility.

Rating Maintain OUTPERFORM

 We believe that the recent property cooling measures would not be a dampener to MATRIX as they are providing affordable mass housing products and industrial properties. We continue to like the stock given its attractive FY14E yields of 6% and resilient demand profile.

Valuation  Maintaining our TP at RM4.80, which is at a 20% discount to our DCF-driven RNAV @ 10% WACC.

Risks to Our Call Failure to meet sales targets or replenish landbank. Sector risks, including overly negative policies.

 Geographical concentration risk.

Source: Kenanga