After attending its analysts’ briefing, we are reassured with MATRIX’s long-term prospects despite the challenging property market outlook as its development projects tends to target genuine buyers, coupled with industrial developments capitalizing on the Greater Klang Valley story. For FY15, management has set a sales target of RM700m, inline with our estimates of RM697m, which we believe is highly achievable. Hence, we reiterate our OUTPERFORM recommendation on MATRIX with a Target Price of RM3.05 based on 30.0% discount to its RNAV of RM4.35. Furthermore, it is only trading at only 7.0x FY15E PER that is still lower compared to peer average of 8.3x coupled with decent dividend yield of 6.5% vs. peer average of 5.0%.

Targeting at least RM1.1b worth of launches. In the analysts’ briefing, management reiterated that they are still planning to launch RM1.1b GDV worth of projects in FY15 that consists mainly commercial and residential products in Bandar Sri Sendayan (GDV: RM670m), Taman Seri Impian (GDV: RM206m) and Residency SIGC (GDV: RM229m). Commercial component makes up 15.0% of the total planned launches, while residential makes up the remaining 85.0%. These launches exclude Sendayan Tech Valley land sales and also its KL high-rise project (GDV: c.RM400m).

Maintaining FY15-16E sales. While management might be planning RM1.1b worth of launches in FY15, they are setting a conservative sales target of RM700m for FY15, of which RM600m is from commercial and residential property sales and RM100m from industrial land sales, inline with our FY15 sales estimate of RM697m. We believe that management’s and our sales target are achievable despite a slower property market as “affordable” landed residential priced below RM500k makes up 58.0% of its RM1.1b planned launches. Hence, we are maintaining our FY15-16E sales of RM697-RM694m.

Landbanking prospects. In the briefing, management indicated that they are still actively looking for landbank replenishments, especially for industrial landbanks close to Sendayan Tech Valley. However, management expects landbanking news flow to be slow in FY15 as prospective landbanks are hard to come by due to pricing issues. Nonetheless, we are confident that MATRIX will still be able to replenish landbank in FY15 given its light balance sheet, which is still in a net cash position.

OUTPERFORM maintained. We continue to like MATRIX for its affordable/mass market exposure, which tends to target genuine buyers, coupled with industrial developments capitalizing on the Greater Klang Valley story. Furthermore, its valuation is still attractive as it is trading at 7.0x FY15E PER which is still below its small-mid cap peer average of 8.3x, coupled with decent dividend yield of 6.5%that is higher than its peer average of 5.0%. Our Target Price of RM3.05 is based on our FD RNAV of RM4.35 with an unchanged discount of 30.0%. The applied discount is below its historical average levels of 34.0% and is pretty much in-line with the discount range of 30.0%-38.0% applied to its peers, which are operating in the “affordable” housing segment e.g. HUAYANG.

Source: Kenanga