Matrix Concepts  (MCH)’s  4Q13 results came in within expectations.  A 5 sen final dividend was declared. FY13 new sales expanded 15% y-o-y to MYR788m  from  MYR686m  in  FY12.  The  land  price  in  Sendayan  Tech Valley also hit a new high of MYR45 psf. Given the challenging market conditions, we continue  to favour  affordable  housing players  such  as MCH. We maintain BUY and MYR5.00 FV on the stock.

• Within  expectations.  MCH’s  4Q13  results  were  in  line  with  our  and market expectations. While property development contributed 96% of the total revenue during the quarter, land sales made up the balance.   A 5 sen final dividend was declared, bringing full-year  gross  dividend to 35.5 sen, representing a handsome dividend yield of 9% for the year.
• New sales climb  to  MYR788m.  FY13 new property sales of  MYR788m represented  a  15% growth  from MYR686m in FY12  (9M13 sales were MYR648.4m).  Sendayan  Tech Valley (STV) continued to be in demand. A  German-based  steel  components  producer,  Schmidt  +  Clements Group,  recently invested MYR140m to set up  a plant in STV. Phase 1 of the  plant  construction  will  commence  in  March  and  be  completed  by year-end, while Phase 2 will start in 2016. Upon completion, both phases will  require  a  total  of  150  staff.  We  understand  that  the  land  was transacted  at  MYR45psf,  in  line  with  management’s  target  to  raise prices..
• Forecasts. We fine-tune our FY14 earnings forecast up slightly. Unbilled sales currently stand  at MYR437m, compared with MYR593m in 3Q13. Dividend  payout  is  expected  to  normalise  to  40%  after  an  exceptional FY13, due to the absence of dividend in FY12  as 2013 was  the year of IPO.
• Valuations.  We maintain our BUY  call on MCH, with an unchanged FV of  MYR5.00,  based  on  a  20%  discount  to  RNAV.  Affordable  housing players remain the winners in this challenging market. Property sales will fare  better  compared  to  other  players  which  have  exposure  to  other higher-end  segments.  MCH  is  still  one  of  our  Top  Picks  apart  from Tambun Indah (TILB MK, BUY, FV: MYR2.08). Undemanding valuations, 10-15%  earnings  growth,  5-6%  generous  dividend  yields,  as  well  as catalysts  from  infrastructure  developments  and  rising  job  opportunities are the key factors underpinning our BUY call.

Financial Exhibits

SWOT Analysis

Company Profile

MCH is a Negeri Sembilan-based developer  that  currently has 2,732 acres of land  with a total portfolio GDV of MYR8.2bn.  The group concentrates mainly in developing residential and commercial properties, as well as industrial land sale.

Recommendation Chart

Source: RHB