Matrix’s 3Q14 results came in within expectations. Maintain  BUY  and MYR3.93  TP,  a  36.5%  upside.  New  property  sales  stayed  resilient  at MYR159m  vs  2Q’s MYR166m.  While  FY14  total  new  sales  are  likely  to come in 10% lower from last year’s MYR788m,  we believe next year’s sales will be stronger, given the pipeline launches worth MYR1bn GDV and more industrial land plots being transacted. 
 
Within  expectations.  Matrix Concepts’ (Matrix) 3Q14 results came in line with our and market expectations. The QoQ decline in revenue was mainly  due  to  the  early  construction  stage  of  Hijayu  3A  and,  hence, minimal  progress  billings  contribution  during  the  quarter.  However,  the stronger  EBIT  margin  of  40%  (2Q14:  36%)  was  due  to  higher  margin products from recent launches, which have lifted net earnings, with 6.2% QoQ growth. Also in line with our expectation was the  3.75 sen interim single-tier  dividend  declared,  ie  the  same as the previous quarter’s payout.

Property  sales  stayed  resilient  in  3Q.  Matrix’s new property  sales  in 3Q  reached  MYR158.5m  (2Q:  MYR166m),  bringing  9M  new  sales  to MYR450m.  Of  the  MYR158.5m  figure,  MYR146m  was  made  up  of property sales while the remainder was from industrial land sales. Within weeks after their launches in August, take-up rates for its new projects, ie  Hijayu  3A  –  Dextora  and  another  phase  at  Taman  Sri  Impian, achieved  30%.  YTD,  the  average  take-up rate  for  all  projects launched this year was more than 70%. While FY14 new sales will likely come in at  about  10% lower  from last  year’s MYR788m, we believe next year’s sales  will  be  stronger.  This  will  be  due  to  the  timing  to  transact  some higher-margin industrial land disposals as well as MYR1bn worth of new launches planned for FY15.  

The international school has opened. In September, Matrix launched its  Matrix  Global  Schools  at  the  Bandar  Sri  Sendayan  township.  The school  comprises  Matrix  Private  School  and  International  Pre-School. The private school is slated to open for registration in 1Q15.

Forecast.  We  make  no  changes  to  our  earnings  forecasts.  Unbilled sales remained steady at MYR410.5m (2Q14: MYR435m).

  Maintain  BUY.  We  maintain  our  BUY  rating  and  MYR3.93  TP  on  the stock, based on 10% discount to RNAV.

Financial Exhibits

Financial Exhibits

SWOT Analysis

Company Profile

Matrix  Concepts  (Matrix)  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 sales.

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Source: RHB