Matrix’s 4Q14 results came in above our expectation. Maintain BUY with a higher TP of MYR3.36  (20% upside).  Dividend is the key highlight for the  quarter,  with  5.25  sen  final  and  1.25  sen  special  dividends  being declared.  FY14 new property sales  achieved MYR630.2m vs  MYR788m in  FY13,  mainly  due  to  the  timing  of  land  sales.  We  expect  higher contribution from land sales to boost earnings this year.

Above  expectations.  Matrix  Concepts’  (Matrix)  4Q14  results  beat  our estimate  but  were  in  line  with  market  expectation.  The  sequential improvement  in  net  profit  was  largely  attributed  to  the  higher  margin products  that  the  company  recently  launched,  the  pickup  in  the construction  progress  for  Hijayu  3A,  as  well  as  the  reversal  of  the provisions  made for staff costs. EBIT margin,  as a result, expanded to 49% from 40% the previous quarter. Meanwhile, apart from the 5.25 sen final dividend, Matrix has also declared a 1.25 sen special dividend (both dividends  are  single-tier).  This  brought  the  full-year  DPS  to  17.3  sen (adjusted for bonus issue), representing an attractive yield of 6%.

New sales achieved MYR630.2m. Matrix’s new property sales in 4Q hit MYR182m, from  MYR158.5m  in 3Q.  Its full-year new sales amounted to MYR630.2m  (of  which  MYR529m  is  from  property  development  and MYR101m from industrial land sale), down from MYR788m in FY13. The lower number was mainly  due to the timing of land sales.  This year,  we expect  more  land  deals  to  be  sealed,  as  we  understand  that  some industrial players may accelerate their  transactions  particularly in 1Q15 in  order  to  avoid  paying  the  GST.  Meanwhile,  the  response  for  new launches  still  seems  reasonable.  Hijayu  3A  Phase  1  &  2,  which  were launched in 1H14 were fully sold, while Phase 3 and 4 launched in 3Q14 and 4Q14 have reached a take-up rate of 46% and 10%, respectively.

Forecast. As we expect higher contribution from land sales, we raise our FY15-16 earnings forecasts by 7-14%. Unbilled sales  inched up slightly to MYR429.3m, from MYR410.5m in 3Q14.

Maintain BUY. We maintain our BUY rating. As we update our landbank data and RNAV, our TP s revised upwards to MYR3.36 (from MYR3.00). This is based on a lower 20% discount to  RNAV  (from 25%) given  thatmore land deals are expected this year.

Source: RHB