The  stock  remains  one  of  our  Top  Picks  for  the  sector.  We  maintain BUY and MYR3.36 TP (15% upside). New sales target is set at MYR700m for  FY15,  and  we  believe  this  is  achievable  as  land  sales  may  pick  up from  FY14,  mainly  due  to  timing  issue.  About  MYR1.1bn  worth  of  new projects  will  also  be  rolled  out  this  year,  and  these  are  mainly  the landed affordable homes, which suit the current market conditions.  

Prudent new sales target of MYR700m. Management sets a new sales target  of  MYR700m  for  FY15,  some  11%  increase  from  FY14’s MYR630m.  We  believe  this  is  achievable  and  expect  industrial  land sales  to  have  a  higher  contribution  in  FY15  (only  MYR101m  in  FY14). Meanwhile,  FY15  earnings  growth  seems  promising  as  we  understand that  many  industrial  players  are  likely  to  accelerate  their  transactions particularly in 1Q15 in order to avoid paying the GST. Hence, more land sales could be booked this year.  

Healthy pipeline launches. About MYR1.1bn worth of new projects will be rolled out progressively in FY15. These include shop lots in Sendayan Merchant Square 1,  Hijayu Resort Homes and terrace houses in Hijayu 3B and 3C, as well as landed houses in Taman Sri Impian (TSI), Kluang. In  our  view,  the  type  of  properties  suits  the  current  market  conditions, given buyers’ preference for landed and affordable homes. This year, we also expect Matrix Concepts to ink the deal with AEON and the new mall should  spur  demand  for  both  residential  and  commercial  properties  in TSI.

Constant landbanking effort. While  recognising  the  need  to  buy more land to replenish landbank particularly in TSI and Sendayan TechValley, given  the  remaining  landbank  of  <400  acres,  management  has  been prudent  and  patient  to  wait  for  opportunities  when  land owners get less sticky  with  pricing.  We  expect  some  new  acquisitions  to  materialise  in 2H, which could bring a boost to RNAV.    

Maintain BUY. We maintain our BUY rating and MYR3.36 TP, based on a 20% discount to RNAV. The stock remains one of our Top Picks for the sector  this  year,  given  the  company’s exposure to affordable housing and potential uptick in industrial land sales in FY15.

Financial Exhibits

Financial Exhibits

SWOT Analysis

Company Profile

Matrix Concepts 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 on developing residential and commercial properties, as well as industrial land sales.

Recommendation Chart

Source: RHB