• Maintain BUY and TP of MYR1.75, 21% upside with c.6% FY24F (Mar) yield. Matrix Concepts’ 4QFY23 (Mar) results meets expectations. Its full- year property sales of MYR1.2bn is very much in line with management’s target. We expect earnings growth to strengthen, as construction activities – and, as such, progress billings – should accelerate, since it has largely fulfilled its manpower requirement at construction sites.

• 4QFY23 results review. Revenue fell by 17% QoQ, as The Chambers and M Greenvale were completed and handed over in 3QFY23. Progress billings improved as its first batch of foreign workers arrived in early 2023. Administrative expenses rose by 6% YoY, on the following: i) MYR2.6m project write-off (related to the land in Damansara Perdana); ii) asset impairment of MYR7m (on a land acquisition in Sendayan); and iii) write-off of receivables of MYR3m (from the healthcare unit). Its finance cost also rose compared to the last few quarters, given interest expenses charged out for new projects. A fourth interim single-tier dividend of 2.25 sen was declared (vs 2.5 sen in 4QFY22), bringing full-year DPS to 8.25 sen, ie level with that of FY22.

• Decent sales in 4QFY23. 4QFY23 and full-year property sales totalled MYR202.2m (3QFY23: MYR340.3m) and MYR1.2bn (FY22: MYR1.34bn). Projects launched in 3QFY23 saw very positive take-up rates – including Hijayu Residence Phase 2 Parcel 2 (100% sold, from 29% in 3QFY23), Bayu Sutera 5 (89% sold, from 22% in 3QFY23) and Irama Sendayan Biz (82% sold). Some projects that were launched during the quarter also saw strong demand, such as Bayu Sutera 6 Precinct 4A2 (76% sold) and Tiara Sendayan 15 (P14 Balance) which is 95% sold.

• Construction activities to ramp up. MCH has very much fulfilled its manpower requirements at construction sites, as foreign workers have started coming in progressively since early 2023. Therefore, progress billings of the local projects should pick up gradually in 1QFY24, and more materially from 2QFY24 onwards.

• Slight delay in the completion of the Jakarta project. The completion of the Menara Syariah project in Jakarta is now delayed by 1-2 quarters to 3QFY24. Management should be able to provide some clarification during its analyst briefing today. The talks on an en bloc disposal are still ongoing.

• Forecasts. We fine-tune FY24-25F earnings slightly, as MCH’s unbilled sales dropped to MYR1.44bn for 4QFY23, from MYR1.51bn in 3QFY23.

• We maintain our TP at MYR1.75, based on a 35% discount to RNAV. Our TP also builds in a 2% ESG premium, as our ESG score of 3.10 for the company is a notch above the country median.

Source: RHB Research - 25 May 2023