Matrix has entered in to a MoU with NS Corp (a state owned body of Negeri Sembilan) to develop lands in Malaysia Vision Valley 2.0 (MVV 2.0) measuring an area of approximately 1.35k acres. While no lands were secured and no concrete details on the partnership are available yet, we are nonetheless positive on the development as it provides better visibility of the group’s growth strategy moving forward. We believe that a residential development in the MVV 2.0 area (likely nearby to its current Sendayan township) will be able to capture the spill over demand from the Klang Valley area as evidenced by the success of its Sendayan township. Maintain BUY with an unchanged TP of RM2.54 based on a 25% discount to RNAV of RM3.39.

NEWSBREAK

Matrix through its wholly-owned subsidiary MCHB Development (NS) Sdn Bhd has entered in to a Memorandum of Understanding (MoU) with NS Corporation (a state owned body of Negeri Sembilan) on 28 Apr 2022 with the objective to collaborate and develop certain parts of the lands in Malaysia Vision Valley 2.0 (MVV 2.0) measuring an area of approximately 1.35k acres. MVV 2.0 is an integrated economic region complementing the development of Greater Kuala Lumpur district spanning 153.4k hectares covering districts of Seremban and Port Dickson, located in the state of Negeri Sembilan. (Bursa)

HLIB’S VIEW

Nothing concrete on the development yet. At this juncture, we understand that Matrix has not secured any lands yet and the details of the collaboration including the partnership structure, funding plan, execution plan, exact land location and cost are not available yet.

Better visibility of the group’s growth strategy. Nonetheless, we are positive on this development as it provides better visibility of the group’s growth strategy moving forward. The proposed development of an additional 1.35k acres of land with the assumption of a land depletion of 150 acres per year will provide Matrix with earnings visibility of 9 years. The new development will likely be a residential development located near to its home turf in the Sendayan area. As such, Matrix will have a home ground advantage as it is familiar with the demographic, dynamics and regulations of the area.

Capturing the spillover demand from KV. In the event that MVV 2.0 project is not followed through (as a result of policy risk), we believe that a residential development in the Greater Klang Valley area will still be able to capture spill over demand from Klang Valley as evidenced by Matrix’s development in the Sendayan area, which in recent years have attracted >60% of home buyers from the Klang Valley. The improvement in road infrastructure and connectivity to the city centre as well as the current work-from-anywhere trend (which allows workers to work in remote areas away from work location) will bolster for the demand for housing developments in the Greater Klang Valley area.

Forecast. Unchanged. Maintain BUY with an unchanged TP of RM2.54 based on a 25% discount to RNAV of RM3.39. We continue to like Matrix as it is well-positioned to ride on affordable housing theme within its successful townships with cheap land cost and sustained property sales. This is supported by an attractive dividend yield of 6.1-7.3% for FY22- 24, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 29 Apr 2022