PETALING JAYA: Matrix Concepts Holdings Bhd can sustain its earnings momentum, given its status as an established township developer in Seremban, near-term catalyst from its Indonesia project and a healthy balance sheet and better earnings prospect from financial year 2024 (FY24).
MIDF Research said Matrix Concepts posted a 37.3% year-on-year (y-o-y) growth in earnings to RM64.6mil in the first quarter of FY24 (1Q24) on the back of acceleration in progress billing as its labour shortage issue is gradually resolved.
“Matrix Concepts secured new property sales of RM305.3mil in 1Q24, which is on track to meet management’s new sales target of RM1.3bil for FY24.
“On the other hand, unbilled sales stood at RM1.4bil in 1Q24, providing more than one-year earnings visibility,” the research house said in an initiation report on Matrix Concepts.
As construction progress at its project sites normalised, MIDF Research expects the group to register better earnings outlook in FY24 and FY25, at RM255.5mil (up by 15.8% y-o-y) and RM280.3mil (up by 9.7% y-o-y), respectively.
“Earnings should also be supported by better new sales outlook. Note that Matrix Concepts targets to achieve new sales of RM1.3bil in FY24, which is higher than the new sales of RM1.2bil achieved in FY23.”
Matrix Concepts’ balance sheet improved to a net cash position in FY23 from a low net gearing of 0.04 times in FY22, due to the group’s repayment of bank borrowings in FY23.
“We think the group’s healthy net gearing would help support its dividend payout to shareholders as it has a dividend policy of paying out not less than 50% of earnings,” it added.
The developer announced a dividend of 2.5 sen per share in 1Q24 and the research house expected it to pay a dividend of 9.5 sen for FY24, which will translate into a dividend yield of 6.4%.
Based in Seremban, Matrix Concepts’ principal activities are property development, construction, education and hospitality.
Its main earnings contribution is from the property development division, which accounted for 96% of revenue in FY23. Matrix Concepts total land bank as at March 31, 2023 is 2,203.7 acres.
The group is the developer of Bandar Sri Sendayan in Seremban, an established township with a land size of 13,287 acres.
More than 7,000 acres has been completed at the township while there are 6,172 acres for ongoing and future developments, which should last the group for the next five to seven years, MIDF Research noted.
“Projects at Bandar Sri Sendayan recorded encouraging average take up rate of 91% for ongoing development in FY23,” it said.
Matrix Concepts is expanding its land bank through the acquisition of 1,382 acres at the Malaysia Vision Valley corridor.
The company also has international project exposure in Australia and Indonesia.
It launched its third Australian project, M333 St Kilda in Melbourne, while its earlier projects in Australia include M. Carnegie and M. Greenvale which were launched in 2016 and 2019, respectively.
Matrix Concepts ventured into Indonesia through the development of Menara Syariah, which is located in Islamic Financial District at Pantai Indah Kapuk 2. The gross development value of Menara Syariah is RM1bil, MIDF Research said.
The research house added that Matrix Concepts targeted to sell Menara Syariah on an en-bloc basis, which should contribute a lumpy earnings in FY24 and FY25.
MIDF Research maintained a “buy” call on Matrix Concepts with a target price of RM1.81 a share.
