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Wednesday, May 16, 2018

Matrix Concepts Holdings - Jakarta the Future Growth Engine?

Author: HLInvest | Publish date: Wed, 16 May 2018, 09:42 AM

Matrix has entered into a MOU with PT Bangun Kosambi Sukses and PT Nikko Sekuritas Indonesia for the joint development of an Islamic Financial District in Pantai Indah Kapuk 2, Jakarta. With limited information at this juncture, we opine that it is a positive move to diversify and search for the next growth engine by leveraging on Indonesia’s immense potential. Besides, the prominent local partners would provide the necessary platform and local know-how expertise. We maintain forecast, BUY rating and RNAV-based TP (20% discount) of RM2.36.
NEWSBREAK

Matrix has entered into a Memorandum of Understanding (“MOU”) with PT Bangun Kosambi Sukses (BKS) and PT Nikko Sekuritas Indonesia (NSI) for the joint development of an Islamic Financial District in Pantai Indah Kapuk 2 (PIK 2), Jakarta.

BKS is jointly owned by Agung Sedayu Group and Salim Group, which is principally involved in the property development of PIK 2 Sedayu Indo City Indonesia. NSI, in turn is an investment banking firm that offers brokerage, underwriting and fund management in Indonesia.
HLIB’s VIEW

Diversifying into Indonesia is a positive move for Matrix as they are moving abroad in search of the next growth engine given that Bandar Sri Sendayan is expected to be fully developed by around 2025. With the limited information available at this juncture, we opine that the prospect in Indonesia would be immense with more than 10m population in Jakarta and the growing middle class with a GDP per capita of circa USD17k (Kuala Lumpur: ~USD24k).

Prominent partners. Local largest property player, Agung Sedayu Group and international conglomerate, Salim Group would be able to provide the necessary platform and local know-how expertise to Matrix for their venture in Indonesia. Agung Sedayu has completed variety of projects in the area of Jakarta, Bogor, Depok, Tangerang and Bekasi since its establishment in 1971. Similarly, Salim Group has been involved in property development and the leisure industry for around 30 years. Its businesses include flour milling, automotive assembly, banking and insurance, property development, and commercial real estate.

Location. PIK 2 is a mega project in the north of Jakarta spanning across more than 2.4k acres. Matrix is proposing to jointly develop an Islamic Financial District which is initiated by the Indonesian Government within the mega development. Banking on the success of PIK project since 2004, BKS is now focusing in developing PIK 2 Sedayu Indo City since unveiling the master plan back in 2016. The price for landed properties in PIK 2 is currently fetching around RM400-RM600psf equivalent for built-up size of 667-2,411 sqft.

Forecast. Unchanged pending further details.

Maintain BUY with unchanged TP of RM2.36 based on unchanged 20% discount to RNAV of RM2.95. 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. HSR is a long-term catalyst and its dividend yield is one of the highest in the sector at circa 6%.

Source: Hong Leong Investment Bank Research - 16 May 2018

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