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Tuesday, November 18, 2014

Matrix Concepts Holdings - Dividend And Earnings On Track


Matrix’s 3Q14 results came in within expectations. Maintain BUY and MYR3.93 TP, a 36.5% upside. New property sales stayed resilient at MYR159m vs 2Q’s MYR166m. While FY14 total new sales are likely to come in 10% lower from last year’s MYR788m, we believe next year’s sales will be stronger, given the pipeline launches worth MYR1bn GDV and more industrial land plots being transacted.

Within expectations. Matrix Concepts’ (Matrix) 3Q14 results came in line with our and market expectations. The QoQ decline in revenue was mainly due to the early construction stage of Hijayu 3A and, hence, minimal progress billings contribution during the quarter. However, the stronger EBIT margin of 40% (2Q14: 36%) was due to higher margin products from recent launches, which have lifted net earnings, with 6.2% QoQ growth. Also in line with our expectation was the 3.75 sen interim single-tier dividend declared, ie the same as the previous quarter’s payout.

Property sales stayed resilient in 3Q. Matrix’s new property sales in 3Q reached MYR158.5m (2Q: MYR166m), bringing 9M new sales to MYR450m. Of the MYR158.5m figure, MYR146m was made up of property sales while the remainder was from industrial land sales. Within weeks after their launches in August, take-up rates for its new projects, ie Hijayu 3A – Dextora and another phase at Taman Sri Impian, achieved 30%. YTD, the average take-up rate for all projects launched this year was more than 70%. While FY14 new sales will likely come in at about 10% lower from last year’s MYR788m, we believe next year’s sales will be stronger. This will be due to the timing to transact some higher-margin industrial land disposals as well as MYR1bn worth of new launches planned for FY15.

The international school has opened. In September, Matrix launched its Matrix Global Schools at the Bandar Sri Sendayan township. The school comprises Matrix Private School and International Pre-School. The private school is slated to open for registration in 1Q15.

Forecast. We make no changes to our earnings forecasts. Unbilled sales remained steady at MYR410.5m (2Q14: MYR435m).

 Maintain BUY. We maintain our BUY rating and MYR3.93 TP on the stock, based on 10% discount to RNAV.

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