Matrix expects FY19 performance to at least match FY18’s

TheEdge Mon, Mar 18, 2019 08:58am - 5 years View Original


KUALA LUMPUR: Seremban-based property developer, Matrix Concepts Holdings Bhd, ended financial year 2018 (FY18) on a high note and expects to at least match that performance this financial year ending March 31, 2019 (FY19) while also targeting sales of RM1.2 billion.

Net profit for FY18 rose by 14.3% year-on-year (y-o-y) to RM211.83 million, while revenue grew 4.8% y-o-y to RM812.29 million.

The group has already achieved RM1.14 billion in sales for the cumulative nine months ended Dec 31, 2018 (9MFY19).

“I’m confident we can have a sales growth of over 10% going forward. We have always been prudent in making sure that our margin is maintained at some 20%,” its executive deputy chairman Datuk Lee Tian Hock told The Edge Financial Daily in an interview.

He sees affordable housing driving the group’s earnings and sales growth in FY19.

Lee said the group has set aside 70% of its new launches for affordable homes over the next two years, and is confident they will be well-received.

He is also unfazed by the influx of affordable housing — variously defined as priced below RM500,000 to below RM200,000 by different authorities and consultancies — by public and private entities in the country, noting that Matrix’s affordable housing products are competively-priced.

He noted that its launches have seen an average take-up rate of up to 80%.

On prospects, Lee maintains a positive outlook on the local property market, especially in the affordable housing segment.

“I believe demand is more than supply, given that the location is right,” he added.

Such optimism stems from the observation that more people have moved away from Kuala Lumpur to stay in newly-developed townships on the fringes of the capital city such as Seremban in the last five years.

The location of Seremban is no longer an issue among housebuyers, said Lee, anticipating the 379,087-acre Malaysia Vision Valley 2.0 (MVV 2.0) mega project to further boost demand for houses in the area.

Lee sees Matrix as one of the beneficiaries of the project, which spans over a 30-year development period, as it presents the group with a good headstart and competitive advantage since it has already established itself there.

Sime Darby Property Bhd is the master developer of MVV 2.0, which has a gross development value of RM640 billion.

Matrix also takes comfort from the fact that its landbank is located smack in the middle of MVV 2.0.

In fact, it is on the lookout to buy more land in the vicinity of the mega project.

Matrix recently acquired another 200 acres in Bandar Sri Sendayan, Seremban and expects the transaction to be completed by May. It is also looking to acquire another 600 acres nearby.

As at Dec 31, 2018, Matrix has an unbilled sales of RM1.4 billion and total undeveloped landbank of 1,320 acres, which Lee said will keep the group busy for the next seven years.

He also noted that the group is targeting to achieve collective sales of RM3 billion for FY20 and FY21.

For 9MFY19, Matrix recorded lower net profit of RM151.7 million, down 10% y-o-y due to its product mix comprising more affordably-priced residential properties which fetched lower margin.

Revenue, however, climbed 20% y-o-y to RM769 million on the back of higher revenue recognition from the sales of residential and commercial development properties.

 

Analysts still positive on Matrix despite subdued property market

Bloomberg data shows all three analysts covering the stock have a ‘buy’ call with target prices ranging between RM2.17 and RM2.40.

“We continue to like Matrix for its impeccable track record in township developments,” said AllianceDBS Research analyst Quah He Wei in a note dated Feb 21.

Quah added that the stock’s valuation remains undemanding at six times FY20 earnings per share despite having sustainable earnings visibility and a high dividend yield of about 6.5%.

RHB Research analyst Loong Kok Wen said the weaker-than-expected 9MFY19 results are not a major concern, given that Matrix’s unbilled sales and news sales remained healthy.

“As construction works progress further, Matrix margins from property development should gradually improve,” she said in a report dated Feb 21.

Matrix shares closed up one sen or 0.51% at RM1.96 on Friday, bringing a market capitalisation of RM1.48 billion. Year-to-date, its share price has risen 4.3% from RM1.88 on Dec 31, 2018.

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