This article first appeared in The Edge Financial Daily on December 4, 2017

KUALA LUMPUR: Despite booking a 14% year-to-date gain closing at RM2.20 last Friday, Matrix Concepts Holdings Bhd is still undervalued, said chairman Datuk Mohamad Haslah Mohamad Amin.

After gaining over 80% since its listing four years ago, shareholders will be curious to know if the company can break past its current market capitalisation of RM1.63 million, given the softer property market.

After all, like many other property counters, Matrix Concepts has been trading sideways over the past six months.

“I’ve been telling analysts that Matrix is a jewel, especially as we’ve been reporting earnings growth despite the weak market,” Mohamad Haslah, a former banker, told The Edge Financial Daily in an interview.

Mohamad Haslah also believes Matrix Concepts’ price-earnings ratio (PER) and net tangible assets (NTA) indicate that the company is undervalued.

Based on last Friday’s closing price, Matrix Concepts is valued at 1.51 times its NTA and 7.7 times earnings.

By those two valuations, the group does not seem to be very far off the mark from some of its peers of the comparable market capitalisation (see table).

For example, LBS Bina Group Bhd is trading at 1.28 times NTA, though its PER is almost double of Matrix Concepts at 13.37 times. LBS Bina had hit an all-time high of RM2.25 per share as at last Friday’s closing bell.

Meanwhile, MKH Bhd is seen to be trading at 0.68 times NTA and 6.29 times earnings.

What’s standing out, however, is that Matrix Concepts has a return on equity of 17.77%, which is significantly higher than its peers. It also commands "buy" calls by all analysts covering the stock, with a consensus target price of RM2.40, according to Bloomberg data.

The Negeri Sembilan-centric property developer considers itself primed for continuous growth despite the weak sentiment in the property market.

In fact, Mohamad Haslah is confident that Matrix Concepts will be able to sustain its annual property sales at RM1 billion for the financial year ending June 30, 2018.

This sales target is underpinned by the group’s plans to launch some RM1.42 billion worth of affordable residential in Kuala Lumpur, Johor and Negeri Sembilan. On top of that, the group also has projects abroad, like its project in Melbourne, Australia.

“We are also confident about maintaining at least annual sales of RM1 billion in FY18,” he said, noting that unbilled sales currently stand at around RM1.1 billion, which will be progressively recognised over the next two years.

In its latest financials, Matrix Concepts posted a 12% year-on-year (y-o-y) increase in net profit to RM51.38 million in the second quarter ended Sept 30, 2017, riding on a higher gross profit margin.

In the same period, revenue fell 10% y-o-y to RM202.9 million from RM224.85 million, mainly due to slower revenue recognition for the group’s industrial developments.

It is interesting to see that Matrix Concepts enjoys relatively good margins compared with its peers.