Matrix Concepts likely to exceed sales target, says HLIB Research

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KUALA LUMPUR (Feb 22): Hong Leong Investment Bank (HLIB) Research has maintained its buy call and target price (TP) of RM2.17 for Matrix Concepts Holdings Bhd.

In a note this morning, HLIB said Matrix's profit for the nine-month period of FY19 (9MFY19) was below its expectations, accounting for 64% of its full-year forecasts and 66% of consensus full-year forecasts — with lower quarter-on-quarter (q-o-q) and year-on-year (y-o-y) results attributed to lower-than-expected margin product mix and high base effect in its third quarter for the financial 2018 f(3QFY18) from the sale of its industrial properties.

The research house expects the group's 4QFY19 to "come in strong", with the property developer exceeding its sales target of RM1.2 billion (previously RM1.1 billion). It added that sales figures for 9MFY19 stand at RM1.14 billion.

HLIB said Matrix has over RM500 million in gross development value in terms of properties that will be launched in 4QFY19, and it is on track to meet the full-year launch target of RM1.7 billion.

Moving forward HLIB says Matrix's earnings visibility will continue to be supported by new sales and unbilled sales of 1.7 times cover, albeit with a lower margin product mix.

"Maintain Buy with unchanged TP of RM2.17 based on unchanged 25% discount to revalued net asset value (RNAV) of RM2.90. We continue to like Matrix as it is well-positioned to ride on the affordable housing theme within its successful townships with cheap land cost and sustained property sales.

"This is supported by an attractive dividend yield of 6.2% for FY19 and 7.0% for FY20, being one of the highest in the sector," said HLIB.

As of 10:32am, Matrix's shares were down two sen or 1% to RM1.95, with 114,900 shares being traded.