Matrix Concepts Holdings’ (MCH) 2QFY24 net profit came in within our and consensus expectations at RM64.0m (+26.5% YoY, -0.9% QoQ). For 1HFY24, Group net profit of RM128.6m (31.8% YoY) constitutes about 52% of our and consensus full year estimates. The Group continued its robust sales momentum, after clinching another RM310.8m pre-sales in 2QFY24 (1QFY24 sales: RM294.7m) with Sendayan Developments contributing 94.8% or RM294.7m of total sales. The Group’s unbilled sales as of 30 September 2023 is still hovering around RM1.3bn, providing substantial earnings visibility for the next 15-18 months. All told, no change to our earnings estimates and we maintain our Outperform call, and book-value based target price (TP) of RM1.80.

• 2QFY24 revenue rose 61.6% YoY to RM359.4m, mainly attributed to robust performance of the property development division, which surged by 65.0% YoY to RM350m as construction activities picked up speed with issues relating to insufficient workers in the previous year having now dissipated. The Group’s flagship Sendayan Developments continues to be a significant revenue driver, contributing RM340.5m (+87% YoY) for the quarter. Meanwhile, the Bandar Seri Impian township in Kluang reported RM8.1m (-56% YoY) and the Group’s first Klang Valley development, The Chambers, recorded revenue of RM1.7m in 2QFY24. In 1HFY24, it sold RM616m worth of properties (or 45% of FY24 sales target of RM1.36bn). We understand it has projects worth some RM200m to be unveiled in 4QFY24.

• FY24 sales target of RM1.36bn, or about +13% YoY from its FY23 pre-sales, is underpinned by pipeline launches worth RM1.9bn. MCH will launch its serviced apartments project in Cheras (Levia Residences) in 3QFY24 that has estimated gross development value (GDV) of RM532. Meanwhile, the Group’s Indonesian development, Menara Syariah in Pantai Indah Kapuk 2, Jakarta, Indonesia, is in the final stages of completion. As reported earlier, MCH is looking to either dispose one block or keep both for recurring income. We understand that MCH had initially expected at least 20% margins if it disposes the two towers outright. Now, we believe the value could be higher, given the land value alone is already transacted at 3x its original cost (MCH’s initial investment of USD31.75m for a 30% stake).

Source: PublicInvest Research - 24 Nov 2023