Matrix Concepts Holdings (MCH) reported 2QFY25 net profit of RM67.4m (+5.3% YoY, +11.1% QoQ), which is within our and consensus expectations. For 1HFY25, Group net profit of RM128.1m (-0.4% YoY) constituted about 51% and 49% of respective full year estimates. Progress billings in 2QFY25 were slower, leading to its revenue dropping by 10.7% YoY to RM321m, mainly due to lower contributions from the Group's flagship Sendayan Developments. Pre-sales are still good however, with new property sales totaling RM341.7m secured in 2QFY25, largely driven by Sendayan Developments, which contributed RM294.8m or 86.3% of total pre-sales. As of 30 September 2024, the Group's unbilled sales stood at RM1.3bn, providing revenue visibility for the next 15-18 months. All told, no change to our earnings estimates. Maintain Neutral with higher target price (TP) of RM2.00 (from RM1.80 previously) or pegged at 10% premium to its book value, which we believe is justifiable, given its consistency in delivering earnings and its decent dividend yields of about 4.5%. Separately, it announced a 2.75sen dividend in 2QFY25.

• 2QFY25 revenue dropped by 10.7% YoY to RM321m, primarily due to a reduction in revenue from the property development segment, especially from its flagship Sendayan Developments, which contributed RM285.8m during the quarter (-16.1% YoY). However, revenue contributions from the Group's developments in the Klang Valley and Johor experienced a notable increase, rising 71.4% YoY to RM16.8m, driven by the recognition of Levia Residences, the Group's second high-rise development in Kuala Lumpur. Additionally, the healthcare segment contributed RM5.1m in revenue, derived primarily from Mawar Medical Centre, which began contributing in 2HFY24.
• FY25 launch target worth RM1.8bn largely includes new phases within its flagship Sendayan Developments. Elsewhere, the Group's Indonesian development, Menara Syariah in Pantai Indah Kapuk 2, Jakarta, Indonesia has also been successfully completed end-2023. 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). Pre-sales secured in 1HFY25 totalled about RM663m, which is on track to meet its FY25 sales target of RM1.3bn.

Source: PublicInvest Research - 27 Nov 2024