• Revised to Hold (TP: RM1.81). Matrix’s 9MFY24 top-line rose by +21% YoY to RM986.8mn, in-line with our expectations, accounting for 80% of our full year forecast. The group’s core net profit of RM185.9mn (+22.3% YoY) also met our and consensus expectations, accounting for 84% and 76%, respectively. However, in 3QFY23, Matrix recorded a revenue of RM296mn, marking an 18.6% YoY decline. This decrease can be attributed to the absence of revenue contribution from the group's Australian and Klang Valley property development activities, which resulted from the completion of projects like M. Greenvale and The Chambers in the previous year. Additionally, the contribution of revenue from residential and commercial properties experienced a 16.3% decline, decreasing to RM290.4mn from RM347.0mn registered in the previous quarter. This decrease is attributed to fewer property launches and adjustments in product mix recognition. Despite the lower group revenue for the quarter under review, the group's core PATAMI margin improved to 19.3% from 17.8% in the preceding quarter, primarily due to the product mix favouring the sale of higher-margin products. We have revised our rating to HOLD while maintaining the TP of RM1.81, pegged at 1.0x P/B to FY25F BVPS of RM1.81. This implies a +1.0 Std. Dev. above its 5-yr historical average forward P/B of 0.9x. In light of strong price rally recently, we prefer investors to accumulate the stock on dip.

• Key highlights. During the 3QFY2024, Sendayan Developments, the Group's flagship project, sustained its significance as a major contributor, generating RM268.3mn in revenue for the quarter, despite experiencing a 21.2% decline compared to the preceding quarter of RM340.5mn. Additionally, the group's township development in Kluang, Bandar Seri Impian, showed remarkable growth with a 106.1% increase in revenue, reaching RM16.8mn compared to RM8.1mn in the previous quarter. Revenue from the group's hospitality unit increased by 11.0%, rising from RM5.7mn to RM6.4mn. Similarly, revenue from the group's education unit experienced a marginal 2.4% rise, improving from RM3.4mn to RM3.5mn. The company achieved RM961.4mn in new property sales in 9MFY24, marking a slight 9.9% decrease compared to RM1.07bn in 9MFY23. However, it is on track to surpass the 2024 sales target of RM1.1bn. The unbilled sales position has grown to RM1.17bn, providing future revenue visibility. The company declared a third interim single-tier dividend of 2.50sen per share, implying a profit after tax payout ratio of 51.2% for 9MFY24, which translates to a dividend yield of 4.2%.

• Earnings Revision. No earning revision.

• Outlook. We anticipate that Matrix will sustain its positive earnings momentum through its ongoing property developments. This expectation is further bolstered by the imminent launch scheduled for 4QFY24 in the Bandar Sri Sendayan townships, representing an exciting opportunity with an approximate RM159.2mn GDV.

Source: BIMB Securities Research - 26 Feb 2024