KEY INVESTMENT HIGHLIGHTS

• 1QFY25 earnings within expectations
• Lower earnings due to high base in 1QFY24
• Robust new sales
• Earnings forecast maintained
• Maintain BUY with an unchanged TP of RM2.22

1QFY25 earnings within expectations. Matrix Concepts 1QFY25 core net earnings of RM60.7m came in within expectations, making up 23% of our and consensus full year estimates. Matrix Concepts announced dividend of 2.5sen per share for 1QFY25, in line with its historical practice of declaring dividends every quarter.

Lower earnings due to high base in 1QFY24. Sequentially, 1QFY25 revenue was lower at RM279.7m (-20.8%qoq) mainly due to lower revenue recognition from projects at Bandar Sri Sendayan. However, core net income was higher at RM60.7m (+17.1%qoq) mainly helped by lower expenses. On yearly basis, 1QFY25 core net income was lower (- 6.1%yoy), in line with lower revenue (-15.6%yoy) due to high base earnings in the previous year which were lifted by contribution from M.

Greenvale in Australia and The Chambers in KL following completion of the projects. Nevertheless, the earnings decline was partially cushioned by earnings contribution from healthcare division as the division started to contribute positively since 2HFY24. Looking forward, we expect earnings to pick up in the coming quarters due to resilient earnings recognition from property projects at Bandar Sri Sendayan.

Robust new sales. Matrix Concepts recorded new property sales of RM321.4m in 1QFY25, higher than new property sales of RM287m in 4QFY24. New sales in 1QFY25 are on track to meet management new sales target of RM1.39b for FY25 as it makes up 23% of management sales target. Bandar Sri Sendayan remains the key sales contributor in 1QFY25 as it contributed to 87.5% of total new sales. We reiterate our view that growth of Bandar Sri Sendayan will remain stable going forward and contribute substantially to Matrix Concepts earnings. Demand for projects at Bandar Sri Sendayan will continue to be driven by strong demand for affordable landed house.

Maintain BUY with unchanged TP of RM2.22. We make no changes to our earnings forecast for FY25F/26F/27F. Our TP for Matrix Concepts is also unchanged at RM2.22, based on 30% discount to RNAV. We remain positive on Matrix Concepts as we see stable long-term prospect for Bandar Sri Sendayan. Besides, landbank acquisition of Matrix Concepts in MVV 2.0 will strongly propel earnings growth beyond FY27 as Matrix Concepts targets to have first property launch on MVV 2.0 land in 2HFY26. Meanwhile, dividend yield of Matrix Concepts is attractive at 5.6%. Hence, we maintain our BUY call on Matrix Concepts.

Source: MIDF Research - 23 Aug 2024