• Maintain BUY, TP rises to MYR2.02 from MYR1.88, 13% upside with c.6% FY24F (Mar) yield. Matrix Concepts’ 3QFY24 results are within expectations. Although earnings weakened QoQ, DPS remained intact at 2.5 sen. Its 9MFY24 property sales amounted to MYR961m vs its MYR1.35bn FY24 sales target. We raise our TP after updating our RNAV estimate. The stock could benefit from the revival of the Kuala Lumpur-Singapore High- Speed Rail project, given its landbank exposure in Labu.

• 3QFY24 results review. The sequential decline in revenue was largely due to billings from a different product mix, as well as the timing of new launches during the quarter. Meanwhile, revenue from the hospitality and education divisions improved by 11% and 2.4% QoQ. Projects in Sendayan remained the key revenue driver, contributing MYR268.3m for the quarter. GPM expanded to 53.9% from 43.6% in 2QFY24 due to higher sales and billings from a wider-margin product mix. A third interim single-tier DPS of 2.5 sen was declared, ie level with that of the previous quarter but higher than its DPS of 2.0 sen in 3QFY22. The company remains in a net cash position.

• Stronger sales in 3QFY24 driven by new launches. 3QFY24 property sales came up to MYR345.3m vs MYR310.8m in 2QFY24. 9MFY24 total sales was at MYR961.4m. Levia Residence in Cheras, which was launched during the quarter, chalked a maiden sales contribution of MYR97.9m. Phase 1 (Tower A) was well-received, as its bookings and take-up rate have reached 50.4%. Meanwhile, Eka Heights 3A and Hijayu Phase 2 Parcel 2 (Resort Residence 2B), which were launched in Nov 2023 and Dec 2023, are 37.8% and 100% sold. Other earlier launches in Jul-Aug 2023 such as Bayu Sutera 7 (Precinct 3B) and Irama Sendayan 2C achieved take-up rates of 81.5% and 87.3%, marking an improvement from 63% and 19% in the previous quarter.

• Minimal launches in 4QFY24. MCH has already launched MYR978.6m worth of projects so far vs its MYR1.1bn worth of planned launches for FY24. As most major developments have already been rolled out in 2QFY24- 3QFY24, launches in 4QFY24 will be minimal. These include a new phase in Bayu Sutera (GDV: MYR85.5m) and Irama Sendayan (GDV: MYR73.7m).

• Forecasts. We maintain our earnings forecasts. Unbilled sales fell slightly to MYR1.2bn, from MYR1.3bn as at 2QFY23. Note that the company sold an industrial property for MYR48m in end-2023, and this is expected to bring an estimated gain of about MYR20m.

• Higher TP. Our TP is based on an unchanged 30% discount to RNAV, with a 2% ESG premium applied on intrinsic value, as our ESG score of 3.10 for the company is one notch above the country median.

Source: RHB Research - 26 Feb 2024