• Maintain BUY, new MYR2.50 TP from MYR2.15, 11% upside with c.5% FY25 (Mar) yield. Matrix Concepts’ 2QFY25 results are in line. The quarter also saw a contribution from the disposal of an industrial property that resulted in a gain of MYR24m. 1HFY25 property sales, already at MYR663m, puts it on track to hit its full-year target of MYR1.3bn. Meanwhile, the upcoming launch of Malaysian Vision Valley (MVV 2.0) – with residential, commercial and industrial components – should be its next growth driver. We raise our TP to reflect this next phase of growth ahead.

• 2QFY25 results. The sequential growth in revenue was primarily driven by billings from existing projects, as well as a new project, Levia Residences in Cheras. The sale of an industrial property worth MYR45m was also recognised during the quarter. Revenue for the property development segment could have been stronger, as some works in Bayu Sutera were delayed by a contractor at certain stages of construction. Contributions from the education and hospitality as well as healthcare segments spiked up by 13.9% QoQ, supported by a steady increase in student enrolment numbers as well as higher demand at Mawar Medical Centre. MCH now has a net gearing of 0.09x (vs a net cash position in the previous quarter), as borrowings were drawn down to fund its acquisition of the first parcel of MVV land. A 2.75 sen second interim DPS was declared (1QFY25: 2.5 sen).

• Steady sales in 2QFY25. 2QFY25 property sales amounted to MYR341.6m vs MYR321.4m in 1QFY25. Response for Levia Residences remained encouraging, with a take-up rate of 73.3% for Tower A units (from 61% in 1QFY25). MCH has just made Tower B units available for sale.

• Launches in the pipeline. For FY25, the company plans to launch projects worth MYR1.78bn. So far, it has already rolled out MYR618.5m in new properties in 1H. Launches of projects or project parts other than Tower B at Levia Residences (GDV: MYR268m) include Eka Heights Precinct 9 (GDV: MYR208m) and Laman Sendayan 2A (GDV: MYR215m). The maiden launch of MVV City will be in FY26, while the ground-breaking ceremony of this project will be held next month.

• We make no changes to our earnings forecasts. 4QFY25 earnings should strengthen as construction works at Bayu Sutera pick up. Unbilled sales fell to MYR1.32bn, from MYR1.59bn in 1QFY25.

• Higher TP. Our new TP is based on a 20% discount to RNAV (from 30%), and with a 2% ESG premium imputed, given our ESG score of 3.10 for the company.

Source: RHB Securities Research - 27 Nov 2024