Matrix Concepts Holdings Berhad - Beefing up Malaysia Vision Valley 2.0
Thu, 20-Jun-2024 08:39 am
by Research Team • Apex Research

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MATRIX (5236)

Target Price (RM)

2.14

Recommendation

Buy

  • Landbank replenishment. Matrix’s wholly owned subsidiary, MCHBD Development Sdn Bhd and NS Corporation through a joint venture vehicle namely Megah Sedaya Sdn Bhd is purchasing four plots of freehold agricultural lands located in Mukim Labu, Daerah Seremban, Negeri Sembilan for RM435.0m from Kumpulan Sime Darby Bhd.

  • Land details. Located in adjacent to existing land measuring 1,382.0-ac that was acquired by Matrix back on 22nd August 2022 (see Appendix 1). The said land will complement the existing land that will be develop into an integrated township. Located in close proximity within Kuala Lumpur International Airport (KLIA) as well as major towns such as Putrajaya, Cyberjaya, Kajang, Bangi, Bandar Sri Sendayan and Seremban that is well connected via North South Expressway, ELITE, LEKAS and Seremban–Port Dickson Expressway. We expect developments in MVV2.0 to leverage onto the spillover of urbanisation and growth of Greater Klang Valley.

  • Acquisition details. The acquisition price tag translates to RM10.00/sqf which is in on a slight premium against the acquisition made in August 2022 at RM7.64/sqf. Still, we reckon the premium is justifiable based on the land value appreciation in recent year which saw Malaysia’s average property transacted price rose 14.6% yoy to c.RM540,000 in 1Q24. The acquisition will be funded by internal funds and conventional loans and/or bonds/sukuk. Post completion of acquisition, we gathered that net is expected to increase from 0.1x to 0.3x.

  • Our take. We are sanguine over the acquisition that is expected to be earnings accretive in the long run. The move will bring an enlarged development with a total land size of 2,382.0-ac that carries an estimated total GDV of RM12.0bn to be carried out over 12 years from 2026. We believe the move will be able to replicate the success of BSS development which has demonstrated strong take up rates over the years.

  • Outlook. Going forward, Matrix will focus onto the launch of several projects that carries at total GDV of RM1.65bn for FY25F. 1HFY25 launches centered towards BSS development namely Bayu Sutera, Eka Heights and Hijayu.

  • Valuation. Given that the contribution may not take place in coming years, we made no changes to our earnings forecast for FY25F and FY26F respectively. Maintained our BUY recommendation on MATRIX with a target price of RM2.14, based discount rate of 20% to our RNAV.

  • Risk. Inability to replenish landbank, rising construction cost beyond expectations, changes in housing as well as property regulations and labour shortages.
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