Matrix Concepts Holdings Berhad - Earnings impacted by weaker BSS contribution
Fri, 23-Aug-2024 07:25 am
by Research Team • Apex Research

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MATRIX (5236)

Target Price (RM)

2.07

Recommendation

Buy

Summary

  • MATRIX’s 1QFY25 core net profit at RM60.7 (-6.1% yoy and flattish qoq) came below expectations, accounting to only 18.6% and 22.8% of ours and consensus forecast respectively, impacted by timing of launches of BSS township projects.

  • Tweaked our FY25-26 earnings forecast lower by -24.5%/-19.9%, adjusting to weaker-than-expected contribution from BSS township.

  • Maintained BUY recommendation on MATRIX, but with lower target price of RM2.07 (based discount rate of 20% to our RNAV) post earnings revision. 

     

Results Review

  • Results review. 1QFY25 core net profit fell -6.1% yoy to RM60.7m, impacted by timing of launches of BSS township projects and completion of M. Greenvale in Australia and The Chambers in previous financial year. Revenue for the quarter declined -15.6% yoy to RM279.7m. A first interim dividend of 2.5 sen per share, payable on 10 October 2024 was declared.

  • Results below expectations. Reported core net profit came below expectations, making up to 18.6% of our core net profit forecast and was at 22.8% of consensus forecasted net profit of RM275.4m. Key deviation is due to slower sales recognition from BSS flagship development that was impacted by timing of launches.

  • Operations Highlights. Unbilled sales stood at RM1.59bn as at end-1QFY25, implying 1.2x of FY24 revenue is sufficient to maintain revenue visibility over the next 18 months. We gather that MATRIX launched a total of RM209m worth of GDV in 1QFY25 and targets total launches of RM1.72bn in FY25. During the quarter, average take up rate remains relatively healthy at 86.5%. Meanwhile, EBITDA margins improved to 29.5% vs 26.9% in 1QFY24, lifted by lower marketing expenses.

  • Industry Highlights. Malaysia property transactions continue to demonstrate resiliency with housing loan applications rose 16.9% qoq to RM121.5bn in 2Q24, while loan approval rate hovered above 40% during the period. Channel checks highlight that Seremban property market remains attractive, premised to the strategic location and affordability. Hence, we expect take-up rates to remain relatively solid for future launches.

  • Outlook. MATRIX is equipped with a total landbank of 1,966-ac that carries a total GDV of RM11.4bn to sustain operations over the next 7-10 years. Going forward, key developments in remainder of FY25 include progressive launches in BSS township, launch of Levia at Klang Valley, stable growth in healthcare segment and finalisation of SPA of MVV land that is slated for first launch towards end-FY26.

  • Valuation. Tweaked our FY25-26 earnings forecast lower by -24.5%/-19.9%, adjusting to weaker-than-expected contribution from BSS township. Maintained our BUY recommendation on MATRIX with a lower target price of RM2.07 post earnings revision, 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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