Matrix: Sendayan To Lead The Way

Matrix FY14Q1 Financial Result

MATRIX	FY14Q1	FY13Q4	FY13Q3	FY13Q2	FY13Q1
Revenue	134.7	144.3	127.4	147.3	155.6
PBT	54.0	56.4	48.7	40.6	61.5
PBT%	40.1	39.1	38.2	27.6	39.5
PAT	38.6	40.7	36.2	30.0	46.0
Res & Com Prop %		74.1	66.7	76.0	76.0
Industrial Prop %		20.8	27.8	21.0	24.0
Industrial Land %		5.1	5.5	3.0	0.0
Total Equity	582.0	552.4	540.1	518.3	387.9
Total Assets	964.5	900.5	862.8	793.0	645.4
Trade Receivables	144.3	140.8	161.5	118.1	185.7
Prop dev cost	523.5	443.8	362.4	400.0	360.5
Inventories	0.7	1.6	1.4	2.6	3.0
Cash -OD	96.0	83.8	211.2	206.5	38.5
Total Liabilities	382.5	348.1	322.7	274.7	257.5
Trade Payables	299.3	245.7	229.5	198.3	204.8
ST Borrowings	34.4	35.5	36.7	8.8	17.0
LT Borrowings	13.2	15.3	15.5	16.1	16.9
Net Cash Flow		53.4	180.8	176.1	8.1
Operation	85.6	39.7	120.7	65.2	9.5
Investment	-29.4	-69.2	-37.7	-17.0	-0.4
Financing	-29.0	82.9	97.8	127.9	-1.1
EPS	12.80	13.50	12.10	13.10	63.70
NAS	1.92	1.83	1.80	1.73	1.63
D/E Ratio	Net cash	Net cash	Net Cash	Net cash	Net Cash

Matrix latest FY14Q1 result is slightly poorer QoQ, mainly due to timing of construction billings and absence of land sales from its Sendayan TechValley (STV).

Its PBT margin improves slightly to 40.1% even without the high margin land sales.

Its is reported that Matrix is close to secure at least RM100mil (RM130-147mil) from 75 acres of land sales in STV within this year. Matrix has 243 acres of industrial land remaining at the end of year 2013 and it is in the process of replenishing its STV land.

Matrix achieved sales of only RM126mil (292 units) in the first quarter, with an average take-up rate of about 40% two months after launch. It is expected to post better sales & result in the subsequent quarters.

The management target to launch RM763mil worth of properties (excluding industrial land sale) in FY14, mainly in Bandar Sri Sendayan. The launch of condominium in Kuala Lumpur has been delayed to second half of FY15.

Unbilled sales currently stand at RM440.8mil, increases marginally from RM437mil at the end of Dec13.

Matrix's balance sheet and cash flow remain strong. It has declared a first interim single tier dividend of 5sen for FY14. 

Now the government is looking to extend express rail link (ERL) from KLIA to Malacca. It is confirmed that there will be a stop at Seremban.

By looking at the geographical location of Bandar Sri Sendayan (BSS), KLIA, Seremban and Malacca, it is highly likely that the ERL route will pass through and stop at BSS.

The proposed Senawang-KLIA expressway will pass beside BSS as well.

If this is true, then it will certainly increase the demand of properties in Sendayan.

Even though BSS has over 5,000 acres of land, actually quite a big portion of it are for STV (934 acres), TUDM (750 acres) and also for agricultural use (1,241 acres). Its actual size for residential & commercial development is 1,942 acres.

The initial plan of TUDM Academia & Training City includes a 18-hole golf course, university, training centre & residential units for TUDM personnel.

For the agriculture land, I'm not sure whether it has been or will be converted to residential, commercial or industrial use. I think this will happen sooner or later.

Anyway, in Negeri Sembilan and KL, Matrix still have 1,779 acres of land with GDV of RM6.6 billion for its future projects starting from year 2015 to 2022.

       Acquisition of land in 2013 to extend Bandar Sri Sendayan

Personally I am still comfortable to hold Matrix's shares even though property market is slowing down. This is because Matrix pays good dividend and mainly builds landed properties, which should be more resilient in a difficult market.

Besides, the freehold Bandar Sri Sendayan, supported by Sendayan TechValley, has a massive potential to become a very successful township.