Tuesday, 18 November 2014

Matrix: New Business Segment To Contribute Soon

Matrix FY14Q3 Financial Result

Revenue 148.8 163.7 134.7 144.3 127.4
PBT 58.5 58.6 54.0 56.4 48.7
PBT% 39.3 35.8 40.1 39.1 38.2
PAT 45.1 42.4 38.6 40.7 36.2

Total Equity 643.5 613.5 582.0 552.4 540.1
Total Assets 1000.9 944.5 964.5 900.5 862.8
Trade Receivables 174.9 160.0 144.3 140.8 161.5
Prop dev cost 556.3 524.4 523.5 443.8 362.4
Inventories 0.7 0.7 0.7 1.6 1.4
Cash -OD 23.3 29.4 96.0 83.8 211.2

Total Liabilities 357.4 331.1 382.5 348.1 322.7
Trade Payables 274.7 253.7 299.3 245.7 229.5
ST Borrowings 23.6 32.2 34.4 35.5 36.7
LT Borrowings 21.4 1.5 13.2 15.3 15.5

Net Cash Flow -45.5 -39.4 27.2 53.4 180.8
Operation 65.3 68.8 85.6 39.7 120.7
Investment -63.9 -55.7 -29.4 -69.2 -37.7
Financing -46.9 -52.5 -29.0 82.9 97.8

Dividend paid 60.5 45.3 30.1 46.2 30.4

EPS 10.50 14.00 12.80 13.50 12.10
NAS 1.41 2.02 1.92 1.83 1.80
D/E Ratio 0.03 0.01 Net cash Net cash Net Cash

Matrix's revenue in FY14Q3 drops 9.1% QoQ but its net profit increases 6.4% to RM45.1mil.

Year-to-date net profit of RM126.1mil in 9 months is 12.4% higher than the corresponding period last year.

However, EPS drops from 14sen in previous quarter to 10.5sen due to bonus issue.

Matrix launched 2 new projects worth RM145.5mil in Q3, with reported 30% take-up rate in few weeks time. They are Hijayu 3A (phase 3 - BSS) & Impiana Heights (Phase 1 - TSI). 

Overall GDV of its new launches to-date for FY14 is RM559mil. Average take-up rate for its projects reach above 70%.

Matrix plans to launch Hijayu 3A (phase 4) in the final quarter of FY14.

For upcoming FY15, it plans to launch more than RM1bil worth of new projects according to its press release.

Unbilled sales stands at RM410.5mil at the end of Q3, which is lower than RM434.7mil a quarter ago.

       Balista @ BSS

Matrix continues to spend a lot on land acquisition. It has just signed an SPA to acquire 164 acres of industrial land for RM71.5mil 2 months ago to expand its Sendayan TechValley.

To recap, last year Matrix has successfully acquired land in Labu (236.9 acres), Rasah (194.4 acres) & KL for RM47.5mil, RM59.3mil & RM43.6mil respectively. All the purchase price have been fully paid.

These Labu, Rasah & KL land are expected to add GDV of at least RM760mil, RM800mil & RM250mil respectively to Matrix.

Major township Bandar Sri Sendayan still has more than RM4bil future GDV while Taman Seri Impaian has about RM700mil remaining.

       D'Tempat Clubhouse @ BSS

Despite high spending on land acquisition, Matrix still pay relatively high dividend. It has just declared a third interim single tier dividend of 3.75sen. 

It has paid a total of RM49.4mil so far in FY14 as dividend, which represents 39.2% of its 9-months net profit. 

If its Q4 also posts RM45mil net profit, then it should at least pay another 4sen for its final interim dividend.

I feel that it will not give too much above 40% dividend payout this year.

It is noteworthy that Matrix has 2 new business segment coming up in its current quarterly financial report, which are education and clubhouse operation.

The 20-acre Matrix Global School which includes private school, international school & international pre-school, will probably start student intake in Q1 of 2015.

Matrix has earlier signed an affiliation agreement with Ellesmere College Ltd of UK to allow both parties to exchange information, skills and expertise.

The 6.3-acre D-Tempat clubhouse is also targeted to be completed in early 2015.

Nevertheless, I'm not sure how much stake Matrix has in the global school and clubhouse. It seems like they are 100% owned?

I hope that someone who are familiar with this area can let us know how is the demand for international school in BSS.

Both investment will provide recurrent income to Matrix in the future if they are being run successfully, esp Matrix Global School which can accommodate 2,500 students.

       Matrix Global School @ BSS

Recently Negeri Sembilan's MB has suggested to increase the Bumiputra's quota of new residential properties from 30% to 50%. 

If this is to be implemented, it will surely negatively affect all property developers in the state including Matrix.

I'm not sure what is the percentage of Bumiputra buyers in Bandar Sri Sendayan at the moment. If it is already high, then the negative impact will not be that much.

As the Royal Malaysia Air Force base is going to be relocated to BSS, I think there will be more Bumiputra buyers here.

Anyway, the new quota is just a suggestion at current stage.

Matrix share price has been sold down to RM2.87 after the news. It is trading at FY13's PE ratio of 8.7x.

I will conservatively keep my guesstimated net profit of RM160mil for FY14, in which it has already achieved 79% after 3 quarters. 

So, EPS and target price will remain unchanged at 35sen & RM3.50.

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