Matrix: New Business Segment To Contribute Soon

Matrix FY14Q3 Financial Result

MATRIX	FY14Q3	FY14Q2	FY14Q1	FY13Q4	FY13Q3
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.

Aspen Vision City

First phase of the highly-anticipated Aspen Vision City in Batu Kawan will only start by the end of year 2015. It is scheduled to be completed by 2018. 

The whole project is worth an estimated RM8bil and will take 10 years to be completed.

The initial development comprises a shopping mall with a full-sized IKEA store as its anchor tenant, as well as some retail and office space.

Residential development will only be launched after the first phase.

In the near future, the very ULU Batu Kawan will have

• Industrial park
• Shopping mall
• IKEA
• Office towers
• Medical center
• University & college
• Premium outlet
• Golf course
• Theme park
• Green park

Do you want to Live, Learn, Work, Play here?

GDEX: Still Got Upside?

If you buy & keep GDEX since early 2013, its share price has appreciated about 3x in less than 2 years with a bonus issue in between.

With rapid increasing popularity of online business & shopping in Malaysia, I am quite sure that in the near future GDEX's revenue only has one direction, which is up.

Furthermore, it is linked with Singapore Post and Alibaba!

For its FY14 which ends in Jun14, GDEX posts a record PATAMI of RM23.9mil. It is a superb 76% improvement YoY.

Its share price is currently trading at around RM2.09. With total paid-up shares of 840.7mil, EPS is at 2.8sen.

So current PE ratio of GDEX is 75x!

It still has 92.5mil warrants which are going to expire in Feb16.

RHB has just started coverage on GDEX today. It gives it a target price of RM2.42 which is DCF-derived (discounted cash flow). This represents a whopping PE of 81x base on FY15 earning forecast!

RHB's FY17 EPS forecast for GDEX is only at 5sen per share...

       RHB coverage on GDEX

I wish that one of the stocks in my portfolio can be given such high PE ratio base on whatever valuation methods. Probably I'll be very rich by then.

There is no doubt that GDEX is a well-managed company in a right industry at the moment. It has great potential for growth and its future is bright.

It plans to expand its business to ASEAN region and this may boost its profit significantly if successful.

Would it be easy to penetrate into other countries?

Personally I think courier service is not a business with high barrier of entry. Competition will be intense.

Anyway, I don't do detail research GDEX, as its relatively high PE ratio since last year has prohibited me from studying it further.

It has proven that I was wrong as GDEX's share price keeps on advancing to higher and higher PE level.

Besides, I have also missed quite a few opportunities by giving higher PE stocks a miss.

Perhaps sometimes PE ratio is not that important in stock selection?

Tambun: Land Acquisition Terminated

Tambun Indah's share price falls for 7 consecutive days from RM2.46 to RM2.18. Now it looks like there is a reason behind it.

Today Tambun announced that it has terminated the SPA to purchase 209.5 acres of land adjacent to its Pearl City from TPPT, due to "non fulfillment of a condition precedent".

I wish I can know the exact reason.

It is expected to get the refund of RM15mil deposit paid earlier within 21 working days.

Its share price will surely take another beat tomorrow.

       TPPT land south of Pearl City - cut by 2 power transmission lines

The proposed land acquisition was first announced in June 2014. The land was supposed to be acquired at RM150mil or RM16.50psf.

Surely all shareholders will be disappointed with the termination of this land acquisition. However, Tambun still holds the largest landbank in Penang. It still has over 400 acres with estimated GDV around RM3bil left to develop in its Pearl City.

So the termination of land acquisition from TPPT will not affect Tambun's earning in the next few years.

Nevertheless, analysts from investment banks will surely revise Tambun's target price downward from RNAV point of view.

I will keep my target price as its top & bottom lines will not be affected. The only concern is how much property sector will slow down next year.

       Straits Garden progress - early Nov14

After the termination of this SPA, Tambun might be able to return to net cash position soon. Hopefully it will keep looking for more strategic land.

Tambun will announce its FY14Q3 financial result this month, and it might as well declare an interim dividend at the same time.

I hope that its latest quarter PATAMI can stay around RM25mil.