PETALING JAYA: MIDF Research has initiated coverage on township developer Matrix Concepts Holdings Bhd at RM1.52 with a “buy” call and a target price (TP) of RM1.81, after the group showed improved performance.

Among the primary factors reinforcing MIDF’s favourable perspective on Matrix Concepts include its status as an established township developer in Seremban that focuses on affordable homes, with a good track record of dividend payout and better earnings prospects from FY2024 onwards.

The other reasons would be the developer’s prime growth projects in Indonesia and land banking in Labu, Negeri Sembilan, as well as the projection of a healthy balance sheet. Its flagship development is Bandar Sri Sendayan, which spans over 6,270 acres in Seremban West.

In a note today, the research house said the target valuation is derived from applying a 25% discount to the revalued net asset value.

The property developer registered a net profit increase of 37% to RM64.6 million for its first quarter ended June 30 (Q1 FY2023) from RM47 million in Q1 FY2022 due to improved construction efficiency following the resolution of labour shortages.

Revenue for the quarter jumped 45% to RM331.4 million from RM229.3 million previously, mainly attributed to the revenue contribution from its townships.

MIDF said since construction progress at project sites has “normalised”, it is forecasting a better earnings outlook for Matrix Concepts in FY2024 and FY2025.

“We estimate earnings of Matrix Concepts to be higher at RM255.5 million (+15.8% year-on-year (y-o-y) for FY2024 and RM280.3 million (+9.7% y-o-y) for FY2025.

“With a greater new sales outlook, earnings are expected to progress as well,” MIDF said.

To support this, the developer is also expected to achieve new sales of RM1.3 billion in FY2024, which is higher than new sales of RM1.2 billion achieved in FY2023.

The company anticipates the achievements will come from its flagship Sendayan Developments, spanning Negeri Sembilan and Kluang, Johor.

The group has also acquired a 1,382-acre land within the Malaysian Vision Valley corridor 2.0, which aims to strengthen its presence in Negeri Sembilan to ensure ongoing expansion.

Matrix Concepts’ principal business activities focus on property development, construction, education and hospitality. Listed on the main board of Bursa Malaysia in 2013, the property developer  has also extended its presence to Melbourne, Australia, and Jakarta, Indonesia.

The group was founded by Lee Tian Hock, who is the group executive deputy chairman and a major shareholder.

As at 3.11pm, Matrix Concepts’ share price was down two sen or 1.3% at RM1.50, giving it a market capitalisation of RM1.88 billion.