This article first appeared in The Edge Malaysia Weekly on September 16, 2024 - September 22, 2024

Matrix Concepts Holdings Bhd (KL:MATRIX) has again proven its mettle in the competitive local property market. Despite elevated interest rates, the property developer’s steady financial performance and consistent dividend payouts attest to its resilience and commitment to shareholders.

A familiar name on The Edge Billion Ringgit Club’s (BRC) winners list, Matrix Concepts has for every year, except in 2023, beaten its sectoral peers to take home the award for highest return on equity (ROE) over three years for property companies below RM3 billion market capitalisation. This is its seventh win since its first in 2017 in the ROE category and ninth including BRC awards for highest returns to shareholders over three years in 2019 and highest growth in profit after tax (PAT) over three years in 2021.

Over this year’s award evaluation period, its ROE had trended lower from 15.4% in 2021 to 11% in 2022 and 10.6% in 2023. Its three-year adjusted weighted ROE of 11.7% per annum came in above its peers.

A quick check of Matrix Concepts’ 2024 annual report shows that its shareholders’ equity increased from RM1.6 billion in the financial year ended March 31, 2020 (FY2020) to RM1.8 billion in FY2021 and RM1.91 billion in FY2022. It further grew to RM2 billion in FY2023 and RM2.14 billion in FY2024.

The group posted a PAT of RM205.2 million in FY2022, down from RM262.22 million in FY2021. Its earnings inched higher to RM207.22 million in FY2023 as revenue grew 24.7% year on year (y-o-y) to RM1.11 billion from RM892.4 million previously. In FY2024, Matrix Concepts’s PAT further increased to RM244.3 million on revenue of RM1.34 billion — its highest since listing on Bursa Malaysia in 2013.

Since listing on Bursa Malaysia in 2013, Matrix Concepts has consistently paid dividends to its shareholders. Over the past three years, the group paid dividends of 12.5 sen per share in FY2022, 8.25 sen per share in FY2023 and 10 sen per share in FY2024. In FY2022, the group completed a one-for-two bonus issue.

Established in 1996, Matrix Concepts launched its maiden project at Taman Bahau in Negeri Sembilan and expanded its footprint to Johor and Kuala Lumpur. The group has since extended its presence beyond Malaysia, with development footprints in Melbourne, Australia, and Jakarta, Indonesia.

For FY2024, Matrix Concepts recorded property sales of RM1.25 billion, up 4.2 % y-o-y, compared with RM1.2 billion in FY2023. The sales achieved, however, was marginally below the group’s internal target of RM1.3 billion. Unbilled sales achieved for FY2024 of RM1.28 billion — while 11% lower than the RM1.44 billion in FY2023 — provide substantial earnings visibility for the next 15 to 18 months.

As at FY2024, the group’s total land bank stands at 2,032 acres, which it says is adequate for development over two decades.

For the first quarter ended June 30, 2024 (1QFY2025), Matrix Concepts’ net profit fell 6.1% y-o-y to RM60.7 million from RM64.6 million previously on the back of a 15.6% decline in revenue to RM279.7 million.

PublicInvest Research, in a note dated Aug 23, said Matrix Concepts was within its and consensus expectations, coming in at 24% and 23% of full-year estimates respectively. “The slower start to the new financial year is attributed to lower revenue contribution from the property development segment, as revenue recognition from its flagship Sendayan Developments reduced 16.6% y-o-y to RM250.3 million,” the research house said, but noted that the group’s “sales momentum remained good, with pre-sales secured amounting to RM321.4 million or 25% of FY2025’s sales target of RM1.3 billion. Unbilled sales stood at RM1.59 billion”.

Maintaining a “neutral” call and unchanged target price of RM1.80, PublicInvest also noted that Matrix Concepts’ FY2025 launch targets of RM1.65 billion largely include new phases within its flagship Sendayan Developments in Seremban, Negeri Sembilan. Flagging that the stock offered an attractive dividend yield of about 5%, the research firm maintained its earnings forecasts of RM251.7 million for FY2025, RM243.7 million for FY2026 and RM243.1 million for FY2027.

RHB Research, meanwhile, in a note dated Aug 23, maintained a “buy” recommendation and RM2.15 target price. Forecasting a dividend per share of 11 sen in FY2025 and FY2026, higher than 10 sen in FY2024, RHB noted that Matrix Concepts is in a net cash position but expects net gearing to increase to 0.1 times in 3QFY2025 due to additional borrowings. It expects impact on earnings to be negligible as interest expense will be capitalised.

Like 1Q2024, Matrix Concepts declared a first interim dividend of 2.5 sen for 1Q2025. The research house expects the group to deliver an annual net profit of RM251 million for FY2025, and further grow to RM261 million for FY2026 and RM274 million for FY2027.

In notes accompanying its 1QFY2025 earnings, Matrix Concepts said its acquisition of 1,382 acres of land within the Malaysia Vision Valley development corridor, followed by a new land development agreement with master developer NS Corp in June 2024 for a 1,000-acre prime land, “will enable the group to meet the thriving housing demand in Seremban and capture the spillover effect from the Klang Valley market”. “The close proximity of the new land to the anticipated revival of the High-Speed Railway (HSR) project further augments growth prospects,” Matrix Concepts said.

“Beyond property development, the group is actively enhancing its other business units, including the healthcare, education and hospitality divisions … Since the third quarter of FY2024, the group enjoys healthy contributions from its healthcare unit. This income stream is expected to strengthen due to an anticipated increase in patient beds over the next 12 months,” Matrix Concepts added, noting that efforts to diversify revenue streams will contribute to its long-term sustainability and growth.

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