Matrix reported 9MFY22 core PATMI of RM143.9m (-20.7% YoY) that matched expectations. Declared 3rd single tier first interim dividend of 3.75 sen (2QFY22: 3.0 sen; 3QFY21: 3.0sen) per share going ex on 22 Mar 2022. 3QFY22 new sales came in at RM356.7m, which brought 9MFY22 sales to RM998m (83.2% of its full year target of RM1.2bn). We are expecting a stronger 4QFY22 ahead from higher progressive billings with expectation of higher sales and higher productivity. Maintain our forecast and BUY recommendation with an unchanged TP of RM2.54 based on a 25% discount to RNAV of RM3.39.

Within expectations. Matrix reported 3QFY22 core PATMI of RM60.5m (+16.7% QoQ, -19.8% YoY), which brought 9MFY22 core PATMI to RM143.9m (-20.7% YoY), making up 62% of our and 60% of consensus expectation. We deem the results inline as we are expecting a stronger 4QFY22 from a higher progressive billings contribution with expectation of higher sales coming from its strong bookings numbers.

Dividend. Declared 3rd single tier first interim dividend of 3.75 sen (2QFY22: 3.0 sen; 3QFY21: 3.0sen) per share going ex on 22 Mar 2022, bringing 9MFY22 cumulative dividend of 8.75 sen (9MFY21: 8.0 sen).

QoQ. Despite flattish revenue (-2.7%), core PATMI rose by 16.7% thanks to improvements in profitability margin from the favourable product mix.

YoY/YTD. Core PATMI declined (-19.8% YoY;-20.7% YTD) largely due to lower revenue (-26.1% YoY;-14.0% YTD) owing to lower progressive billings recognition from the slowdown in productivity.

Sales and launches. 3QFY22 new sales came in at RM356.7m, this brought 9MFY22 sales to RM998m (83.2% of its full year target of RM1.2bn). 9MFY22 saw RM508.6m new launches from Laman Sendayan 3 & 4 as well as Tiara Sendayan 9. Management shared that newly launched Laman Sendayan 3 and Tiara Sendayan 9 were nearly 100% taken up. The company has GDV of RM273.1bn in the pipeline for launches in the 4QFY22. Unbilled sales increased to RM1.27bn (from RM1.1bn in 2QFY22) representing 1.2x cover ratio.

Outlook. We gathered that sales and booking momentum remained robust for the month of Jan and Feb 2022, as such, we believe Matrix is set to exceed its sales target of RM1.2bn. Hence, we are expecting a stronger 4QFY22 ahead from higher progressive billings with expectation of higher sales and higher productivity.

Forecast. Unchanged Maintain BUY with an unchanged TP of RM2.54 based on a 25% discount to RNAV of RM3.39. We continue to like Matrix as it is well-positioned to ride on affordable housing theme within its successful townships with cheap land cost and sustained property sales. This is supported by an attractive dividend yield of 5.4-6.4% for FY22- 24, being one of the highest in the sector.

Source: Hong Leong Investment Bank Research - 24 Feb 2022