• Maintain BUY and MYR2.66 TP, 16% upside and c.6% FY22F (Mar) yield. We believe Matrix Concepts’ high dividend yield and potential en bloc sale in Jakarta will continue to drive investor interest on the stock. If the en bloc sale materialises, part of the proceeds repatriated back may suggest a potential upside to FY23F dividend. We are also upbeat that management remains focused to entrench its presence in Sendayan, while strategic landbanking should boost the company’s RNAV if the land is sizeable enough.

• Aiming for 50% dividend payout. Post virtual meeting with management, we remain positive on the steady growth outlook for the company. Management will endeavour to payout 50% of earnings as dividend despite its official payout policy of “up to 40%”. Already, MCH has been hitting >40% payout over the past four quarters. Its dividend yield of c.6% is amongst the highest in the sector. It is in a near net cash position.

• Target 10% growth in FY23 property sales. While Matrix should be on track to achieve its MYR1.2bn sales target (9M MYR998m), management is likely to set FY23 sales target at MYR1.3bn. Existing township projects will still be the key sales drivers, while the high-rise project in Cheras (GDV: MYR375m) may be rolled out by end-2022.

• Encouraging interest for Menara Syariah in Jakarta. The potential take- up for the twin towers in Jakarta looks promising. The consortium has received strong interest from some local corporates/agencies, and if successful, both parties may enter into a sales and purchase agreement in the next six months. The office towers are slated for completion by end 2022 to early 2023. Management indicated that bulk of the proceeds from the sale will be utilised for Phase 2 development, while the balance will likely be repatriated back to Malaysia, which we believe could top up the dividend pool for FY23F.

• Launching St Kilda project in mid-2022. M. Greenvale in Melbourne will be handed over in May/Jun 2022. As a continuation of its presence in Australia, MCH will launch its St Kilda project in Melbourne in Jun/Jul 2022. It is a low-rise apartment project worth a GDV of AUD80m.

• Landbanking a potential share price driver. MCH still has almost 2,000 acres of remaining land, and it depletes 180-200 acres every year. Management’s strategy to expand its presence in the Sendayan area is reasonable. We think the timing is good as current interest rate is still low and land prices are still decent as the property market has yet to fully recover. Currently the company is negotiating for some land acquisitions, and we think this could be a positive catalyst for the stock if the new land is a sizeable one.

• ESG. Based on our in-house proprietary methodology, we derived an ESG score of 3.20 for MCH. Our MYR2.66 TP, which is based on an unchanged 30% discount to RNAV, incorporates a 4% ESG premium.

Source: RHB Research - 14 Mar 2022