MATRIX Concepts value seen fair at RM5

Matrix Concepts Holdings Bhd

By RHB Research Institute

Buy

Target Price: 5.00

MATRIX Concepts Holdings Bhd’s (MCH) catalyst this year would be the acquisition of land to extend the Sendayan Tech Valley (STV). The acquisition is intended to not only sustain sales of industrial land, but more importantly, to boost job opportunities and hence, create spillover demand for properties in Bandar Sri Sendayan (BSS).

In addition, the completion of the Tentera Udara Diraja Malaysia complex Seremban Toll and new link to KLIA in two to three years’ time will expand the population catchment and improve accessibility to BSS/STV.

RHB Research Institute has initiated coverage on MCH with a “buy” and RM5 fair value.

It says that MCH is not vulnerable to the recent (property) tightening rules due to its its focus on mid-end housing. MCH is one affordable housing player that it believed may follow Tambun Indah and Hua Yang’s footsteps in being re-rated.

The successful sale of Kalista condos in Seremban 2 by IJM Land Bhd at end-2013 is a sign of the strong pent-up demand for mid-end housing within the locality.

RHB said that MCH’s gross margin of about 40% is above the sector’s between 20% and 25% average.

It estimated earnings growth of 14% to 15% for financial year 2014 (FY14) and FY15.

The company’s net cash of 64 sen per share and solid balance sheet will underpin its attractive dividend payout and at the same time provide scope for a bonus issue, it adds.

BRAHIM’S HOLDINGS BHD

By Alliance Research

Strong Buy

Target Price: RM2.10

ALLIANCE Research is positively surprised on news reports that Brahim’s Holdings Bhd was set to form a partnership with All Nippon Airways (ANA) to provide in-flight halal meals for Middle Eastern airlines landing in Haneda and Narita airports in Japan. The firm had not anticipated the swift progress of the negotiations between Brahim’s and ANA.

In light of Japanese reputation for quality and stringent standards, the firm believes that investor sentiment and confidence on Brahim’s in-flight catering operation will be re-rated, once the partnership is finalised

The partnership will allow Brahim’s to diversify from its dependence on the KLIA passenger traffic flow, thereby reducing the concentration risk of the group’s revenue and earnings base, it adds.

The research house maintained its “strong buy” call recommendation on Brahim’s with target price of RM2.10 based on 19 times financial year 2014 price-earnings ratio, with upside bias pending further details of the impending partnership agreement.

It said if the partnership materialises, it expected Brahim to incorporate a new entity in order to undertake the in-flight catering service for ANA. It was unlikely to be parked under Brahim’s Airline Catering which is 30%-owned by Malaysia Airlines (MAS), as MAS is a member of the oneworld alliance while ANA is a member of the Star Alliance.

BANGKOK BANK LTD

By Maybank KE Research

Buy (unchanged)

Target price: 210 baht (RM20.88)

IN the analyst meeting last Friday, Bangkok Bank Ltd (BBL) management guided for the fourth quarter of 2014 (4Q13) loan growth intact and indicated that the financial year 2013 (FY13) target of 8% was achievable.

For 2014, the bank is targeting loan growth of 5% to 7% based on 4% gross domestic product growth.

Sector-wise, corporate loans growth is forecast at 4% to 6%, small-medium enterprises at 7% to 10%, retail at 10% to 12% and the rest for the international business.

Maybank KE Research cut its 2014 forecast (F) earnings by 7% after revising down loan growth to 7% as well as net interest margin (NIM) following the November 2013 rate cut.

BBL is also likely to be affected by the lingering negative political conditions.

Maybank KE Research expects NIM to be squeezed in 4Q13 and 1Q14 due to policy rate cuts and the corporate-loan driven lending growth of 3% quarter-on-quarter (QoQ) in 4Q13 (lower margin).

NIM is expected to improve from 2Q14 after re-pricing the deposits.