PETALING JAYA: Matrix Concepts Holdings Bhd
’s land acquisition in Kulai, Johor, is positioned to deliver substantial multi-year financial gains, according to analysts.
Matrix, which has most of its property developments in Negri Sembilan, bought 57 contiguous land parcels in Tempat Sengkang, Kulai, spanning 174.8 ha (around 432 acres) for RM169.3mil cash or RM9 per sq ft.
Earmarked for an industrial-led mixed township with an estimated gross development value (GDV) of RM2.1bil over a five-to-eight-year development period, the project targets its initial launch in financial year 2029 (FY29) following an 18-month lead time.
“Similar to Matrix’s Malaysia Vision Valley or MVV development, the group plans to launch the industrial component first, followed by residential and commercial offerings.
“This sequencing should allow the group to recover its capital and cash flow faster through industrial plot sales, while the resulting industrial activity and job creation should support demand for subsequent residential phases,” Hong Leong Investment Bank (HLIB) Research commented on the deal in a report.
The research house estimated the development could generate an average annual net profit of RM47.3mil over eight years starting FY29, and contributing for about 15.4% to its FY29 forecast net profit on Matrix.
Roughly 85% of the RM169.3mil consideration will be debt funded which will temporarily raise Matrix’s pro forma net gearing from 33.2% to 40.3%.
However, ongoing sales collections and loan redemptions from existing industrial projects will help cushion interest expenses.
Furthermore, analysts wrote retained earnings and phased capital expenditure will safeguard Matrix’s generous dividend policy (more than 50% payout ratio), and have maintained projected FY27 dividend yields of 6% to 8.2%.
At RM9 per sq ft, the purchase price represents an 18.2% discount to Henry Butcher’s independent valuation of RM11 per sq ft.
It is also priced well below nearby transactions, such as Mah Sing Group Bhd’s purchase at RM15 per sq ft and Sime Darby Property Bhd’s at RM17.25 per sq ft.
CIMB Securities noted the cheaper valuation could be offset by higher infrastructure spending to improve connectivity, conversion premiums and elevated construction costs.
The low land cost-to-GDV ratio of just 8.1% provides a defensive buffer against construction cost inflation while granting pricing flexibility.
Total effective land cost, including conversion premiums and infrastructure, is estimated at RM34 to RM35 per sq ft.
BIMB Securities stated the acquisition advances Matrix’s strategic goal of raising Johor’s revenue contribution from 5% to 15%-20% over time and generating over 30% of group revenue outside Negri Sembilan.
It can also leverage its local operational base in Kluang and industrial master-planning expertise from the MVV Tech Valley project.
Research houses have maintained their “buy” recommendation on Matrix. HLIB Research has a sum-of-parts (SOP) target price (TP) of RM1.83 a share on the developer, citing long-term earnings visibility and a 7.6% FY27 dividend yield.
CIMB Securities has a SOP-derived TP of RM1.55 per share on the stock pointing to low land cost and attractive “paid-to-wait” dividend yields.
BIMB Securities has a TP of RM1.49 on Matrix, valuing the company at 1.1 times its FY27 price-to-book value.
