Matrix Concepts announced that its wholly owned subsidiary, Megah Sedaya Sdn Bhd (MSSB) and NS Corp have entered into Development Rights Agreement to jointly develop 1,000 acres of freehold land in Malaysia Vision Valley 2.0 (MVV 2.0), Labu.
The 1,000 acres of land shall acquire by NS Corp from Sime Darby Berhad while MSSB shall pay for the Development Rights by way of the settlement of the purchase price amounting RM435.6m.
Matrix Concepts will hold 85% stake in the JV that undertake development of the 1,000 acres of land. Strengthening presence in Labu.
MIDF Research, in a note today (June 20), said they view the land deal positively as it will strengthen Matrix Concepts’ footprint in Negeri Sembilan.
Recall that Matrix Concepts announced acquisition of 1,382 acres of land in MVV 2.0 for RM460m in 2022 while the land acquisition should complete by 4QCY24.
Meanwhile, the 1,000 acres of land in Labu that Matrix Concepts being granted development rights is adjacent to the previous land in MVV 2.0. Hence, that enlarges Matrix Concepts landbank in Labu to 2,382 acres which will be used for residential, commercial, and industrial development.
The purchase consideration of RM435.6m translates into RM10psf which is higher than price of RM7.64psf for the previous land deal.
Nevertheless, MIDF opined that the acquisition price is fair considering the land appreciation and positive prospect of property development projects in Negeri Sembilan.
Potential GDV from the land is RM5b which translates into attractive cost to GDV ratio of 8.7%.
Matrix Concepts intend to fund the land deal with a combination of borrowings and internally generated funds. Balance sheet of Matrix Concepts is strong at net cash position as of FY24.
Nevertheless, MIDF estimates net gearing to go up 0.31x post balance of payment for first MVV 2.0 land acquisition and the latest land acquisition.
Meanwhile, earnings impact is limited as the land should develop beyond FY26, hence MIDF maintained their earnings forecast, a BUY call with a revised TP of RM2.05.
MIDF has revised their TP for Matrix Concepts to RM2.05 from RM2.00 as they narrow their RNAV discount to 19% from 21% in view of the better long-term prospect of Matrix Concepts.
MIDF remains positive on Matrix Concepts’ strong exposure to affordable landed homes in Seremban which supported by resilient demand for affordable landed home. Meanwhile, estimated dividend yield of Matrix Concepts is attractive at 5.8%.
