KUALA LUMPUR (March 18): Matrix Concepts Holdings Bhd's launch of its Icon Twin Towers in Jakarta's Islamic Financial District (IFD) in the second half of 2019 (2H19) has been seen as a positive development by analysts.

In separate notes today, Hong Leong Investment Bank (HLIB) Research and RHB Investment Bank (RHB IB) maintained their buy calls on the counter.

*Matrix Concepts’ Indonesian JV to kick off in two months

HLIB maintained its buy call with an unchanged target price of RM2.17, while RHB IB also maintained a buy call with a target price of RM2.35.

HLIB Research analyst Andrew Lim said the research house expects the development to rake in a net property value of RM30 million for the group, under the assumption that its profit before tax margin stands at 18%, and its weighted average cost of capital stands at 10%.

"However, we calculate that the increase in restated net asset value (RNAV) per share will be fully offset by the increase in share base (earnings per share (EPS) dilution of 9.1% arising from the proposed placement).

"Nonetheless, we remain positive on the long-term outlook of the joint venture (JV) as this establishes a platform for opportunities to further develop projects in PIK 2. Note that only circa 10% to 15% of PIK 2 have been developed," it said.

Meanwhile, RHB IB forecasts that the group's maiden Indonesian earnings should start coming in from FY21 onwards, with dividends per share (DPS) forecasts for FY20-21 tweaked to a payout ratio of 47% to 48%, from 42% to 43% in the past, and a dividend yield of 6% to 7%.

However, it added that the group could have borrowed more to fund its equity participation in the JV in lieu of a private placement due to its low gearing.

"Group chairman Datuk Mohammad Haslah explained that offshore borrowings in US$ may expose the company to currency volatilities, while borrowings in IDR will be expensive due to the high interest rate," said RHB IB.

The towers, which occupy 1.4 ha of land, are part of the group's development in Jakarta's IFD.

Matrix Concepts is in a JV to develop the towers as well as Phase 1 and 2 of its developments in the IFD with PT Bangun Kosambi Sukses (BKS) and PT Nikko Sekuritas Indonesia (NSI).

The Edge Financial Daily reported today that BKS is jointly owned by the Agung Sedayu and Indonesia-based Salim Group, which in turn is developing PIK 2 Sedayu Indo City in Indonesia, while NSI is an investment banking firm in Indonesia.

The JV Fin Centerindo Satu (FCS) has capital amounting to RM409 million, with Matrix Concepts holding a 30% stake, followed by NSI with 30% and BKS with 40%.

At 11:18am, shares in Matrix Concepts traded higher by two sen or 1.02% to RM1.98, with 132,200 shares changing hands, giving the group a market capitalisation of RM1.48 billion. — theedgemarkets.com

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