KUALA LUMPUR: Matrix Concepts Holdings Bhd's acquisition of lands in Mukim Labu, Negeri Sembilan, is poised to provide longer visibility of earnings ahead.
The company acquired 404.7 hectares of land from Sime Darby through its 85 per cent-owned Megah Sedaya Sdn Bhd (MSSB).
The purchase price is RM435.6 million, translating to RM10 per square foot in the MVV2.0 development corridor, according to Hong Leong Investment Bank Bhd (HLIB Research).
"The group's Bandar Sri Sendayan (BSS) township has a remaining landbank of 607 hectares and a remaining gross development value (GDV) of RM7.85 billion, which has a remaining development period of seven to eight years.
"The newly acquired land should help alleviate investors's concerns about the depleting land bank in BSS and provide longer visibility of earnings ahead. Given that township development typically has slower progress and a lower margin in the early years, the overlapping years between BSS and MVV should allow the MVV township sufficient time to mature in the early years, ensuring earnings continuity and sustainability.
"Besides that, Matrix also has a home ground advantage as it is already familiar with the demographics, dynamics, and regulations in Negeri Sembilan," it said.
It added that MVV township has a more strategic location compared to BSS given that it is closer to the Klang Valley area, tactically positioning it to capture the spillover demand.
It added that the current land acquisition price of RM10psf is 30.9 per cent higher than its previous acquisition of the adjacent land, which was transacted at RM7.64psf.
The total land cost of the enlarged MVV development is RM895.6 million, while the effective GDV for Matrix is RM10.2 billion. Thus, the land cost-to-effective GDV translates to 8.8 per cent.
"Based on a 12-year development period, this translates to roughly RM850 million of effective GDV per annum."
The firm maintained "old" on the stock with an unchanged target price of RM1.87.