Matrix Concepts' Kulai project to deliver RM47.3mil annual profit from FY29

KUALA LUMPUR: Matrix Concepts Holdings Bhd's proposed RM2.1 billion mixed development in Kulai, Johor, could generate an average annual net profit of RM47.3 million from financial year 2029 (FY29), Hong Leong Investment Bank Bhd (HLIB) said.

Analyst Tan Kai Shuen said the potential contribution would account for 15.4 per cent of HLIB's FY29 earnings forecast, assuming an eight-year development period and an 18 per cent net profit margin.

However, actual contributions would depend on launch timing, sales performance and construction progress, with earnings likely to be lower in the initial years.

HLIB maintained its "Buy" call on Matrix Concepts with an unchanged target price of RM1.83, citing the acquisition's potential to diversify the company's earnings base beyond Negri Sembilan.

The proposed development would also strengthen the company's exposure to the Johor-Singapore Special Economic Zone, where expanding industrial activities could support demand for residential and commercial properties.

"However, competition is intensifying as more developers enter Kulai, including Sime Darby Property, Genting and Paragon Globe.

"Matrix's lower land entry cost helps mitigate this risk by providing greater pricing flexibility, including room to price its products more competitively," Tan said in a note.

On Oct 27, Matrix Concepts signed sale and purchase agreements to acquire 57 adjoining freehold agricultural land parcels spanning 174.8 hectares in Sengkang, Senai, and Kulai for RM169.3 million.

The land is earmarked for a mixed development comprising residential, industrial and commercial components, with the first launch targeted within 18 months of the announcement.

Tan said the company planned to launch the industrial component first, followed by residential and commercial offerings, similar to its Malaysia Vision Valley (MVV) development strategy.

Industrial land sales could accelerate capital recovery and cash flow, while job creation could support demand for subsequent residential phases.

HLIB viewed the acquisition price of RM9 per square foot as attractive, representing an 18.2 per cent discount to the indicative market value of RM11 per square foot assessed by independent valuer Henry Butcher.

Nearby transactions included land acquired for MS Industrial Park at RM15.01 per square foot in December 2025 and Sime Darby Property Bhd's land purchase at RM17.25 per square foot in August 2026.

However, Tan cautioned that the less developed location could require higher infrastructure expenditure and serve a smaller residential and industrial demand catchment.

Matrix Concepts' pro forma net gearing is expected to rise to 40.3 per cent from 33.2 per cent as of June 30, 2026.

HLIB maintained its earnings forecasts pending completion of the acquisition.

Meanwhile, RHB Research analyst Loong Kok Wen was also mildly positive on the acquisition, maintaining a "Buy" recommendation but lowering the target price to RM1.45 from RM1.65.

Loong said the acquisition marked Matrix Concepts' ambition to establish a presence in the Iskandar Malaysia market, supporting its long-term target of generating more than 30 per cent of revenue outside Negri Sembilan.

However, she said about RM145 million in new borrowings would be required to fund the purchase, raising net gearing to around 0.40 times from 0.33 times.

RHB estimated that the acquisition would have a minimal impact on FY27 to FY29 earnings, at about one per cent, mainly due to higher interest expenses.

"Considering its other investment property development plans ahead, including a hospital and commercial centre, cash flow planning is crucial to ensure the sustainability of dividend payout," Loong said.

RHB Research's lower target price reflects a wider 45 per cent discount to revalued net asset value, compared with 35 per cent previously, amid geopolitical uncertainty in the Middle East and domestic political concerns.