Those who have been following The Edge Billion Ringgit Club (BRC) awards over the years would know that Matrix Concepts Holdings Bhd has kept a long winning streak.
Since 2017, the Seremban-based property developer has taken home The Edge BRC award for the highest return on equity (ROE) over three years for companies with a market capitalisation not exceeding RM3 billion. It has done it again for the sixth consecutive year.
Its adjusted weighted three-year ROE of 16% for the period under review is the highest among developers with a market capitalisation of between RM1 billion and RM3 billion. ROE, which is calculated by dividing net income by shareholders’ equity, is considered the return on net assets. Essentially, the ratio measures how effectively management is using a company’s assets to create profits.
That Matrix Concepts has come in ahead of the pack in this category is no surprise. Nevertheless, it should be noted that its ROE has been on a downtrend for four straight financial years.
Numbers collated based on The Edge BRC award methodology shows Matrix Concepts’ ROE slipping from 19.1% in the financial year ended March 31, 2018 (FY2018) to 17.2% in FY2019, before skidding further to 16.2% in FY2020. The ratio continued to decline to 15.4% in FY2021 and 11% in FY2022.
Still, its consistent double-digit ROEs over the past few years, which were well above industry average, have not gone unnoticed by the investing fraternity.
In a research note dated Aug 26, Hong Leong Investment Bank (HLIB) Research estimated that Matrix Concepts’ ROE could remain at a double-digit level of 11% in FY2023, followed by 11.8% in FY2024 and 11.6% in FY2025.
According to HLIB Research analyst Tan Kai Shuen, the research house continues to like Matrix Concepts because of its proven track record as a township developer, as well as its strategically located developments that are well positioned to capture the spillover demand from the Klang Valley.
Matrix Concepts’ net profits grew steadily from RM185.3 million in FY2017 to RM213.3 million in FY2018, and rose further to RM218.4 million in FY2019, RM237.4 million in FY2020, and RM262.2 million in FY2021. However, it dropped 22% year on year to RM205.2 million in FY2022.
A quick check of Matrix Concepts’ annual report 2022 shows that its shareholders’ equity had increased from RM1.6 billion in FY2020 to RM1.8 billion in FY2021 and RM1.91 billion in FY2022.
Matrix Concepts has come a long way since its inception in 1996. It launched its maiden project, a mixed residential and commercial development comprising 595 units, in Taman Bahau in Negeri Sembilan. In 2013, it was listed on the Main Market of Bursa Malaysia. Three years later, the group launched its first overseas project — M Carnegie Boutique Apartment in Melbourne, Australia.
Fast forward to today, Matrix Concepts operates property development and construction businesses primarily focused on Negeri Sembilan and Johor. The group is also involved in education, hospitality and healthcare, which cumulatively create a unique business model that is sustainable and resilient for its competitive advantage.
Matrix Concepts’ flagship property development is its township in Negeri Sembilan, which has now expanded beyond Bandar Sri Sendayan to also include Ara Sendayan, Tiara Sendayan, Bayu Sutera, Irama Sendayan, Laman Sendayan and Eka Heights. Collectively known as Matrix’s Sendayan Developments, it covers an area of about 7,000 acres. Another township, nestled in a 1,210-acre expanse in Kluang, Johor, is Bandar Seri Impian.
The group’s presence in property development is not limited to townships but now also encompasses a high-rise development, with the addition of the RM322.7 million gross development value (GDV) Chambers Residence in Kuala Lumpur.
For FY2022, Matrix recorded sales of RM1.34 billion, up 10.7% y-o-y, compared to RM1.21 billion in FY2021. The sales achieved for the financial year have exceeded the group’s internal target of RM1.2 billion. Equally encouraging, unbilled sales achieved for FY2022 stood at RM1.3 billion, higher than that of RM1 billion in FY2021. The average take-up rate across all property projects launched was 89.7%.
With a larger shareholder equity, keeping its double-digit ROE would be harder than before but this serial winner has yet to disappoint.