KUALA LUMPUR: Analysts are reacting positively to Matrix Concepts Holding Bhd’s new joint venture (JV) to manufacture Industrialised Building Systems (IBS) prefabricated building materials.
In its note, Hong Leong Investment Bank Bhd (HLIB) Research said Matrix Concepts stands to benefit from the transfer of IBS technology from its reputable Japanese counterpart – not to mention the potential cost savings, better building quality and improved efficiency.
HLIB said while the cost of IBS building materials is higher than traditional materials by five to 10 per cent for residential projects, net margin should not be affected.
It said costs could be offset by potential savings from shorter construction periods (by up to 30 per cent), material wastage reduction; and tax incentives from the investment would also defray the incremental cost.
“While the manufacturing plant is currently targeted to fulfil their in-house development, the JV does not rule out the possibility of supplying to other housing developers in the longer-term, when IBS is widely-adopted by the industry,” it said.
HLIB said the overall outlook for Matrix Concepts remains favourable, as it is on track to achieve its RM1 billion sales target after hitting its nine-month financial year 2017 sales of RM837 million.
HLIB said Matrix Concepts’ current unbilled sales stand at a historical high of RM904 million, representing 1.6 times of its property development revenue.
“The immediate pipeline launches for CY17 (calendar year 2017) amount to (approximately) RM1 billion,” it said.
HLIB has maintained its “buy” call on Matrix Concepts, with an unchanged target price at RM2.89.
“We continue to like Matrix, as it is well-positioned to ride on the affordable housing theme, with a majority of its products being below RM600,000, within its successful township.
“The HSR (High Speed Rail) is a long-term catalyst and dividend yield is one of the highest in the sector, at circa six per cent,” it added.