MATRIX Concepts Holdings Bhd’s earnings and dividend delivery over the medium term are expected to remain steady despite the negative earnings impact from the lockdown according to RHB Investment Bank Bhd (RHB Research).

Its analyst Loong Kok Wen stated although Matrix’s billings are affected by the Covid-19 pandemic, the management is keeping its RM1.2 billion sales target as the number of bookings and response for pipeline projects are still encouraging.

“Earnings should pick up substantially in late March of the financial year 2022 (FY22) once safety measures are relaxed when the vaccination rate hits 60%,” Loong wrote in a recent research note.

According to Loong, the developer’s conversion from bookings to contractual sales has been challenging due to various delays, such as virtual meetings with lawyers to sign the sale and purchase agreement, loan approvals and online stamping by the authorities.

“Thus far, the company has secured RM350 million worth of bookings during the recent movement restrictions. Sales are expected to rebound strongly post lockdown which is a similar trend we saw during last year’s re-opening,” Loong noted.

The analyst also expects minimal billings from Matrix’s property projects as currently, about 35% of its projects have resumed construction.

“These are mainly the infrastructure portion like sewerage linked to the public and earthworks, which are deemed essential. This should enable some progress billings during the lockdown. However, once the lockdown is lifted, construction works will be accelerated to catch up on the billings,” she added.

Matrix’s second quarter of the FY22 earnings could be hit badly due to the lockdown.

“As progress billings are minimal, there could be potential losses from other investment properties such as hospitality and education. Management shared that the student intake at its Matrix Global Schools has dropped to about 500 from 700 pre-pandemic.

“We understand due to online learning, some parents have decided to save on school fees and switch to other alternatives like public schools as students can no longer enjoy the facilities of a private school,” Loong said.

Therefore, RHB Research has cut the group’s FY22-FY24 earnings by 2% to 4%.

Loong added that Matrix’s construction works for the Jakarta project are still ongoing, but at a reduced capacity and the completion of the office towers will now be delayed to early 2023.

At the same time, its Greenvale development in Melbourne, which is already fully sold, will be completed by end-FY22 (by February). Hence, the group’s earnings should be fully recognised during the quarter.

RHB Research has maintained its ‘Buy’ call and target price of RM2.36 based on an unchanged 35% revised net asset value discount, 16% upside and 6% yield.