Kenanga Research neutral on Matrix’s RM57 mln land acquisition

KUCHING: The research arm of Kenanga Investment Bank Bhd ( Kenanga Research) has declared that they are neutral on Matrix Concepts Holdings Bhd’s ( Matrix Concepts) most recent land acquisition.

According to a report by the research arm, Matrix Concepts had announced last Friday that they would be acquiring a 132 acre plot of agriculture land in Port Dickson for a total cash considerat ion of RM57 million.

This translates to a price of RM9.9 per square feet ( psf) and represents a premium of 24 per cent compared to their last transacted price of RM8.0 psf in 2015.

“The premium may have been due to the difficulties get t ing every owner’s agreement on pricing as it involved 21 transactions with different land owners,” the research arm conjectured.

Despite the premium however, the research arm concluded that land acquisition cost to be still fair as it implies a land cost to gross development value (GDV) ratio of 10 per cent when factoring in the RM700 million GDV given by the group’s management.

Due to this fair ratio, Kenanga Research has determined that they are neutralonthelongawaitedland replenishment development and notes that the acquisition is expected to increase the group’s net gearing from 0.15 fold as of the fourth quarter of 2017 (4Q17) to 0.21 fold.