Matrix Concepts Holdings Bhd has had a good FY2022 ended March 31, 2022, with record high sales of RM1.34 billion and year-on-year growth of 11.3%.

This was mainly driven by the robust demand for affordable premium residential homes in its flagship development project, Bandar Sri Sendayan in Negeri Sembilan.

The renowned township builder from Negeri Sembilan has geared up to launch more products, mainly landed houses priced below RM800,000 in its existing township developments in Negeri Sembilan and Johor.

In August this year, Matrix Concepts continued to expand its foothold in Negeri Sembilan by acquiring a 1,382-acre parcel of freehold land adjacent to Bandar Sri Sendayan for RM460 million.

It is also the biggest land deal in Malaysia in terms of size in the past five years.

Aside from business expansion exercises, Matrix Concepts launched the first ever property metaverse platform in Malaysia in September, in its efforts to provide a better experience to its potential buyers as well as keeping the internal team updated with the latest technology for future sustainable growth.

Matrix Concepts group managing director Ho Kong Soon tells City & Country the secrets of weathering the storm and the company’s business direction.

City & Country: You have set a rather conservative sales target of RM1.2 billion for FY2023 after achieving a record high of RM1.34 billion in FY2022. Why is this so?

Ho Kong Soon: We were focused on launching affordable homes in FY2022, which was the tail end of the pandemic and when the market confidence level was not high due to the many uncertainties at the time. However, we could see that the housing demand was still very strong. The key to winning the market is the right product at the right price. We tried to capture the market’s demand with our landed products at a fairly affordable price, and it worked well. Our sales picked up quickly and eventually exceeded our FY2022 sales target of RM1.2 billion. Entering FY2023, we set a rather conservative sales target of RM1.2 billion for a few reasons, one being that we needed to manage market expectations on the performance of the group. We don’t want to be overly bullish and set an ambitious target only to disappoint our shareholders later. What’s more important to me is the performance consistency, no matter when it occurs, as it demonstrates the company’s financial and strategic resilience. The RM1.2 billion target is the number based on our launches in the pipeline and resources. As we are in 3QFY2023 now, I’m happy to share that we have achieved more than we had expected for 3Q in terms of sales. Based on our current data, I believe that the year’s RM1.2 billion sales target is achievable, and hopefully we will be able to achieve more than what we did for the last financial year.

Please review the group’s performance in the first two quarters of FY2023.

So far, we have launched 18 new phases with easily 2,000 new houses in our existing township developments in Negeri Sembilan and Johor. The total gross development value (GDV) is about RM1.2 billion. The overall take-up has been encouraging, considering that we have revised some products’ selling prices due to the rising cost of construction materials and shortage of labour. However, we always ensure that our products are within the reach of the market. We have also improvised the layout designs for selected products to cater to the different needs of buyers; we find ways to control our overall construction cost without compromising the product’s quality; and we continue to upgrade our software and hardware to better prepare ourselves for any internal or external challenges that may come in the future. We are always prepared for anything that may come, to stay ahead of and afloat in the market. I think it partly explains our rather stable and consistent performance in the past few years. We did not retrench any staff or cut salaries instead we gave out year-end bonuses as usual during the pandemic. A big part of it goes to our “one step ahead” strategy. A few years before the pandemic, we had already embarked on our digital transformation plan in stages. We continuously improve our digital and technology infrastructure, networks and systems, which helped us have a rather smooth transition from physical to virtual operations when the first national lockdown started on March 18, 2020. However, I will not say that the pandemic has had no impact on Matrix Concepts at all, but I am glad that we were able to react quickly to the changes and get ourselves back to normal operation soon enough, which helped cut down our losses.​

Of course, the overall construction industry is still deeply impacted by the pandemic, and I think the root problem is labour shortage.

What is your biggest challenge in driving the group to achieve better results this fiscal year?​

According to government statistics, the overall construction cost has gone up by about 20%. For Matrix Concepts, our cost has gone up about 6% to 7%, slightly lower than the market average, thanks to the fact that we have our own construction arm and our supply chain is quite well established.​

The biggest problem for us, and probably for the industry as a whole, is the labour shortage, but there’s not much we [the developers] can do about it. For Matrix Concepts, we applied for a few hundred foreign workers directly from the authority. Thankfully, the first batch is arriving next month (November). We expect the labour shortage issue to normalise by January or February next year. However, as some of them are new and unskilled, we will still need some time to train them.​

Many in the industry have said that we [developers] should be using the Industrialised Building System (IBS) more to cut down on our dependence on foreign labour and level up our building method. I do agree that IBS is the way forward but Malaysia is not ready to go fully to IBS yet. It may solve the current labour shortage issue, but it will also further increase the already-high construction cost, which will put the developers in the difficult position of finding the balance between profit margin and product affordability. We have stopped using IBS for our projects but we still have onsite prefab and precast for some projects. There are a few key reasons and one of it is the 8% to 10% additional cost if we continue to use IBS. The traditional way of building is the most cost-efficient and feasible in the current situation. In fact, by using the traditional way of building now, it helps to keep our house prices at an affordable range, so that more people will be able to own a house.​

It is true that prices are very sensitive now in the property market because we are not a high-income country. In my humble opinion, I think IBS can only have a greater impact on Malaysia’s property market when we are already a high-income country with a higher disposable income in general.​

Please share with us the plan for the newly acquired 1,382 acres in Negeri Sembilan.

It will be a mixed development, comprising mainly landed houses and small pockets of industrial products, as the land is not far from the port and KLIA. We see the potential of industrial property. We will also have a lifestyle commercial component there. It will be a self-sustaining township. We are in the midst of converting the land for development before we can kick off the infrastructure works and build a sales gallery. Meanwhile, we are working on branding and promotion. If everything goes smoothly, we will have the first launch in FY2025. For the next two years, we will be focusing on rolling out new phases in our ongoing projects. We are quite comfortable with our land bank, which is about 1,300 acres, excluding the tract that we just acquired. Altogether, the current land bank will easily keep us busy for the next 10 years. Having said that, we are open to any good land deal. If the price is right and it’s in a good location, we will go for it, especially in our existing markets in Negeri Sembilan, the Klang Valley and Johor. We intend to enhance our presence in the Klang Valley before expanding our footprint to other states or a new overseas market. Please share with us the development of your overseas business. Our first overseas project is in Melbourne, Australia. We have completed one project and now the second project is coming to an end. We are looking to hand over the project to buyers in November or December. We just previewed our third project in Australia, which is also in Melbourne. We are now in the midst of finalising the project’s contractor. For now, we will not pursue anything further until the third project is up and running, or the project could meet our ROI (return on investment) target. If not, we may not seek to continue our business expansion in Australia. I will not say Australia did not contribute to our revenue. In fact, it has already achieved the purpose of investment. When Matrix Concepts was publicly listed on Bursa Malaysia in 2013, the common market perception was that we were a not-so-big developer based in Negeri Sembilan. One way to make our name and showcase our ability to the market was to kick-start an overseas project. It is fair to say that the overseas investment was more for corporate image and brand-building purposes.
Today, the Matrix Concepts brand is well established and the purpose of investing in Australia has been well achieved. Therefore, if the ROI of the third project does not meet our target, we may not continue.​

Nevertheless, I will not say that Australia did not contribute to the group’s revenue. It is just not very significant. And as it is a very established and mature market, there is a limitation to the ROI unless the project is extraordinary or on a larger scale. We have recently entered the Indonesia market with a local partner, which I believe will have a bigger impact in terms of revenue and prospects for the group. It is a 3.6ha commercial development located in Pantai Indah Kapuk 2, in the northeast of Jakarta, within an Islamic financial hub that was endorsed by the Indonesian government. The first phase, the Menara Syariah Twin Towers, is due for completion in 1Q2023. Meanwhile, the remaining 2.2ha will keep us busy for the next four to five years. We do have a longer-term plan for the Indonesian market. However, if things don’t go our way or it stresses our cash flow, we will not be sentimental about any investments because we need to answer to our shareholders.

Please tell us more about Matrix Concepts’ metaverse platform.

Matrix Concepts has constantly upgraded itself and readied itself for the future. The launch of the metaverse [platform] is one of the things we do to stay ahead.​

It is a virtual platform where you can create your avatar and explore the company’s projects on the platform. You may also interact with other avatars in real time — our salesperson and other visitors like yourself — who want to explore our projects.​

Some may say the metaverse is not really relevant now in Malaysia as we do not have 5G yet. It is something for the future. However, I believe the ‘future’ is much closer than we imagine. It may come at any time. We don’t want to take action when the future is already here. It is also our strategy to avoid major hiccups after all the crises in the past.