By Sharina Ahmad
PARAMOUNT Corp Bhd is optimistic of selling RM1 bil worth of properties for its financial year ending Dec 31, 2020, despite the challenging market.
Group CEO and director Jeffrey Chew Sun Teong said the property sales would be driven by new property launches worth RM1.2 bil of gross development value (GDV) as well as RM913 mil unbilled sales as of Dec 31, 2019.
Last year, Paramount sold properties worth RM692 mil, falling short of its targeted RM1 bil sales in 2019.
“We missed the target due to the weak demand for our commercial properties dubbed Atwater (two commercial blocks) worth RM380 mil GDV. We found it difficult to find buyers last year.
“However, we foresee that the property sector will remain soft. Nevertheless, the lower lending rate following the reduction in the Overnight Policy Rate (OPR) by Bank Negara Malaysia (BNM) in January 2020 and the recent economic stimulus package are expected to improve consumer sentiments for the purchase of properties,” said Chew during a media briefing on March 3. BNM also announced another 25 basis-point cut to 2.5% on March 3.
He said the company will be launching six projects (including new phases of existing projects), which among them are Bukit Banyan in Sungai Petani with a GDV of RM121 mil, Batu Kawan in Penang with a GDV of RM269 mil and Berkeley Uptown, Klang with a GDV of RM247 mil.
Last year, the company launched projects worth RM858 mil GDV with an average take-up rate of 73%.
Chew added that the company has also identified several parcels of development land for sale such as in Sekitar26, Shah Alam and Machang Bubuk in Bukit Mertajam with a total land size of 32.78ha.
In January, Paramount ventured overseas when it acquired a 49% equity interest in Navarang Charoennakorn Co Ltd, a property developer from Thailand.
Its maiden project, Na Reva, is a premium condominium project situated close to the Bangkok central business district and overlooking the Chao Phraya River. This was launched in February.
The company is expecting to have 10% of contribution derived by its overseas project.
In line with global trends and the increasing demand for co-working spaces, the company will also be focusing on expanding its footprint in the market with Co-labs Coworking adding a new location this year.
“Moving forward, we will continue to focus on driving better operational excellence and profitability while leveraging on synergies from our strategic partners,” said Chew.
To date, Paramount has five co-working spaces located across the Klang Valley and has contributed RM3 mil to the company’s bottom line.
On Paramount’s prospects, Chew said the company expects the property segment to remain challenging, but the lowering of the base lending rate (BLR) following BNM’s OPR cuts is expected to improve consumer sentiment and raise property purchases.
For 4Q19, the company registered a net profit of RM39.1 mil, a 45% increase compared with RM26.9 mil a year ago on the back of higher revenue of RM209.62 mil versus RM186.25 mil previously.
For its full fiscal year, the company posted a 13% increase in its net profit to RM104 mil compared with RM91.8 mil in the previous year while revenue rose to RM705.97 mil from RM632.49 mil.
For FY19, revenue for the property division rose by 11% to RM700.3 mil (FY18: RM631.2 mil) contributed mainly by its developments at Utropolis Glenmarie in Shah Alam, Utropolis Batu Kawan in Penang and Greenwoods in Salak Tinggi, Sepang.
The education division recorded a revenue of RM249.9 mil, which was 9% lower than the RM275.2 mil achieved in FY18. This is mainly due to the completion of the sale of its controlling stake in College Damansara Utama (KDU) university colleges (now known as UOW Malaysia KDU), in September 2019.
Paramount maintains a 35% stake in the tertiary education business and a 20% stake in the pre-tertiary education business.
The company also announced a 4.5 sen per share single-tier final dividend for FY19.
Paramount share price traded 3 sen lower at RM1.37 at 2.40 pm giving the company a market capitalisation of RM837.22 mil. – March 3, 2020
