Petaling Jaya, 28 February 2019:Paramount Corporation Berhad (PCB) released its full year financial results by announcing a Group revenue of RM907.7 million for FY2018, posting a 19% increase compared to the previous year (FY2017: RM763 million), while the Group’s Profit-Before-Tax (PBT) stands at RM151.3 million (FY2017: RM182.6 million).
When excluding the gain on the disposal of 9.4 acres of industrial land in Kota Damansara that was completed in 2Q2018, the Group’s revenue and PBT for FY2018 would be RM815.6 million (FY2017: RM763 million) and RM108.1 million (FY2017: RM104.8 million, excluding the gain on disposal of Sri KDU campus), respectively.
The Group also released Paramount’s 4Q2018 results which recorded a revenue of RM256.8 million, an increase of 8% compared with the corresponding quarter in 2017 of RM238.8 million, while PBT was up 17% at RM43.7 million (4Q2017: RM37.1 million).
Paramount’s Group Chief Executive Officer Jeffrey Chew said, “Despite the challenging market conditions, the Group turned in a solid financial performance. We saw strong sales momentum across Paramount Property developments which resulted in us achieving our sales target of RM1 billion, surpassing last year’s results by 23%. At the same time, Paramount Education continues to grow at a steady pace with new strategies in place.”
Revenue from its property division increased by 22% to RM631.6 million (FY2017: RM516.6 million), with PBT of RM128.9 million (FY2017: RM85.1 million). The higher revenue was mainly due to strong sales achieved from new launches in 2018, namely services apartments at the ATWATER Residences in Section 13, Petaling Jaya and Utropolis Batu Kawan (Phase 2) in Penang.
The education division also showed a 12% increase in revenue to RM276.1 million (FY2017: RM246.4 million), while its PBT was RM38.3 million (FY2017: RM38.9 million, excluding the gain on disposal of Sri KDU in 2017). The marginally lower PBT can be mainly attributed to the full year rental expense incurred by Sri KDU but mitigated by the profit contribution arising from the full consolidation of the R.E.A.L Education Group.
“The Group foresees the property sector to remain soft, however there is hope for recovery given the initiatives introduced by the government in Budget 2019. Moving forward, Paramount Property will continue to pursue our tried and tested strategies, albeit adopting a more cautious approach in responding to market conditions. At the same time, we will explore opportunities to unlock the value of our investments in line with our strategic plan of becoming a pure-play property company,” revealed Chew.
Moving forward, Paramount Property will be launching seven projects including new phases of existing projects in 2019, with an estimated gross development value of RM1.3 billion. This includes expanding its footprint to Klang with an integrated property-education development project of 33.3 acres located at Jalan Goh Hock Huat, which will be anchored by a new 1,500-student capacity Sri KDU International School campus. The development will be supported by residential and various lifestyle components.
ATWATER Section 13, Petaling Jaya commercial development will be launched to complement the residential units that were 84% sold last year. Up north, Paramount Property will be launching the third phase of its Utropolis serviced apartments in Batu Kawan on the back of strong sales achieved thus far. The opening of the KDU Penang University College, Batu Kawan campus targeted for September 2019 will also be a game-changer for Penang – marking the arrival of the first university metropolis on the island.
The Group will also be replenishing its land bank in 2019 by another 41.4 acres close to the existing project, Sejati Residences, Cyberjaya, with a projected gross development value of RM570 million pursuant to the expected completion of the land sale and purchase in 1Q 2019. The Group is working towards launching the first phase of the development in 4Q 2019 in line with the strategy to improve the speed to market for better cost management.
In line with the Group’s asset light strategy, the Group will jointly develop a Transit-Oriented Development with projected GDV of RM1 billion in Section 14, Petaling Jaya with the land owner, Kumpulan Hartanah Selangor.
On the co-working space front, the Group is planning to open another three co-working sites in 2019, expanding its footprint in the Klang Valley. This is spurred by the encouraging uptake of its existing spaces in Starling Mall, Petaling Jaya, and Utropolis Marketplace Glenmarie totalling 23,500 sq ft., in line with the growing acceptance of co-working space among young entrepreneurs, start-ups and multinational companies.
“Given the near full capacity of the Sri KDU schools, Paramount Education’s growth strategy will focus on R.E.A.L. Schools. Strategies are in place to beef up the academic quality, restructure the curriculum to meet the needs of target markets as well as undertake refurbishment and upgrade of school premises and facilities to improve the appeal of the schools to parents and students,” said Chew.
In 2019, R.E.A.L Kids added a new pre-school centre in Rawang, Selangor making it the 34th centre operated by R.E.A.L Kids across Klang Valley and five states in Peninsular Malaysia. In addition, the Group is also sourcing for suitable locations to open a few more centres.
On the tertiary education front, the agreement for the strategic partnership between Paramount and UOWM Sdn Bhd (owned by the University of Wollongong) is expected to be completed in 2Q 2019.
“The entry of University of Wollongong, a well-established and high-ranking public research and teaching university from Australia, will enhance the value of KDU tertiary institutions, and help differentiate the brand from others in the market. In addition, the asset securitisation proposal involving the sale of the university campuses and the subsequent leaseback by these tertiary institutions would also be completed in 2Q 2019, generating recurring rental income to the Group.
“Even as we celebrate our 50th anniversary this year, we will continue to build on our legacy of resilience amidst market challenges and uncertainties. We will continue to explore opportunities to enhance returns on capital employed and create long-term shareholder value,” concluded Chew.