By Izzul Ikram
KUALA LUMPUR (March 1): On the back of achieving record sales of RM1.1 billion in the financial year ended Dec 31, 2022 (FY2022), Paramount Corp Bhd has set out to launch RM1.5 billion worth of projects in FY2023.
Speaking at the property developer’s financial results briefing on Wednesday (March 1), Paramount chief executive officer Jeffrey Chew Sun Teong shared his optimism on the group’s outlook for the current year, citing signs of the property market’s recovery last year.
Chew highlighted that the total number of property transactions grew 12.56% to 105,204 in 3QFY2022, from 93,466 in 2QFY2022, saying it illustrates a recovery in sentiment.
Meanwhile, he also underlined a year-on-year decrease in the sector’s unsold units under construction as well as overhand units in 3QFY2022.
Amid the property sector’s recovery, Paramount has targeted to launch seven projects worth RM1.5 billion in FY2023 — namely Savana Utropolis Batu Kawan, Bukit Banyan, Sejati Lakeside 2, Paramount Palmera, Jalan Ampang Hilir, Bukit Banyan 2 and Greenwoods Amaria Salak Perdana.
Notably, Chew said the group will move into the industrial property sector on the back of received demand with Paramount Palmera in Bukit Minyak, Penang, which will account for RM157 million or 11% of the RM1.5 billion launch target.
22% slump in 4Q net profit, full-year net profit doubles
For 4QFY2022, Paramount’s net profit fell 22.4% to RM18.89 million from RM24.35 million a year prior, as quarterly revenue dropped 22.72% to RM245.24 million from RM317.34 million.
However, for FY2022 as a whole, Paramount’s net profit surged over two folds to RM60.2 million from RM28.53 million in FY2021, on the back of revenue improvements across the group’s three segments — property, investment and others, and coworking.
Full-year revenue improved 24.38% to RM847.46 million from RM681.35 million, mainly due the property division’s stronger showing.
Paramount proposed a final dividend of 3.5 sen per share and a special dividend of 12 sen per share for FY2022. The special dividend has an ex-date of March 17 and is payable on March 29.
Paramount’s property division’s revenue improved by 23% year-on-year to RM823.4 million from RM672.1 million, due to FY2021’s low base.
Notably, the group ended FY2022 with RM1.1 billion in sales, eclipsing its full-year sales target of RM1 billion. Unbilled sales stood at RM1.4 billion.
Meanwhile, Paramount’s coworking division posted a 62% rise in revenue to RM9.4 million from RM5.8 million in FTY2021, carried by higher contributions across all Co-labs coworking outlets and Scalable Malaysia. The coworking division currently operates five outlets around the Klang Valley with an average occupancy rate of 70%.
The coworking division’s loss before tax also contracted 93% to RM600,000 in FY2022, versus RM4.1 million in FY2021.
Coworking division to turn profitable in 2023
While property development remains Paramount’s core business accounting for 97% of the group’s revenue in FY2022, Chew noted that its coworking division is set to turn profitable in 2023.
“We (the coworking division) will turn around into profitability this year for sure, and we are also looking at expanding the space,” he said.
“This could be a strategic option for a new business for us, if we seriously believe this is a good business, we have a good brand, then we will probably accelerate really quickly and it has to be not just organic but probably through acquisition as well,” he added.
Paramount’s deputy CEO Benjamin Teo added that the group is already in talks with Tropicana to expand its capacity at Tropicana Garden, as well as looking at other expansion opportunities around the fringes of Kuala Lumpur.
However, Teo noted that the group does not plan to turn its coworking business into one of its new core businesses in the near term given its small size compared with the group’s property division as well as its inadequate growth rate.
“I think at this juncture the business is very small compared with our core [property business], we don’t believe [the coworking division] is growing at a rate for it to be a core business within the next five years unless we go on a big acquisition strategy.
“But at this juncture, this is something we are exploring, but it is still a few years off. So if anything, we are trying to establish a strong base within our capabilities, expanding within our means at this moment” he said.
Touching on Budget 2023’s hint of a potential implementation of a capital gains tax on non-listed shares down the line, Teo said that details on the matter are still scarce, but added that it will definitely be a point of consideration if the group intends to grow the coworking division through acquisitions.
Shares in Paramount ended unchanged at 89.5 sen, giving the group a market capitalisation of RM556.62 million.