Petaling Jaya, 17 August 2016 : Paramount Corporation Berhad (PCB) today announced a stronger 2Q2016 performance, delivering a 26% increase in group revenue to RM145.3 million compared with the corresponding quarter in the previous year (2Q2015: RM115.3 million). Group Profit Before Tax (PBT) jumped 49% for the same period, to RM32.9 million (2Q2015: RM22.1 million).
Announcing the Group’s 2Q2016 results, PCB’s Group Chief Executive Officer, Mr Jeffrey Chew said, “After a lacklustre 1Q2016 due to the festive breaks and general market sentiment, I am pleased to report that Paramount Group’s 2Q performance has improved significantly. This is mainly attributable to Paramount Property’s improved sales performance and higher progressive billings, as well as higher student enrolment at Paramount Education’s KDU University College (KDU UC).”
He added that the results were also boosted by the education division realising gains on the sale of student accommodation apartments in Petaling Jaya, which were no longer required following KDU UC’s move to its new flagship campus at Paramount Utropolis in Glenmarie.
Detailing the results, he said that Paramount Property had recorded higher sales on its higher-priced properties – Sekitar26 Business’ industrial offices and Sejati Residences’ bungalows and semi-detached homes – as well as its affordably priced double-storey link homes in Greenwoods Salak Perdana. This was complemented by higher progressive billings across all its developments as construction works returned to full swing after the shorter 1Q2016 due to the festive holidays. He also said that KDU UC’s higher new student enrolment during the second quarter of the year was a positive result in what is a very competitive tertiary environment.
Paramount Property’s revenue increased by 39% to RM107.6 million in 2Q2016 (2Q2015: RM77.7 million), while PBT increased by 43% to RM24.6 million (2Q2015: RM17.2 million).
For the same period Paramount Education’s revenue was maintained at about the previous year’s corresponding quarter level of RM37.4 million. PBT of RM13 million was, however, significantly higher by 112% (2Q2015: RM6.1 million).
Mr Chew said that the strong performance in 2Q2016 had helped lift the Group’s performance to levels comparable to 2Q2015, despite dampened economic conditions. For the period 1H2016, Group revenue decreased by 8% to RM258.6 million (1H2015: RM280.3 million), while PBT, at RM53 million, was only marginally lower by 5% compared with the same period the previous year (1H2015: RM55.7 million).
Revenue from Paramount Property for 1H2016 decreased by 12% to RM182.1 million (1H2015: RM206.1 million), while PBT for the division increased by 21% to RM36.7 million (1H2015: RM46.2 million).
Paramount Education’s revenue, on the other hand, grew by 3% to RM76 million (1H2015: RM73.5 million). This higher revenue and the gains realised on the sale of the student accommodation apartments increased the division’s PBT by 89% to RM23.2 million (1H2015: RM12.3 million).
To reward shareholders, the Group has declared an interim dividend of 2.5 sen in respect of the financial year ending 31 December 2016.
Commenting on the Group’s prospects for the rest of the year, Chew said that the Group remains cautiously optimistic about its performance, given that the Business Conditions Survey had improved, from 92.9 points in 1Q2016 to 106.4 points in 2Q2016. The Consumer Sentiments Index also increased to 78.5 points from 72.9 points but remained below 100 points, last seen in 4Q2014.
Mr Chew said, “Prospects for Paramount Property are improving, especially in the area of commercial properties, where astute investors are looking to make long-term strategic investments. Planned launches for the Group’s commercial developments – Sekitar26 Enterprise shop lots, Greenwoods Salak Perdana shop houses and Paramount Utropolis Batu Kawan shop lots – are expected to meet with favourable demand.
“These will be complemented by the launch of several residential developments to maintain our business strategy of having an array of products at different price points and locations. These include Sejati Residences semi-detached units in Cyberjaya, as well as more attractively priced bungalows, semi-detached and double-storey link homes and shop lots in Bukit Banyan, Sg Petani.”
He added that Paramount Property was also finalising plans for the rollout of its new development in Batu Kawan, Penang, which remains a property hotspot. The development mirrors Paramount Property’s very successful Paramount Utropolis project in Glenmarie, anchored on the concept of a university metropolis. Paramount Utropolis Batu Kawan is primed to meet demand for what is planned to be Penang’s third satellite city, as properties on the island become more expensive, beyond the reach of the mass market.
He also said that Paramount Education would continue to face challenges, as the business continues to be intensely competitive, especially in the tertiary segment. The muted economic environment has driven many private higher education providers to offer significant reductions in tuition fees by way of discounts and promotions.
“In the primary and secondary segment, competition is also stepping up due to new schools opening, with more in the pipeline scheduled for 2016 to 2018. Sri KDU’s excellent reputation, its strong value proposition, and its consistent enrolment, which is on track with budget, is expected to drive the performance of Paramount Education in 2016,” he concluded.