Paramount Corporation Berhad (Paramount) announced its financial results for the nine months which ended 30 September 2018 today, posting a group revenue of RM651.1 million, an increase of 24%, compared to the corresponding period in the previous year (9M2017: RM524.3 million), and a Profit Before Tax (PBT) of RM107.6 million (9M2017: RM145.6 million).
Announcing the results, Group Chief Executive Officer, Jeffrey Chew said, “Our revenue has remained steady over the last nine months largely supported by property sales which hit RM787 million from a gross development value of projects launched at RM1.1 billion.”
Revenue from the property division had increased by 28% to RM445.7 million (9M2017: RM347.4 million) while PBT was RM92.9 million (9M2017: RM50.1 million). During the quarter ended 30 September 2018, the Group launched Phase 2 of Suasana at Utropolis Batu Kawan and Phase 2 of Keranji at Greenwoods Salak Perdana on the back of encouraging sales achieved for the earlier phases.
“The Group has also achieved a new milestone with unbilled sales of RM920 million as at 30 September 2018, on the back of seven on-going projects. We target to achieve property sales of approximately RM1 billion backed by new launches of properties valued at an estimated RM1.2 billion. This is expected to contribute positively to the Group’s financial performance in the near future,” he added.
The upcoming launches include commercial development at Atwater in Section 13, Petaling Jaya which is targeted for 4Q2018 as well as a new mixed development project located in the vicinity of Klang’s main business and commercial area, where the Group is constructing a new Sri KDU international school targeting for completion in 2020.
“The Government is making home ownership more accessible, and improved connectivity is opening up new areas of growth in Greater Klang Valley. Buyers will, however, be more discerning. We need to up our game on innovation, put in place more robust sales and marketing efforts, and ensure we offer outstanding customer service,” said Chew.
The Group’s third quarter (3Q2018) results recorded a revenue of RM210.5 million, an increase of 12%, compared to last year (3Q2017: RM187.8 million) while the profit before tax (PBT) was RM28.8 million (3Q2017: RM97.6 million). The lower PBT in 3Q2018 is due to the gain on disposal of the Sri KDU campus to Alpha REIT which was completed in 3Q2017.
Revenue for the Group’s property division increased by 24% to RM144.4 million (3Q2017: RM116.8 million) while the PBT had increased by 88% to RM28.1 million (3Q2017: RM14.9 million). The higher PBT contribution in 3Q2018 was mainly from Utropolis Glenmarie’s serviced apartments (Urbano) in Shah Alam and the Utropolis Batu Kawan’s residential and commercial developments.
The education division recorded a revenue of RM66 million, lower by 7% compared with the corresponding quarter last year of RM71 million. The PBT for the division in 3Q2018 was RM6.5 million which is lower than PBT in 3Q17 of RM12.6 million (excluding the gain on disposal of the Sri KDU campus). This was largely due to the rental expense incurred by Sri KDU under the sale and leaseback agreement with Alpha REIT coupled with the lower contribution from the R.E.A.L Education Group.
“The K-12 segment will be the main driver within the education segment with R.E.A.L targeting the mass affluent segment while Sri KDU offers premium private and international schools. We believe there is untapped growth potential in the pre-school and enrichment centre segments as student enrolments have been encouraging so far,” shared Chew. In line with this, the Group has opened three (3) new preschool centres in Klang Valley and a new language programme has been launched under the enrichment centre segment, “Mandarin for Life” during the year.
For the tertiary business, the Group has restructured the international marketing strategy and intensify its social media and digital marketing to promote its flagship schools. The total tertiary student enrolments have improved during the nine months ended 30 September 2018 as compared to the corresponding period last year.
In addition, the Group has entered into a strategic partnership with the University of Wollongong, one of Australia’s leading regional public universities, in relation to the Group’s tertiary education business. University of Wollongong will effectively take up 65% of stake in the business and operations of KDU University College and KDU Penang University College, and 70% stake in KDU College, for a sum of RM38.5 million. The Group does not expect any financial impact arising from this exercise for the financial year ending 31 December 2018 as the target completion is in 1Q2019. In continuing with the Group’s asset light strategy, Paramount will continue to build strategic partnerships to undertake property development projects on joint venture basis if such opportunities arise. In addition, the Group seeks to unlock value through the monetisation of land bank and strategic divestments.
“Our operational performance is intact, and we have a healthy balance sheet. We are also on track to achieve our plans to expand and maximise opportunities across our property and education businesses. Barring any unforeseen circumstances, the Group is confident to deliver a better operating performance for the current financial year ending 31 December 2018,” Chew concluded.