Paramount reports 23% revenue growth in 3Q2015

Petaling Jaya, 19 November 2015: Paramount Corporation Berhad (PCB) today announced its financial results for 3Q2015, with revenue growing by 23% to RM147.7 million (3Q2014: RM120.4 million) on the back of higher revenue contributions from both its divisions, Paramount Property and Paramount Education. Group Profit before Tax (PBT) increased by 13% to RM23.2 million (3Q2014: RM20.6 million).

The results mirrored the Group’s 9M2015 results, with nine-month Group revenue growing 21% to RM428 million (9M2014: RM352.4 million), again with higher revenue contributions from both divisions. As a result of the higher revenue, Group PBT increased by 14% to RM78.9 million (9M2014: RM69.2 million).

Announcing the Group’s 3Q2015 and 9M2015 results, PCB’s Group Chief Executive Officer Jeffrey Chew said that Malaysia’s property market was expected to remain subdued due to cautious spending sentiments and tighter lending policies. “Despite these challenging market conditions,” he said, “Paramount Property’s developments have generally performed well, with new launches enjoying take-up rates of between 50% and 70%. This can be attributed to two key factors.

“The first is our broad spectrum of property products at different price points. Three out of four of our existing products are priced from RM300,000 to below RM1 million, which appeals to the current market. And the second factor is our relentless efforts to ensure a strong value proposition; giving discerning buyers an unassailable reason to invest now, rather than waiting for a market turnaround.”

He added that on the education front, competition was getting more intense, with a number of new players entering the market in 2015, and more coming on board in 2016 and 2017 – all of which has resulted in aggressive market practices. Current players in the primary and secondary segment, he added, were also expanding their campuses, and introducing International Baccalaureate and A-Levels programmes, putting them in direct competition with the tertiary segment.

“Against this scenario, Sri KDU’s emphasis on the holistic and personal development of students continues to give it a competitive edge, resulting in our Sri KDU Schools operating at close to full capacity. On the tertiary side, KDU University College’s new campus in Glenmarie and our focus on being a real-world university meeting real-world needs has supported recruitment efforts,” he said.

In 3Q2015, revenue for Paramount Property grew 27% to RM111.4 million (3Q2014: RM88 million) attributable to higher sales and progressive billings registered on the Utropolis in Glenmarie, Shah Alam and Sekitar26 Business in Shah Alam developments. As a result of the higher revenue, PBT for the property division increased by 16% to RM18.6 million (3Q2014: RM16 million).

Revenue for Paramount Education (comprising the primary and secondary schools and the tertiary businesses) grew 15% in the same period to RM36.3 million (3Q2014: RM31.7 million) with higher revenue contributions stemming from higher new student enrolments. PBT for the education division, however, decreased by 11% to RM5.5 million (3Q2014: RM6.2 million) due to higher losses stemming from the onset of depreciation charges and interest costs on KDU University College’s new campus in Utropolis, Glenmarie this year.

For the 9M2015 period, Paramount Property’s revenue grew 25% to RM317.5 million (9M2014: RM253.6 million) attributable to higher sales and progressive billings registered on current developments – Sejati Residences, Cyberjaya; Utropolis, Glenmarie; Sekitar26 Business, Shah Alam; and Bukit Banyan, Sungai Petani. As a result of the higher revenue, PBT for the division increased by 19% to RM64.9 million (9M2014: RM54.7 million). Paramount Property recorded new sales of 374 units of properties with a sales value of RM306.37 million in 9M2015 from its ongoing development projects, with locked in sales of RM400 million as at 30 September 2015.

Paramount Education’s revenue also registered growth, increasing 13% to RM109.8 million (9M2014: RM97 million) with higher revenue contributions from all units. While the primary and secondary schools recorded a higher PBT compared to the corresponding period last year, KDU University College in Utropolis, Glenmarie incurred higher losses due to the onset of depreciation charges and interest costs on its new campus this year. Overall, PBT for the education division decreased by 7% to RM17.8 million (9M2014: RM19.2 million).

Barring any unforeseen circumstances, Mr Chew said, overall group performance is expected to be better than that of the previous year. Elaborating on this, he said, “Our current four property products have been enjoying steady sales. We have just soft-launched our newest development – Greenwoods Salak Perdana in Sepang, Selangor – which extends our affordable home offering, and takes us into the Sepang area, which has been earmarked as one of the Klang Valley’s future property hotspots given the economic investments that are being made there.”

He added that the outlook for Paramount Education sector would hold steady, saying that the recent focus on the need for students to have a strong foundation in English and sound articulation skills had increased interest in the Sri KDU Schools offering, where emphasis was placed on languages and personal development.

He added that the volatile currency market was also making parents very cautious about exploring overseas degree programmes, which in turn will benefit Paramount Education’s tertiary segment.