PARAMON: Strategic Land Acquisition Poised to Bolster Growth, Buy Rating Affirmed

A recent land acquisition by a prominent corporation is set to significantly enhance its development pipeline and long-term earnings visibility, drawing a positive outlook from investment bank TA Securities, which has maintained its “Buy” recommendation. The strategic purchase in Putrajaya is viewed as a key step in expanding the group’s transit-oriented development (TOD) portfolio.

Strategic Acquisition and Development Plans

The company, through its wholly-owned subsidiary, has acquired 2.62 acres of freehold land in Putrajaya for a total consideration of RM40.0 million. This prime site is located within the Putrajaya Sentral masterplan, offering excellent regional connectivity due to its proximity to an integrated transport hub connecting the MRT Putrajaya Line, KLIA Transit, and extensive bus services.

Plans are underway to transform this site into a transit-oriented mixed development (TOD) with an estimated Gross Development Value (GDV) of RM323 million. The project is slated for launch around one year after the Sale and Purchase Agreement (SPA) completion, tentatively in 2027. The project benefits from development approvals already in place, which are expected to facilitate a faster transition from land acquisition to project launch, thereby enhancing execution visibility. The acquisition price implies a land cost-to-GDV ratio of 12%, well within management’s historical comfort range.

Enhanced Pipeline and Market Positioning

This acquisition is a crucial part of the group’s strategy to replenish its GDV pipeline, bringing the total replenishment since 2025 to approximately RM2.6 billion. Management aims to replenish up to RM6.0 billion of GDV over FY25-26. The Putrajaya site also broadens the group’s exposure to TOD-centric developments, which typically benefit from stronger demand resilience and pricing support due to their superior accessibility. The company’s established presence and strong track record in the neighbouring Cyberjaya-Putrajaya corridor further support the manageable execution risks and buyer recognition for the new development.

Financial Implications and Outlook

The acquisition will be funded through a combination of internal funds and bank borrowings. While the company’s gross gearing is estimated to rise to approximately 0.89x from 0.79x (as at September 2025), and net gearing to 0.74x, temporarily exceeding management’s preferred range, analysts view this as manageable. This assessment is based on management’s willingness to selectively stretch gearing for value-accretive and strategically aligned opportunities, ensuring that the investment remains justified by its long-term potential.

TA Securities remains positive on the acquisition, highlighting the strategic TOD location, reasonable entry valuation, and the advantage of existing approvals. The investment bank asserts that the project’s medium-term earnings visibility and track-record-driven take-up prospects adequately justify the investment and remain supportive of long-term shareholder value. Consequently, TA Securities has maintained its FY25-27 earnings forecasts and reiterated its “Buy” rating, with a target price of RM1.46 per share.