COMPANY UPDATE
Friday, August 01, 2025
FBMKLCI: 1,513.25
Sector: Property
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
Paramount Corporation Bhd
Secures Prime Land in Batu Kawan
Acquire Prime Land in Batu Kawan, Penang
Paramount Corporation Berhad (Paramount) has entered into a sale and purchase agreement with Penang Development Corporation to acquire 18.97 acres of freehold land in Bandar Cassia, Batu Kawan, Penang, for RM57.8mn (RM70 psf). The site is located within a 600-metre radius of its 44.2-acre Utropolis Batu Kawan (UBK) development and offers strong connectivity via Jalan Tun Abdullah Ahmad Badawi.
RM744mn Mixed Development to Build on UBK Momentum
Paramount plans to develop the site into a mixed-use development comprising serviced apartments, semi-detached townhouses, and shop offices. The estimated GDV stands at RM744mn, with construction scheduled to begin in 2027 and completion targeted by 2033. This project builds on the success of UBK, where completed residential phases are fully sold and the ongoing Savana phase achieved a take-up rate of 80% as of Mar-25.
Acquisition Price Deemed Reasonable
While the land acquisition price of RM70psf appears higher relative to SkyWorld’s RM43psf transaction in Batu Kawan, we note that SkyWorld’s purchase was part of an affordable housing joint development and is not directly comparable. Based on the estimated GDV, Paramount’s land cost accounts for just 8% of total development value, well below the typical 20% threshold, indicating a fair entry price.
Strengthens GDV Pipeline and Strategic Positioning
This acquisition raises Paramount’s remaining GDV to RM6.2bn, in line with management’s target of acquiring RM400mn worth of land with potential GDV of RM2.0bn to support launches over the next five years. The group continues to focus on replenishing land near existing developments to shorten turnaround time and leverage brand familiarity.
Gearing to Edge Above Management’s Comfort Levels
Assuming 70% debt funding for both the land acquisition and the proposed 28% stake in Envictus, Paramount’s gross gearing is expected to increase to 0.79x (from 0.73x as of Mar-25), exceeding management’s comfort threshold of 0.75x. Net gearing would also rise to 0.63x from 0.56x. Although this marks a step above management’s preferred gearing range, the levels are still within a tolerable range. Importantly, management has signalled its willingness to temporarily exceed its gearing threshold for opportunistic and value-accretive transactions.
Our view
We are mildly positive on the land acquisition, given its strategic location within a mature growth corridor, strong alignment with Paramount’s existing development in Batu Kawan, and favourable land cost-to-GDV ratio. Although gearing is expected to rise, we believe the long-term growth prospects and earnings visibility from this project justify the investment.
Forecast
We maintain our FY25-27 earnings forecasts at this juncture.
Recommendation and Valuation
No change to our target price of RM1.48/share, based on CY26 P/Bk multiple of 0.6x. Maintain Buy.
Earnings Summary
Profit & Loss (RMm)
| YE Dec 31 | 2023 | 2024 | 2025f | 2026f | 2027f |
|---|---|---|---|---|---|
| Revenue | 1,012.3 | 1,040.2 | 1,088.9 | 1,230.2 | 1,403.8 |
| EBITDA | 187.4 | 223.1 | 207.6 | 231.8 | 260.7 |
| Dep. & amortisation | (27.3) | (23.3) | (26.9) | (21.9) | (18.0) |
| Net finance cost | (27.3) | (37.1) | (40.6) | (44.0) | (51.4) |
| El | 8.4 | 16.3 | 0.0 | 0.0 | 0.0 |
| PBT | 130.2 | 156.9 | 137.5 | 163.3 | 188.7 |
| Normalised PBT | 121.9 | 140.6 | 137.5 | 163.3 | 188.7 |
| Taxation | (35.1) | (42.0) | (48.1) | (57.2) | (66.1) |
| Profit after tax | 95.1 | 114.9 | 89.4 | 106.2 | 122.7 |
| Profit from discontinued operations | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| MI & Holders of PDS | 12.2 | 12.5 | 1.9 | 0.3 | 0.3 |
| Core net profit | 74.5 | 86.1 | 87.5 | 105.9 | 122.4 |
| Reported EPS (sen) | 13.4 | 16.5 | 14.1 | 17.0 | 19.7 |
| Core EPS (sen) | 12.0 | 13.8 | 14.1 | 17.0 | 19.7 |
| Normalised PER (x) | 9.0 | 7.8 | 7.7 | 6.4 | 5.5 |
| GDPS (sen) | 7.0 | 7.5 | 7.5 | 8.0 | 8.0 |
| Div Yield (%) | 6.5 | 6.9 | 6.9 | 7.4 | 7.4 |
Balance Sheet (RMm)
| YE Dec 31 | 2023 | 2024 | 2025f | 2026f | 2027f |
|---|---|---|---|---|---|
| Fixed assets | 1,472.9 | 1,064.0 | 1,442.1 | 1,475.2 | 1,512.2 |
| Others | 116.4 | 234.4 | 231.9 | 229.4 | 226.8 |
| Total fixed assets | 1,589.4 | 1,298.4 | 1,674.0 | 1,704.6 | 1,739.0 |
| Cash | 202.7 | 216.1 | 389.9 | 587.2 | 810.3 |
| Others | 1,185.1 | 1,548.8 | 1,361.1 | 1,349.2 | 1,416.8 |
| Total current assets | 1,387.9 | 1,764.9 | 1,751.1 | 1,936.4 | 2,227.1 |
| Asset held for sale | 0.0 | 10.3 | 10.3 | 10.3 | 10.3 |
| Total assets | 2,977.2 | 3,073.6 | 3,435.4 | 3,651.3 | 3,976.5 |
| ST debt | 259.7 | 356.7 | 206.7 | 206.7 | 166.7 |
| Other liabilities | 452.5 | 540.4 | 661.1 | 670.6 | 722.9 |
| Total current liabilities | 712.2 | 897.1 | 867.8 | 877.3 | 889.7 |
| Shareholders’ funds | 1,429.7 | 1,431.0 | 1,472.1 | 1,528.5 | 1,601.3 |
| MI | 1.2 | 1.4 | 1.4 | 1.4 | 1.4 |
| PDS | 199.6 | 50.0 | 50.0 | 0.0 | 0.0 |
| LT borrowings | 568.4 | 633.6 | 983.6 | 1,183.6 | 1,423.6 |
| LT liabilities | 66.1 | 60.5 | 60.5 | 60.5 | 60.5 |
| Total long term Liabilities | 634.6 | 694.1 | 1,044.1 | 1,244.1 | 1,484.1 |
| Total equity and liabilities | 2,977.2 | 3,073.6 | 3,435.4 | 3,651.3 | 3,976.5 |
Cash Flow (RMm)
| YE Dec 31 | 2023 | 2024 | 2025f | 2026f | 2027f |
|---|---|---|---|---|---|
| PBT | 130.2 | 156.9 | 137.5 | 163.3 | 188.7 |
| Adjustments | 16.1 | 18.8 | 43.1 | 46.6 | 54.0 |
| Dep. & amortisation | 27.3 | 23.3 | 26.9 | 21.9 | 18.0 |
| Changes in WC | 69.9 | 141.7 | 219.6 | (79.7) | (132.8) |
| Operational cash flow | 243.6 | 340.7 | 427.1 | 152.1 | 127.9 |
| Capex | (53.2) | (67.6) | (405.0) | (55.0) | (55.0) |
| Others | 1.8 | (205.7) | 0.0 | 0.0 | 0.0 |
| Investment cash flow | (51.3) | (273.3) | (405.0) | (55.0) | (55.0) |
| Debt raised/(repaid) | (196.8) | 143.9 | 200.0 | 200.0 | 200.0 |
| Equity raised(repaid) | 0.0 | (149.9) | 0.0 | 0.0 | 0.0 |
| Dividend | (111.5) | (46.7) | (46.7) | (49.8) | (49.8) |
| Others | (38.8) | (33.6) | (1.6) | 0.0 | 0.0 |
| Financial cash flow | (347.1) | (86.4) | 151.7 | 100.2 | 150.2 |
| Net cash flow | (154.9) | (18.9) | 173.8 | 197.3 | 223.1 |
Ratio
| YE Dec 31 | 2023 | 2024 | 2025f | 2026f | 2027f |
|---|---|---|---|---|---|
| Profitability ratios | |||||
| Core ROE (%) | 5.1 | 6.0 | 6.0 | 7.1 | 7.8 |
| Core ROA (%) | 2.4 | 2.9 | 2.7 | 3.0 | 3.2 |
| EBITDA Margins (%) | 18.5 | 21.4 | 19.1 | 18.8 | 18.6 |
| PBT Margins (%) | 12.0 | 13.5 | 12.6 | 13.3 | 13.4 |
| Liquidity ratios | |||||
| Current ratio (x) | 1.9 | 2.0 | 2.0 | 2.2 | 2.5 |
| Quick ratio (x) | 1.7 | 1.7 | 1.6 | 1.5 | 1.6 |
| Leverage ratios | |||||
| Total liabilities / equity (x) | 0.9 | 1.1 | 1.3 | 1.4 | 1.5 |
| Net debt / Equity (x) | 0.4 | 0.5 | 0.5 | 0.5 | 0.5 |
| Growth ratios | |||||
| Revenue (%) | 19.4 | 2.8 | 4.7 | 13.0 | 14.1 |
| Pretax Profit (%) | 35.3 | 15.3 | (2.2) | 18.8 | 15.6 |
| Core net earnings (%) | 64.9 | 15.6 | 1.6 | 21.0 | 15.6 |
| Total assets (%) | (4.6) | 2.9 | 11.8 | 6.3 | 8.9 |
Assumptions
| YE Dec 31 | 2023 | 2024 | 2025f | 2026f | 2027f |
|---|---|---|---|---|---|
| New Sales (RM mn) | 1,120.0 | 1,389.0 | 1,463.0 | 1,550.0 | 1,574.0 |
| Prop Dev PBT Margins (%) | 14.4 | 14.8 | 12.9 | 13.5 | 13.6 |
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
- BUY :
- Total return of the stock exceeds 12%.
- HOLD :
- Total return of the stock is within the range of 7% to 12%.
- SELL :
- Total return of the stock is lower than 7%.
- Not Rated:
- The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Environmental | Social | Governance | Average | |
|---|---|---|---|---|
| Scoring | ★★★ | ★★★ | ★★★ | ★★★ |
| Remark | It has established environmental policies to mitigate the environment impact and minimise pollution | PCB places great focus on training its employees to ensure safety and it encourages its suppliers, vendors, contractors and other business partners to follow the same standards. | Adequate transparency practices to ensure stakeholder engagement and management efficiency. | |
| ★★★★★ (≥80%) | Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. | +5% premium to target price | ||
| ★★★★ (60-79%) | Above adequate integration of ESG factors into most aspects of operations, management and future directions. | +3% premium to target price | ||
| ★★★ (40-59%) | Adequate integration of ESG factors into operations, management and future directions. | No changes to target price | ||
| ★★ (20-39%) | Have some integration of ESG factors in operations and management but are insufficient. | -3% discount to target price | ||
| ★ (<20%) | Minimal or no integration of ESG factors in operations and management. | -5% discount to target price | ||
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Friday, August 01, 2025, the analyst, Thiam Chiann Wen, who prepared this report, has interest in the following securities covered in this report: (a) nil
