Wednesday, July 30, 2025
FBMKLCI: 1,523.82
Sector: Property
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
Paramount Corporation Bhd: F&B Foray to Broaden Earnings Base
Proposed Acquisition of 28% Stake in Envictus
Paramount Corporation Berhad has announced the proposed acquisition of a 28.0% equity interest in Envictus International Holdings Ltd (Envictus) for a total cash consideration of SGD38.3mn (approximately RM126.3mn). The stake will be acquired from JAG Capital Holdings via Paramount’s wholly owned subsidiary, Venice Concepts Sdn Bhd, at a price of SGD0.45 per share. This represents a 28% premium over Envictus’s 5-day volume-weighted average price (VWAP).
The acquisition will be fully funded through a mix of internal funds and bank borrowings, with completion expected by 7 August 2025. Upon completion, Paramount will become the second largest shareholder in Envictus, behind Executive Chairman and Group CEO Dato’ Jaya J B Tan, who holds a 28.3% direct stake. The acquisition is expected to provide Paramount with potential board representation and the opportunity to take an active role in guiding Envictus’s strategic direction, while also broadening and diversifying its earnings base.
About Envictus
Envictus is a Singapore-listed food and beverage (F&B) group with operations across three core segments: food services, trading and frozen food, and dairies. Its food services division includes over 100 Texas Chicken outlets in Malaysia and Brunei, with exclusive rights to develop up to 115 outlets in Malaysia and 10 in Brunei under franchise agreements running through 2030 and 2029, respectively. The group also operates the San Francisco Coffee chain, with 50 outlets across Malaysia. The trading and frozen food segment, under the Pok Brothers brand, supplies chilled and frozen products to hotels, retailers, and F&B outlets, while the dairies segment manufactures and distributes HALAL-certified creamers under the SuJohan label.
For the six months ended March 2025, Envictus recorded revenue of RM369.8mn, with food services contributing 62%, trading and frozen food 20%, and dairies 18%, while profit after tax stood at RM16.1mn.
Strategic Stake at a Reasonable Entry Multiple
We believe the premium over VWAP reflects the strategic nature of the stake, supported by potential board representation and access to Envictus’s F&B operations across Malaysia and Brunei.
At an implied P/E of 14x (based on annualised IHFY25 PAT of RM16.1mn), the valuation appears fair when benchmarked against regional F&B peers (see Figure 1). Notably, its closest peer, Oriental Kopi, is currently trading at a significantly higher forward P/E of 21x, driven by strong ROE and heightened investor expectations for café-led domestic growth.
Share Information
| Bloomberg Code | PAR MK |
| Stock Code | 1724 |
| Listing | Main Market |
| Share Cap (mn) | 622.8 |
| Market Cap (RMmn) | 685.0 |
| 52-wk Hi/Lo (RM) | 1.14/0.9 |
| 12-mth Avg Daily Vol (‘000 shrs) | 163.2 |
| Estimated Free Float (%) | 47.2 |
| Beta (x) | 0.7 |
| Major Shareholders (%) | |
| Paramount Equitite S/B | 24.8% |
| Southern Palm Industries S/B | 8.4% |
Forecast Revision
| FY25 | FY26 | |
|---|---|---|
| Forecast Revision (%) | 0.0 | 0.0 |
| Net profit (RMm) | 87.5 | 105.9 |
| Consensus | – | – |
| TA’s / Consensus (%) | – | – |
| Previous Rating | Buy (Maintained) | |
| Consensus TP (RM) | – | |
Financial Indicators
| FY25 | FY26 | |
|---|---|---|
| Net Gearing (%) | 52.5 | 52.5 |
| FCF/share (sen) | 3.6 | 15.6 |
| P/CFPS (x) | 30.1 | 6.9 |
| ROA (%) | 2.7 | 3.0 |
| ROE (%) | 6.0 | 7.1 |
| NAV/Share (RM) | 2.3 | 2.4 |
| Price/NAV (x) | 0.5 | 0.4 |
Share Performance (%)
| Price Change | PAR | FBM KLCI |
|---|---|---|
| 1 mth | 4.8 | (0.3) |
| 3 mth | 4.8 | 0.5 |
| 6 mth | 1.9 | (1.9) |
| 12 mth | (1.8) | (4.6) |
(12-Mth) Share Price relative to the FBMKLCI
Source: Bloomberg
Our View – Strategic F&B Entry to Broaden Earnings Base
We view Paramount’s proposed acquisition of a 28% stake in Envictus as a strategic and forward-looking move that aligns with its long-term diversification strategy. Since divesting its education business in 2018, Paramount has actively sought new growth avenues beyond property development, including investments in digital start-ups and overseas property ventures via joint ventures with Navarang Charoennakhon in Thailand and EWI Capital Berhad.
This investment marks a meaningful entry into the food and beverage sector, complementing Paramount’s existing premium presence through DEWAKAN, a MICHELIN-starred restaurant and Green Star recipient, and BIDOU, a newly established French fine dining restaurant in Kuala Lumpur. Through Envictus, Paramount gains access to a broader food and beverage platform that covers the full value chain, from upstream operations such as Pok Brothers food distribution and SuJohan dairy products, to downstream consumer brands like Texas Chicken and San Francisco Coffee. This allows Paramount to tap into a scalable business with recurring income potential in a resilient consumer segment.
Overall, we are positive on the acquisition as it supports Paramount’s strategic roadmap for 2026 to 2030 to build alternative income streams and creates synergy opportunities across the F&B value chain.
Forecast
We maintain our FY25-27 earnings forecasts at this juncture. Upon completion of the acquisition, Envictus will be recognised as an associate company of Paramount. Based on the annualised IHFY25 profit after tax and assuming a five-month contribution from Envictus post-completion, we estimate a potential uplift of approximately 4.3% to our FY25 net profit forecast. The full-year impact will only be reflected from FY26 onwards.
From a balance sheet perspective, we estimate that Paramount’s net gearing could increase to 65%, from 56% as at March 2025, assuming the acquisition is fully funded via borrowings.
Recommendation and Valuation
No change to our target price of RM1.48/share, based on CY26 P/Bk multiple of 0.6x. Maintain Buy.
Figure 1: Asia Café & Restaurant Operators
Source: Bloomberg
| Company | Share Price (LC) | Market Cap (RM mn) | Forward PE (x) | Dividend Yield (%) | Forward ROE (%) |
|---|---|---|---|---|---|
| Philippines | |||||
| Jollibee Foods Corp (PHP) | 219.000 | 18,535 | 18.2 | 1.2 | 13.9 |
| Shakey’s Pizza Asia Ventures (PHP) | 8.100 | 1,001 | 10.5 | 2.5 | 13.1 |
| Hong Kong | |||||
| Jiumaojiu International Holdings | 2.930 | 2,232 | 14.7 | 0.7 | 5.3 |
| Haidilao International Holdings Ltd | 14.200 | 43,179 | 13.0 | 7.1 | 42.2 |
| Singapore | |||||
| Food Empire Holdings Ltd | 2.380 | 4,413 | 15.9 | 2.5 | 18.9 |
| Malaysia | |||||
| Oriental Kopi Holdings Berhad | 0.845 | 1,760 | 20.6 | 1.4 | 35.4 |
| Simple Average | 15.5 | 2.6 | 21.5 | ||
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) | 9.1 | 8.0 | 7.8 | 6.5 | 5.6 |
| GDPS (sen) | 7.0 | 7.5 | 7.5 | 8.0 | 8.0 |
| Div Yield (%) | 6.4 | 6.8 | 6.8 | 7.3 | 7.3 |
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 | (50.0) | 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 |
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 |
Ratios
| 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 derive the target price.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Scoring | Environmental | Social | Governance | Average |
|---|---|---|---|---|
| ★★★ | 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. | ★★★ |
| Remark | ||
|---|---|---|
| ★★★★★ (≥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 Wednesday, July 30, 2025, the analyst, Thiam Chiann Wen, who prepared this report, has interest in the following securities covered in this report: (a) nil
Kaladher Govindan – Head of Research
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