Paramount Corporation Berhad
Lowering Sales Target by 20%
Review
- Paramount Corporation Bhd (Paramount) posted a core net profit of RM36.2mn in IH25, accounting for 41% of our full-year forecast. The results fell short of expectations, mainly due to weaker-than-anticipated property sales and revenue recognition.
- A first interim dividend of 3.0sen/share was announced, matching the amount declared in the corresponding period last year.
- YoY: Net profit attributable to ordinary equity holders for IH25 saw a 13% increase YoY to RM36.2mn, mainly due to the lower distributions to perpetual securities holder arising from the partial redemption of perpetual securities in 3Q24.
- The property segment posted an 11% revenue increase to RM424.Imn in IH25, driven by higher progress billings from The Atera (Selangor), Utropolis Batu Kawan (Penang), and Bukit Banyan (Kedah). However, PBT grew a modest 3% to RM66.1mn, given the high base in IH24 which had included project cost finalisation savings.
- The coworking segment’s revenue climbed 52% YoY to RM14.0mn in IH25, supported by stronger design-and-build contributions from Scalable Malaysia. However, the segment recorded a wider LBT of RM0.4mn (IH24: LBT RM0.2mn), reflecting startup losses from the NU Sentral space, which began operations in 2Q25.
- QoQ: Core net profit rose 51% QoQ to RM21.8mn, driven by improvements across all business segments.
- New property sales fell 45% YoY but rose 28% QoQ to RM295mn in 2Q25, bringing IH25 sales to RM525mn (-18% YoY). The decline was largely attributable to a sharp 80% contraction in new launches, which amounted to only RM344mn in IH25 compared to RM1.7bn in IH24. Overall, the sales performance was below expectations, achieving only 35% of management’s sales target and 38% of our forecast. The latest unbilled sales eased slightly to RM1.5bn from RM1.6bn a quarter ago.
Impact
We cut our FY25/26/27 sales assumptions by 18%/10%/5% to RM1.2bn/RM1.4bn/RM1.5bn, reflecting management’s latest guidance. Accordingly, our FY25/26/27 earnings forecasts are lowered by 7%/12%/11%.
Outlook
Management has decided to adopt a more cautious stance due to persistent economic and property market headwinds. As a result, the FY25 sales target has been lowered by 20% to RM1.2bn from RM1.5bn, with the launch pipeline scaled back to RM1.0bn from RM1.4bn.
| 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) | 151.8 |
| Estimated Free Float (%) | 47.2 |
| Beta (x) | 0.6 |
| Major Shareholders (%) | |
| Paramount Equitite S/B | – 24.8% |
| Southern Palm Industries S/B | – 8.4% |
| Forecast Revision | ||
|---|---|---|
| FY25 | FY26 | |
| Forecast Revision (%) | (6.6) | (11.7) |
| Net profit (RMm) | 81.7 | 93.5 |
| Consensus | na | na |
| TA’s / Consensus (%) | na | na |
| Previous Rating | Buy (Maintained) | |
| Consensus TP (RM) | na | na |
| Financial Indicators | ||
|---|---|---|
| FY25 | FY26 | |
| Net Gearing (%) | 53.1 | 53.5 |
| FCF/share (sen) | 2.6 | 15.5 |
| P/CFPS (x) | 40.8 | 6.9 |
| ROA (%) | 2.5 | 2.7 |
| ROE (%) | 5.6 | 6.3 |
| NAV/Share (RM) | 2.3 | 2.4 |
| Price/NAV (x) | 0.5 | 0.4 |
| Scorecast | |
|---|---|
| % of FY | |
| vs. TA | 41.0 |
| vs. Consensus | na |
| Below | |
| na | |
| Share Performance (%) | |||
|---|---|---|---|
| Price Change | PAR | FBM KLCI | |
| 1 mth | (0.9) | 4.2 | |
| 3 mth | 3.8 | 2.8 | |
| 6 mth | 1.9 | (0.2) | |
| 12 mth | 2.8 | (2.9) | |
(12-Mth) Share Price relative to the FBMKLCI
Brazil 5511 2395 9000 Europe 44 20 7330 7500 Germanu 49 69 9204 1210 Hong Kong 051 746151 HKT GMT+6:00 ba358-170 20-Aug-2025 20:55:01
Source: Bloomberg
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The Coworking segment’s financial performance is expected to improve in 2H25, driven by higher occupancy at Co-labs Coworking and contributions from Scalable Malaysia’s design-and-build projects. Co-labs will also expand beyond the Klang Valley with the launch of a new Johor Bahru space in 4Q25.
Valuation
Following the earnings revision, we trim our TP to RM1.46/share (from RM1.48/share), based on a CY26 P/B multiple of 0.6x. Maintain Buy.
| Earnings Summary | |||||
|---|---|---|---|---|---|
| FYE Dec | 2023 | 2024 | 2025F | 2026F | 2027F |
| Revenue | 1012.3 | 1040.2 | 1018.5 | 1093.2 | 1264.4 |
| EBITDA | 187.4 | 223.1 | 198.6 | 212.8 | 239.4 |
| EBITDA margin (%) | 18.5 | 21.4 | 19.5 | 19.5 | 18.9 |
| Reported pretax profit | 130.2 | 156.9 | 128.6 | 144.3 | 167.4 |
| Normalised pretax profit | 121.9 | 140.6 | 128.6 | 144.3 | 167.4 |
| Reported net profit | 82.8 | 102.4 | 81.7 | 93.5 | 108.5 |
| Core net profit to equity holders | 74.5 | 86.1 | 81.7 | 93.5 | 108.5 |
| Reported EPS (sen) | 13.4 | 16.5 | 13.1 | 15.0 | 17.4 |
| Core EPS (sen) | 12.0 | 13.8 | 13.1 | 15.0 | 17.4 |
| Core EPS growth (%) | 64.9 | 14.9 | (5.1) | 14.5 | 16.1 |
| PER (x) | 9.1 | 8.0 | 8.4 | 7.3 | 6.3 |
| GDPS (sen) | 7.0 | 7.5 | 7.5 | 8.0 | 8.0 |
| Div yield (%) | 6.4 | 6.8 | 6.8 | 7.3 | 7.3 |
| Core ROE (%) | 5.1 | 6.0 | 5.6 | 6.3 | 7.0 |
21-Aug-25
| 2Q25 Results Analysis | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| RM mn | 2024 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | IH24 | IH25 | YoY (%) | |
| Revenue | 232.9 | 217.8 | 232.5 | 6.8 | (0.2) | 405.5 | 450.4 | 11.1 | |
| Property | 220.7 | 205.9 | 218.2 | 6.0 | (1.1) | 382.5 | 424.1 | 10.9 | |
| Coworking | 5.4 | 6.6 | 7.4 | 12.1 | 35.8 | 9.2 | 14.0 | 51.8 | |
| Investment and others | 72.0 | 26.0 | 28.5 | 9.5 | (60.4) | 99.4 | 54.5 | (45.2) | |
| Eliminations | (65.2) | (20.7) | (21.6) | 4.4 | (66.9) | (85.5) | (42.2) | (50.6) | |
| EBIT | 45.1 | 34.5 | 39.8 | 15.3 | (11.6) | 69.6 | 74.4 | 6.8 | |
| Net Interest | (8.5) | (11.0) | (9.9) | (10.4) | 16.4 | (15.4) | (20.9) | 35.5 | |
| Associates | (0.0) | (0.9) | 0.1 | >100 | >100 | (0.6) | (0.8) | 41.5 | |
| EI | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| PBT | 36.6 | 22.6 | 30.1 | 33.2 | (17.8) | 53.6 | 52.6 | (1.8) | |
| Property | 40.9 | 32.2 | 33.9 | 5.3 | (17.2) | 64.0 | 66.1 | 3.2 | |
| Coworking | 0.3 | (0.5) | 0.1 | >100 | (59.2) | (0.2) | (0.4) | >-100 | |
| Investment and others | 37.1 | (8.5) | (10.9) | 28.5 | >-100 | 35.6 | (19.4) | >-100 | |
| Eliminations | (41.7) | (0.6) | 7.0 | >100 | >100 | (45.8) | 6.3 | >100 | |
| Core PBT | 36.6 | 22.6 | 30.1 | 33.2 | (17.8) | 53.6 | 52.6 | (1.8) | |
| PAT | 25.9 | 15.6 | 21.8 | 39.9 | (15.9) | 38.1 | 37.4 | (1.9) | |
| Reported Net Profit | 24.2 | 14.4 | 21.8 | 50.8 | (10.1) | 31.9 | 36.2 | 13.4 | |
| Core Net Profit to Equity Holders | 24.2 | 14.4 | 21.8 | 50.8 | (10.1) | 31.9 | 36.2 | 13.4 | |
| EPS (sen) | 3.9 | 2.3 | 3.5 | 50.8 | (10.3) | 5.1 | 5.8 | 13.2 | |
| DPS (sen) | 3.0 | 0.0 | 3.0 | nm | 0.0 | 3.0 | 3.0 | 0.0 | |
| ppt | ppt | ppt | |||||||
| PBT Margin (%) | 15.7 | 10.4 | 12.9 | 2.6 | (2.8) | 13.2 | 11.7 | (1.5) | |
| Net Margin (%) | 10.4 | 6.6 | 9.4 | 2.7 | (1.0) | 7.9 | 8.0 | 0.2 | |
| Effective Tax Rate (%) | 29.1 | 31.0 | 27.5 | (3.4) | (1.6) | 28.9 | 29.0 | 0.1 | |
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Sector Recommendation Guideline
Stock Recommendation Guideline
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
| Scoring | Environmental | Social | Governance | Average |
|---|---|---|---|---|
| ★★★ | ★★★ | ★★★ | ★★★ | ★★★ |
| 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 Thursday, August 21, 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
