A MEMBER OF THE TA GROUP
Monday, August 11, 2025
FBMKLCI: 1,556.98
Sector: Property
Paramount Corporation Bhd: Strategic Expansion in Kulim
Acquires Freehold Land in Kulim, Kedah
Paramount Corporation Berhad (Paramount) has entered into a sale and purchase agreement with Golden Bluechip Sdn Bhd to acquire four contiguous freehold parcels tolling 295.55 acres in Bandar Lunas, Kulim, Kedah for RM128.74mn (RM10 psf). The land is situated about 12 km north of Kulim town centre and 4 km north of Phase 4A of Kulim Hi-Tech Park (KHTP)—a major industrial and semiconductor hub — see Appendix I.
RM946mn GDV Township
Paramount plans to transform the site into a mixed township featuring residential, commercial, and industrial lots, complemented by recreational and other key amenities. The project carries an estimated GDV of RM946mn and will be developed over seven years, with a targeted launch in 2027.
Acquisition Price Deemed Reasonable
The purchase price of RM128.74mn is considered reasonable as it nearly matches the independent market valuation of RM128.8mn. Furthermore, at just 14% of the estimated GDV, the land cost is below the industry’s 20% rule-of-thumb, providing a healthy buffer for margins to be achieved from the project.
Strengthens GDV Pipeline and Strategic Positioning
This marks Paramount’s second land acquisition in 2025, bringing year-to-date spending on land banking to RM187mn for a total potential GDV of RM1.7bn (see Appendix 2). With this deal, Paramount’s remaining GDV rises to RM7.2bn, aligning with management’s target of replenishing GDV of at least RM2.0bn to support launches over the next five years.
The group continues to focus on acquiring land near existing developments to shorten turnaround time and leverage brand familiarity. This approach has delivered consistent results in the Northern Region, where Paramount has established a strong presence through townships such as Taman Patani Jaya (173 acres, completed), Bandar Laguna Merbok (493 acres, completed), and Bukit Banyan (657 acres, ongoing).
Most recently, the 69.2-acre Embun Hills development in Bukit Mertajam (GDV: RM460mn) recorded a 100% sell-out of its 30 commercial shop offices on launch day. Meanwhile, Phase I of the residential component, comprising 114 terrace and cluster semi-detached homes priced between RM800k and RM900k each, achieved a 45% take-up rate. This strong start underscores the group’s ability to drive robust demand for new launches by leveraging its deep local market knowledge, established brand presence, and proven execution track record.
Share Information
| Bloomberg Code | PAR MK |
| Stock Code | 1724 |
| Listing | Main Market |
| Share Cap (mn) | 622.8 |
| Market Cap (RMmn) | 672.6 |
| 52-wk Hi/Lo (RM) | 1.14/0.9 |
| 12-mth Avg Daily Vol (‘000 shrs) | 153.4 |
| 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 | 2.9 | 1.8 |
| 3 mth | 2.9 | 0.9 |
| 6 mth | (0.9) | (2.1) |
| 12 mth | 5.9 | (2.1) |
(12-Mth) Share Price relative to the FBMKLCI chart data is sourced from Bloomberg.
Gearing to Edge Above Management’s Comfort Levels
Following the completion of the 28% stake acquisition in Envictus on 5 Aug 2025 and assuming 70% debt funding for the recent land acquisitions in Batu Kawan and Kulim, Paramount’s gross gearing is projected to rise to 0.83x (from 0.73x as at Mar-25), exceeding management’s comfort threshold of 0.75x. Net gearing would also increase to 0.67x from 0.56x. While this is above the preferred range, the leverage level remains within a manageable band. Importantly, management has signalled its willingness to temporarily exceed its gearing limit for opportunistic, value-accretive transactions.
Our view
We are positive on the acquisition, underpinned by its strategic location within an upcoming growth corridor near KHTP, strong synergies with Paramount’s established presence in the northern region, and a competitive land cost-to-GDV ratio of 14% versus the typical 20% benchmark. Although gearing is set to rise, we believe the project’s long-term earnings visibility and potential to replicate the sales success seen in Embun Hills more than justify the investment, supporting both growth and shareholder value over time.
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.
Appendix I: Location of the Land
The acquired land parcels are located in a strategic area. The location is near key infrastructure and economic zones, including Lunas Town, Kulim Town, the Butterworth-Kulim Expressway, Kulim High Tech Park, and specifically adjacent to Phase 4A of KHTP. This proximity is expected to drive demand for the planned development.
Appendix 2: Land banking in 2025
| Date | Location | Land Size (acre) | Purchase Price (RM mn) | GDV (RM mn) | Land Cost to GDV |
|---|---|---|---|---|---|
| 31-Jul-25 | Batu Kawan | 189.97 | 58 | 744 | 8% |
| 8-Aug-25 | Kulim | 295.55 | 129 | 946 | 14% |
| Total | 187 | 1690 | 11% |
Source: Bursa announcements, TA Securities
Earnings Summary
Profit & Loss (RMmn)
| YE Dec 31 | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 1,012.1 | 1,040.2 | 1,288.9 | 1,230.2 | 1,403.8 |
| EBITDA | 204.0 | 221.7 | 207.6 | 231.8 | 238.8 |
| Dep & amortisation | (27.3) | (27.5) | (27.7) | (18.0) | (18.0) |
| Net finance cost | (46.5) | (47.6) | (40.6) | (51.6) | (32.1) |
| PBT | 130.2 | 156.9 | 137.5 | 163.3 | 188.7 |
| Normalised PBT | 121.9 | 140.6 | 137.5 | 163.3 | 188.7 |
| Taxation | (26.7) | (25.7) | (48.1) | (57.1) | (66.0) |
| Profit after tax | 95.1 | 114.9 | 89.4 | 106.2 | 122.7 |
| Normalised PAT | 74.5 | 86.1 | 87.5 | 105.9 | 122.4 |
| Core net profit | 74.5 | 86.1 | 87.5 | 105.9 | 122.4 |
| Core EPS (sen) | 12.0 | 14.1 | 14.1 | 17.0 | 19.7 |
| Normalised PER (x) | 9.0 | 7.8 | 7.7 | 6.4 | 5.5 |
| Div Yield (%) | 6.5 | 6.9 | 6.9 | 8.0 | 9.4 |
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 | 216.5 | 234.4 | 221.9 | 224.4 | 226.8 |
| Total fixed assets | 1,689.4 | 1,298.4 | 1,664.0 | 1,699.6 | 1,739.0 |
| Cash | 202.7 | 216.1 | 389.9 | 587.4 | 810.1 |
| Others | 1,185.2 | 1,548.8 | 1,374.2 | 1,349.0 | 1,417.0 |
| Total current assets | 1,387.9 | 1,764.9 | 1,751.1 | 1,936.4 | 2,227.1 |
| Assets held for sale | 0.0 | 10.3 | 10.3 | 65.3 | 10.3 |
| Total assets | 2,977.2 | 3,073.6 | 3,425.4 | 3,641.3 | 3,976.5 |
| ST debt | 259.7 | 259.7 | 206.7 | 206.7 | 166.7 |
| Other liabilities | 452.5 | 608.4 | 661.1 | 670.6 | 722.9 |
| Total current liabilities | 712.2 | 867.1 | 867.8 | 877.3 | 889.7 |
| Shareholders’ funds | 1,429.3 | 1,431.5 | 1,472.1 | 1,538.0 | 1,601.3 |
| PDS | 199.6 | 50.0 | 50.0 | 0.0 | 0.0 |
| LT borrowings | 434.6 | 620.5 | 698.8 | 655.5 | 1,425.0 |
| LT liabilities | 66.1 | 65.5 | 65.5 | 65.5 | 60.5 |
| Total long term liabilities | 634.6 | 694.1 | 1,046.1 | 1,246.1 | 1,484.1 |
| Total equity and liabilities | 2,977.2 | 3,073.6 | 3,425.4 | 3,641.3 | 3,976.5 |
Cash Flow (RMm)
| YE Dec 31 | 2023 | 2024F | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Adjustments | 130.2 | 156.9 | 137.5 | 163.3 | 188.7 |
| Changes in WC | 27.3 | 18.8 | 43.1 | 46.6 | 54.0 |
| Dep & amortisation | 86.1 | 24.7 | 21.9 | 21.9 | (18.0) |
| Operational cash flow | 243.6 | 340.7 | 437.1 | 152.1 | 121.9 |
| Capex | (50.0) | (50.0) | (50.0) | (50.0) | (50.0) |
| Investment cash flow | (51.3) | (271.7) | (485.9) | (55.9) | (55.9) |
| Debt raised/(paid) | 100.0 | 43.9 | 200.0 | 100.0 | 700.0 |
| Equity raised/(paid) | 0.0 | (149.9) | 0.0 | (50.0) | 0.0 |
| Dividend | (111.1) | (42.1) | (44.7) | (49.0) | (49.0) |
| Financial cash flow | (347.1) | (88.4) | 51.7 | 100.2 | 150.2 |
| Net cash flow | (154.9) | (16.9) | 173.8 | 197.5 | 221.1 |
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 | 2.8 | 2.7 | 3.0 | 3.2 |
| EBITDA margins | (%) | 18.9 | 21.4 | 19.1 | 18.2 | 18.0 |
| PBT margins | (%) | 11.0 | 13.5 | 11.6 | 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 | 1.3 | 1.6 |
| Leverage ratios | ||||||
| Total debt / 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 rates | ||||||
| Revenue | (%) | 19.4 | 2.8 | 4.7 | 13.0 | 14.1 |
| Pretax Profit | (%) | (4.4) | 15.3 | (2.2) | 18.8 | 15.6 |
| Core net earnings | (%) | 29.9 | 15.6 | 1.6 | 21.0 | 15.6 |
| Total assets | (%) | 64.1 | 2.9 | 11.8 | 6.3 | 8.9 |
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. | |
| Rating Adjustment to Target Price | ||||
| (≥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 Monday, August 11, 2025, the analyst, Thiam Chiann Wen,
