| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Paramount Corporation Bhd has significantly expanded its landbank with a strategic acquisition in Selangor, setting the stage for substantial residential development and strengthening its future earnings pipeline. The move is expected to enhance the company’s long-term growth prospects amidst a positive outlook from analysts.
Acquisition Details and Strategic Rationale
The company recently acquired three contiguous leasehold parcels, totaling 48.489 acres in Mukim Bukit Raja, for RM113.5 million. This acquisition is strategically important as the land has already been converted for residential use and has secured key approvals, including the development order, which promises a swift time-to-market for future projects.
Paramount plans to develop this land into a residential project comprising double-storey terrace houses, townhouses, and low-rise condominium units. This development carries an estimated Gross Development Value (GDV) of RM579 million, with a targeted launch in 2026 and development spanning over six years.
This marks Paramount’s third land acquisition in 2025, bringing its year-to-date landbank spending to RM300 million and its total potential GDV to RM2.3 billion. Following this, the group’s remaining GDV pipeline has increased to RM5.04 billion, aligning with management’s strategy to replenish a cumulative RM6.0 billion of GDV over FY25-26. The acquired site’s proximity to Paramount’s established developments in the Shah Alam region is expected to provide strong synergies, leveraging brand familiarity and a proven track record to support robust take-up rates.
Financial Implications and Analyst Outlook
The acquisition will be funded through a mix of internal funds and bank borrowings. While this move is anticipated to temporarily push the company’s gearing slightly above its comfort threshold (gross gearing estimated to rise to c.0.88x from 0.79x, and net gearing to c.0.73x), management views this as manageable given the value-accretive opportunities presented by the acquisition.
TA Securities reiterated its “BUY” recommendation for the company, maintaining its target price of RM1.46 per share. The investment bank views the acquisition positively, citing its strategic location, strong synergies with existing developments, a reasonable land cost-to-GDV ratio, and the expedited launch timeline. Analysts project robust earnings visibility and take-up prospects, supported by the company’s track record, justifying the investment and its contribution to long-term shareholder value. The firm is maintaining its FY25-27 earnings forecasts, pending the completion of the acquisition.
