Paramount 3Q net profit doubles on disposal gain

KUALA LUMPUR (Nov 20): Paramount Corp Bhd’s net profit doubled to RM30.30 million in its third quarter ended Sept 30, 2019 (3QFY19) from RM15.62 million in the year-ago quarter, following a gain on disposal.

In an exchange filing today, Paramount attributed its stronger profitability to a RM23.3 million gain from the disposal of its controlling stake in its tertiary education business — KDU University College Sdn Bhd, KDU College (PG) Sdn Bhd, and KDU College (PJ) Sdn Bhd — to the University of Wollongong, which was completed on Sept 3.

Revenue for 3QFY19 came in at RM217.09 million, up 3% from RM210.53 million in 3QFY18, with higher contribution from the property division.

Paramount said it recorded higher property revenue from its Greenwoods, Utropolis Glenmarie, and Berkeley Uptown developments. However, the segment's profit before tax decreased by 49%, dragged by lower contributions from Atwater and Utropolis Glenmarie, and higher losses from Utropolis Marketplace.

Its education division recorded a 9% revenue contraction during the quarter, following completion of the KDU disposal, which resulted in the financial performance of these companies to be equity accounted as associated companies. However, segmental profit rose as the costs associated with the campus properties were placed with the property investment segment.

For the cumulative nine-month period (9MFY19), Paramount’s net profit stood at RM64.93 million, comparable to RM64.88 million in the corresponding period a year ago, while revenue grew 7% to RM695.97 million from RM651.15 million.

In a statement, Paramount group chief executive officer Jeffrey Chew said the group has, in the first nine months of 2019, achieved property sales of RM481 million, on the back of RM714 million worth of properties launched. “The group’s total unbilled sales of RM957 million as a Sept 30, 2019 is expected to contribute positively to our financial performance in the foreseeable future,” he said.

He expects the property sector to remain soft in 4Q but sees improved consumer sentiments for property purchase, following the reduction in the overnight policy rate (OPR) by Bank Negara Malaysia and the government’s extension of the Home Ownership Campaign to Dec 31, 2019.

He went on to say that he expects the group’s financial performance for the financial year ending Dec 31, 2019 (FY19) to be comparable to the previous year, excluding the gain from the pre-tertiary business disposal.

"The proposed divestment of the controlling stake in our K-12 education business will pave the way for Paramount to focus on property development, explore new business opportunities, while retaining an effective 20% stake in the business. The transaction is expected to be completed in 4QFY19," he added.

Paramount shares closed unchanged at RM1.28 today, bringing a market capitalisation of RM776.55 million.

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