Paramount posts profitable 3Q as property sales rebound and construction works resume

KUALA LUMPUR (Nov 28): Paramount Corp Bhd returned to the black with a net profit of RM19.82 million in its third quarter ended Sept 30, 2020 (3QFY20), after the property developer slipped into a net loss of RM3.7 million in the preceding quarter ended June 30.

The improved earnings come as quarterly revenue tripled to RM218.87 million from RM64.20 million in 2QFY20, its bourse filing showed, following the resumption of construction activities for a full quarter, coupled with strong sales from new property launches.

Even on a year-on-year basis, Paramount's revenue is up 39.3% from 3QFY19's RM157.12 million, thanks to higher property sales, which lifted the group's profit before tax from its continuing operations to RM36.6 million, about five times the RM7.4 million it recorded previously.

The quarterly net profit, however, is down 34.61% from RM30.3 million a year ago, because the financial results of its tertiary education and pre-tertinary education businesses are no longer consolidated following the divestment of its controlling stakes in them, which were completed in 2019 and early this year. The year before also recognised a gain of RM23.3 million from the said disposal of the tertiary education business.

For the cumulative nine-month period ended Sept 30 (9MFY20), the group's net profit came in at RM483.07 million, seven times more than the RM64.9 million it registered a year ago, lifted by a gain of RM460.6 million from the disposal of its pre-tertiary education business in the first quarter of this year. Cumulative revenue for the period fell 18.37% to RM405.18 million from RM496.35 million.  

Paramount Group chief executive officer Jeffrey Chew yesterday said the group’s property sales for 3QFY20 was 82% higher than that of the corresponding period last year, mainly derived from project launches this year, namely Sinaran at Utropolis Batu Kawan, Cendana at Greenwoods Salak Perdana, and the group's Sejati Lakeside Phase 2.

Despite the Movement Control Order (MCO) disruptions, its 9M2020 sales grew 5% to RM503 million from RM481 million for 9MFY19, thanks to strong third quarter sales, he added. As at Sept 30, the group’s unbilled sales stood at RM1 billion.

“For the final quarter of this year, we are working hard to capitalise on the strong sales momentum we have generated. We are intensifying our promotional activities to boost sales, including launching virtual sales consultation for our Sejati Lakeside and Berkeley Uptown projects,” said Chew.

The low interest rate environment coupled with the reintroduction of the government-initiated home ownership campaign since June 2020 is expected to continue to spur buying interest in properties, he added.

While Chew noted that many of the group's business operations have gone back to pre-pandemic levels during 3QFY20, the resurgence of COVID-19 infections remains a risk.

Hence, the group expects its earnings for FY2020 from its continuing operations to come in lower than that of FY2019, though its overall performance would be bolstered by the RM460.6 million disposal gain.

Paramount shares closed up one sen or 1.23% at 82 sen today, valuing the group at RM503.84 million. The stock has retreated 33% from when it was trading at RM1.32 on Jan 2.

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