Paramount 4Q net profit slumps 82% q-o-q amid lower revenue and Covid-19 related costs

KUALA LUMPUR (Feb 26): Paramount Corp Bhd’s net profit slumped 81.87% to RM3.59 million for the fourth quarter ended Dec 31, 2020 (4QFY20), from RM19.82 million for the immediate preceding quarter, amid lower revenue.

Apart from the lower revenue, other factors contributing to the lower profit before tax (PBT) included additional project-related and compliance costs arising from the Covid-19 pandemic, the property developer's bourse filing showed.

For 4QFY20, the group recorded a PBT from continuing operations of RM13 million, compared with RM36.6 million for the preceding quarter, it noted.

Revenue for the quarter fell 13.23% quarter-on-quarter (q-o-q) to RM188.39 million from RM218.87 million.

On a year-on-year (y-o-y) basis, the group saw its net profit plunge 90.82% from RM39.12 million, while revenue slid 10.13% from RM209.62 million. 

Earnings fell 90.82% y-o-y, mainly attributable to a lower profit contribution from the property division, coupled with the absence of the pre-tertiary education business as it was no longer consolidated after the divestment of the company's controlling equity stake in February 2020. 

It proposed a final dividend of 2.5 sen per share, bringing its full-year dividends to 31.5 sen, compared with 6.5 sen paid for FY19.

Despite the dismal quarterly performance, cumulative net profit came in at RM486.66 million for FY20, four times higher than RM104.95 million posted a year ago, contributed by a gain recognised on the disposal of the pre-tertiary education business of RM462.7 million.

Excluding the gain on the disposal, full-year PBT from continuing operations came in at RM51.8 million, from RM88.8 million for FY19, mainly attributable to the lower contribution from the property division but was mitigated by lower non-recurring expenses and interest expense in the investment and others division.

Revenue, however, shrank 15.92% to RM593.56 million from RM705.97 million. 

On prospect, the group said its growth trajectory is projected to improve from the second quarter onwards, driven by a recovery in global demand, where the International Monetary Fund (IMF) had revised upwards its 2021 global growth forecast by 0.3 percentage point (ppt) to 5.5%.

The company added that its growth will also be supported by a turnaround in public- and private-sector expenditure amid continued support from policy measures and higher production from existing and new facilities in the manufacturing and mining sectors. 

The vaccine roll-out from this month is also expected to lift sentiments, it concluded. 

For its property division, it said the group's unbilled sales of RM1.1 billion as at Dec 31, 2020 were a new record.

"Although this provides some visibility of the group's cash flow in the near term, the pace at which this can be converted into billings would depend largely on the construction progress of projects," it noted. 

As at Dec 31, 2020, the group had 589.2 acres (238.44ha) of undeveloped land.

Meanwhile, it said its Co-labs Coworking operation opened a new outlet in early January 2021 at Tropicana Gardens Mall, Kota Damansara, Selangor prior to the implementation of the second movement control order (MCO 2.0).

It looks towards capitalising on opportunities arising from the change in the business landscape as a result of the Covid-19 pandemic.

Barring any unforeseen circumstances, the group is cautiously optimistic that its earnings from continuing operations for FY21 would be relatively better than the previous year, with the anticipation that the Covid-19 pandemic would be brought under control.

However, it warned that any reimposition of containment measures resulting in prolonged disruption/closure of construction sites affecting work progress and the timely launching of property projects would have an adverse impact on the group's financial performance. 

At the time of writing today, Paramount shares were traded two sen or 2.33% lower at 84 sen, valuing the group at RM516 million.

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