Paramount Corporation Bhd has announced sales of RM176 million for 2Q2017, bringing the company’s 6M2017 sales to RM420 million and surpassing the 2016 full-year sales of RM402 million.
These follow a strong performance in 1Q2017 and was attributed to the market’s positive response to Phase 1 of the Group’s newly-launched Utropolis Batu Kawan development, which closely mirrors the Utropolis Glenmarie university metropolis development launched in 2013.
The performance was also supported by strong sales of Paramount Property’s Sejati Residences in Cyberjaya, with other ongoing developments – Bukit Banyan in Sungai Petani, Utropolis Glenmarie in Shah Alam and Greenwoods Salak Perdana in Sepang – holding steady.
Unbilled sales as at 30 June 2017 increased to RM534 million from RM503 million as at the end of 1Q2017, with the Group’s property division, Paramount Property, launching properties with a GDV of RM142 million in 2Q2017.
The performance of the Group’s other division, Paramount Education, was largely boosted by a new stream of income from the Group’s 66% equity interest in R.E.A.L Education Group (REAL), the acquisition of which was completed in April, and the stronger enrolment of new students by KDU University College (KDUUC).
Overall, the Group recorded a revenue of RM184.6 million for 2Q2017, with higher contributions from both the property and education divisions, while group profit before tax (PBT) was RM24.7 million.
Announcing the results, PARAMOUNT Group Chief Executive Officer Jeffrey Chew said the results were the outcome of a concerted effort by the Group to accurately read market demands, and cater its products accordingly.
“Smaller disposable incomes and the pressure of rising living costs are the norm in Malaysia today; and will remain so for the immediate future. With property investment and education being two of the biggest expenses an individual is likely to incur, the onus is on us, as a leader in these two businesses, to ensure that the needs of the public are met.
“We have expanded the breadth of our product portfolio to include more affordable property options; the result of which has been higher take up rates on our properties in Batu Kawan, Bukit Banyan and Salak Perdana. Likewise, the acquisition of REAL has enabled us to offer more affordable private national and international school options, meeting demand for affordable, high quality private education,” he said.
Revenue for the property division for 2Q2017 was RM122.9 million, attributable to higher sales and progressive billings from the Utropolis Batu Kawan, Sejati Residences and Greenwoods Salak Perdana developments, while PBT for the division during the corresponding period was RM16.4 million.
Revenue for the education division in 2Q2017 was RM61.6 million attributable to REAL’s revenue contribution of RM22.9 million as well as the higher revenue from Sri KDU, offsetting the lower revenue from KDU Penang University College (KDUPG). KDUUC’s revenue was maintained. PBT for the division was RM11.7 million.
Group revenue for 6M2017 was RM327.5 million, an increase of 27% compared with the same period last year (6M2016: RM258.6 million) with higher contributions from both the property and education divisions. Group PBT of RM43 million was, however, lower by 19%, compared with 6M2017 (6M2016: RM53 million) as the 6M2016 PBT had included a non-recurring gain of RM8.8 million realised on the disposal of apartments by KDUUC. The lower PBT was also due to the lower PBT contribution from the property division, which was, however, offset by the higher contribution from the education division.
On prospects for the rest of the year, Chew said that the Group remained cautiously optimistic.
“There are signs that consumer sentiments are rebounding, judging by the movements we have seen in the property market. Homebuyers, upgraders and astute investors are investing in properties in good locations, in particular townships/integrated developments that are affordably priced and innovatively conceptualised, as well as those with compelling value proposition as evidenced from sales in Paramount Property’s developments.
“We will add impetus to our performance by rolling out another innovative concept development in 2017 called Sekitar26 Enterprise, a neighbourhood community retail centre in Shah Alam, designed for a myriad of uses, and anchored by Paramount Property’s new development office,” he said.
He also said that Paramount Education will continue to face challenges, particularly in the tertiary segment where competition is intense and highly price-sensitive.
“With the enlarged K-12 segment, comprising Sri KDU and the R.E.A.L Education Group, offering premium and more affordably priced alternative private and international schools respectively, Paramount Education is now able to reach a wider segment of the K-12 market. Sri KDU’s excellence in quality education continues to be reinforced. Following the success of PISA in 2012, Sri KDU International School achieved the International School Quality Mark (ISQM) Gold Award this year, the first in Malaysia and third in Asia to achieve this award,” he added.
Additionally, he said that the Group is seeing results from its asset-light strategy to unlock capital resources from long term assets, with the Group having entered into a Sale and Leaseback agreement with Alpha REITs to dispose of the Sri KDU campus in a deal which is expected to be completed in 4Q2017.