Property to drive Paramount’s earnings this year

  • Business
  • Saturday, 28 May 2005


PARAMOUNT Corp Bhd expects to boost earnings this year with property development as the key driver, RHB Research Institute Sdn Bhd said in a report. 

It said Paramount was targeting to develop the western portion of Bandar Utama early next year. 

The western portion is almost twice the size of the eastern portion. The land, however, is deemed less attractive due to its close proximity to the industrial area. 

The area has been earmarked for 4,840 low-to medium-cost properties worth RM682mil. The gross development value (GDV) of the project is RM811mil.  

The development, which Paramount expects to complete over the next five to seven years, will have a total of 6,243 residential and 119 commercial units. 

Meanwhile, Kemuning Utama in Shah Alam is Paramount's main property development. Some 70% of the land is underdeveloped and the company expects to complete the project in eight years.  

This mixed property development on 524.7 acres freehold land is worth RM1.3bil in GDV. 

Paramount's existing project, Bandar Laguna Merbok, will take five more years to complete, as 40% of the land is underdeveloped. To date, about 2,476 properties worth RM430mil have been sold. Altogether, 2,651 units worth RM466mil were launched. 

“Bandar Laguna Merbok has captured 40% share of the double-storey semi detached segment and 35% share in the double-storey terrace segment in Sungai Petani in 2004,” said RHB Research. 

Some 96% of Bandar Laguna Merbok will comprise residential properties and 4% commercial units. It will have a GDV of RM700mil upon completion in five years. 

“Bandar Laguna Merbok commands a pre-tax margin of 20%. Future progress billings from 395 properties to be launched this year will help to sustain its earnings in 2006,” said RHB Research. 

The research house expects Paramount to make a net profit of RM40.1mil on revenue of RM379.2mil in the current year ending Dec 31. Last year, the company posted net profit of RM25.2mil and revenue of RM271mil. 

RHB Research said the Regency Tower and Perumahan Berjaya Sdn Bhd were the main income contributors to Paramount's property investment division.  

Regency Tower is a 23-storey condominium comprising 76 luxury apartments in Kuala Lumpur’s Golden Triangle. 

Paramount also has 20% stake in Jerneh Insurance Bhd, which contributed RM6.8mil, or 17.9%, of group pre-tax profit last year. 

According to RHB Research, as a company with only two new property projects, Paramount's earnings were subject to high geographical risks.  

Kemuning Utama alone accounts for more than 70% of the group’s operating profit this year. 

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