PETALING JAYA: Paramount Corp Bhd
is set for better returns from its investment assets, which collectively could propel the group’s return-on-equity (ROE) to 10% by financial year 2030 (FY30), up from 7.2% in FY24.
Until then, investors can expect dividend yields of 8% to 10% from its biannual payments at a 45% payout rate, said Kenanga Research.
For FY25 and FY26, the research house anticipates revenue to be driven by its property development division.
However, as sales and launch volumes are expected to remain stable at about RM1bil a year, it does not expect significant increments in the near term.
The research outfit said this could be revised if the completion of its projects in Klang Valley occurs sooner than expected, in addition to potential sales of its property investment assets.
For now, Kenanga Research projects revenue growth of 6% for FY25 and 3% for FY26.
Core net profit growth could be significantly stronger, at 16% and 12%, respectively, led by lower distributions to perpetual securities holders.
The research outfit expects higher contributions from associates, Envictus International Holdings and EWI Capital.
Envictus plans to expand its profitable Texas Chicken chain from 101 outlets to 118 outlets in FY26.
Kenanga Research added that any stronger performance may only materialise in FY27 onwards.
Envictus holds the franchising rights for Texas Chicken in Malaysia and Brunei, in addition to operating the San Francisco Coffee chain.
The research house initiated coverage on Paramount with an “outperform’ call and a target price of RM1.49 a share, based on a revalued net asset value discount of 50%.
The company’s shares closed 1% higher at RM1.01 yesterday.
Paramount is also expanding into the northern region to capitalise on growing demand for houses there, while maintaining its premium branding in the central region.
The increasing focus on the northern region diversifies away from the increasingly saturated and competitive central region, while tapping into rising demand and more favourable absorption rates in the north.
This strategy allows the group to leverage on a higher return-on-asset environment, which enables it to better achieve its ROE target.
About 55% of Paramount’s RM1.02bil worth of launches in the first nine months of FY25 were concentrated in the northern region.
The group’s target to achieve a 10% ROE by FY30 is supported by more active optimisation of its diversified investment asset base.
Its strategy hinges on “sweating” existing assets and unlocking new income avenues to uplift returns within the next three years.
