PETALING JAYA: Analysts are mostly constructive about Paramount Corp Bhd
’s latest acquisition of a strategic freehold landbank in Jalan Ampang, Kuala Lumpur given its close proximity to the group’s previously successful property developments.
The group intends to develop the site into two blocks of high-end serviced apartments, with a targeted launch by end-2026.
The proposed project is expected to generate a gross development value (GDV) of about RM1.1bil.
In a report, Apex Securities Research said it is positive on the acquisition, given its close proximity to the group’s previous developments. The new acquisition implies a land cost-to-GDV ratio of 23.4%, slightly above the group’s recent acquisition average.
“However, we view this premium as justified, supported by the project’s shorter time-to-market, lower execution risk and proven take-up rates of nearby developments,” it noted.
Paramount’s outlook also remains constructive, Apex Research said, adding that with total projected landbank GDV rising to about RM8.8bil post-acquisition, this is expected to sustain long-term revenue visibility while supporting its financial year 2026 (FY26) property launch target of RM1.1bil.
This is further supported by RM1.5bil in unbilled sales, which provides a solid earnings base as project construction progresses. Assuming 80% debt funding, Apex Research estimated the acquisition would raise the group’s gearing, with debt-to-equity increasing from 0.81 times to 0.95 times on a pro-forma basis, while net gearing rises to 0.77 times.
Nonetheless, the research house viewed this as manageable, supported by the group’s strong development pipeline and earnings visibility.
Earnings-wise, Apex Research has lifted its FY27 forecast by 17.8% higher, driven by the inclusion of contributions from the newly acquired project.
Accordingly, it maintained a “buy” recommendation with a higher target pricec of RM1.46 from RM1.40 previously.
The risks to its call include failure to monetise non-core assets, exposure to the cyclicality of the property sector and rising construction costs.
Similarly, TA Research is positive on Paramount’s latest acquisition, supported by its prime location, development readiness and supportive benchmarking against Embassy Row transactions.
While the entry price is slightly elevated, the brokerage does not view it as stretched in the context of comparable land deals.
Encouragingly, despite both Paramount’s Atrium and Ashwood development being fully sold, TA Research said “we understand that there are still active enquiries at the sales gallery, suggesting demand within the enclave remains healthy”.
Based on the approved plot ratio of six times, TA Research estimated an indicative selling price of around RM1,350 per sq ft, which it viewed as reasonable.
It maintained a “buy” call on the stock with an unchanged target price of RM1.25 per share.
