Paramount shares on course for worst day in over seven months as 1Q disappoints

KUALA LUMPUR (May 30): Shares in Paramount Corp Bhd (KL:PARAMON) had their worst day in over seven months on Thursday, after the property developer reported weaker-than-expected first-quarter results.

The counter fell as much as 8.2% or 10 sen to RM1.12, its lowest since May 10. At market close on Thursday, Paramount's share fell six sen or 4.92% to RM1.16 with 1.9 million shares changing hands, valuing the company at RM722.36 million.

Net profit for the first quarter ended March 31, 2024 (1QFY2024) amounted to RM7.7 million, representing only 9.4% of consensus full-year forecasts. The weaker first quarter net profit was primarily attributed to slower-than-expected progress billings.

TA Securities, one of the two analysts tracking Paramount with a “buy” rating and target price (TP) of RM1.68, has adjusted its earnings projections for the company by 18% for financial year 2024 (FY2024) and 10% for FY2025, after factoring in the revised progress billing assumptions based on ongoing projects. It anticipates a 2% increase in FY2026 earnings.

The research house noted that Paramount has maintained its FY2024 sales target of RM1.4 billion, which will be supported by seven projects with an estimated gross development value of RM2.4 billion. Notably, RM81 million worth of projects were launched in the first quarter of 2024.

AmInvestment Bank — the other analyst covering Paramount — also rated the counter a "buy" with a TP of RM1.46.

Paramount had reported to Bursa Malaysia on Wednesday its 1QFY2024 fell 33.44% to RM7.71 million — the lowest level seen since 1QFY2022 — against RM11.58 million a year earlier, as its property segment was hit by lower work progress and sales.

Quarterly revenue dropped 11.28% to RM172.61 million from RM194.56 million in 1QFY2023. Paramount did not recommend any dividend for the quarter under review.

Paramount said it has accelerated its overseas expansion plan with the acquisition of a 21.54% equity interest in Eco World International Bhd (KL:EWINT), in line with its strategic plan.

This acquisition, which was completed on May 14 for a cash consideration of RM170.6 million, will provide an additional layer of profits to complement the group's domestic property development business in the mid-to-long term, according to TA Securities.

“We view the recent acquisition of a 21.5% stake in Eco World International positively, as it accelerates the realisation of Paramount's overseas expansion and diversification strategy,” TA Securities added.