At yesterday’s briefing, management remained committed to achieving>10% growth in new sales and earnings. Paramount’s sales prospects seem more promising amidst the weak property market, given the more exciting product launches in the pipeline. Maintain BUY and MYR2.32 TP (52% upside). While the potential asset monetisation exercise may take some time, share price would be supported by >5% dividend yield.

Growing from strength to strength. FY15 core earnings growth of 27% marks the new CEO Mr Jeffrey Chew’s first report card as he joined the company in Jul 2014. For FY16, management expects to achieve MYR480m sales (from MYR432m in FY15) and double-digit earnings growth, on the back of MYR770m worth of new launches.

More promising sales prospects. Despite the challenging property market environment, Paramount’s pipeline launches are carefully chosen to ensure more sustainable sales. New projects include Phase 1 Section 13 Petaling Jaya project (GDV: MYR300m) and Phase 1 Batu Kawan university metropolis development (GDV: MYR106m), a concept similar to the highly-successful Utropolis Glenmarie. Both projects were delayed from last year due to the Strata Titles Act amendment, but should be ready for 2H launch. While Section 13 mainly targets the young population in the established neighbourhood, the Batu Kawan development is in a new growth area. Another developer, Aspen Group, which is the joint venture partner of the new IKEA store there, fully sold all its retail shops (451 units) last year. As Paramount’s development is located just opposite Aspen Group’s land, it should be similarly sellable.Focusing on landed housing. Acknowledging the market challenges,

management has also set a target that at least 30% of annual launches are landed housing. Paramount rolled out its first phase of the Salak Perdana project (GDV: MYR58m) late last year. Priced at c.MYR450,000-500,0000/unit, the terraces’ take-up rate has improved to about 40% from 18% in Dec 2015.Setting up a new K12 school in Klang. Management, having carried out various research and studies, believes that the demand for international school in Klang should be strong, given the lack of reputable private education institutions there. A licence for a new primary and secondary school has already been obtained from the Ministry of Education. Earthworks for the new campus in Klang will start in Jun 2016, and the construction will take about two years.

We expect the school to commence operations in 2019. This should add 1,500-student capacity to the current total of 3,141 students in the K12 segment. Maintain BUY. Our SOP-based TP is kept at MYR2.32, with 20% holding company discount. While the potential asset monetisation exercise, ie the key share price catalyst, may take time, the decent earnings growth underpinned by MYR367m unbilled sales and the resilient education segment should help to sustain >5% dividend yield. Key risks are delays in launches and worse-thanexpected market conditions.