Review

• Excluding the gain on disposal of investment properties of RM5.6mn,  Paramount Corporation Bhd (PCB) reported normalised net profit to  ordinary equity holders of RM49.1mn in 9M23. Results came in broadly  within our but below consensus estimates, accounting for 79% and 65% of  our and consensus full-year forecasts, respectively.

• YoY: 9M23 net profit to ordinary equity holders surged 87%YoY to  RM49.1mn, primarily due to notable improvements in the property  division.

• The property division demonstrated a strong performance, achieving a  profit before tax (PBT) of RM108mn in 9M3, representing a 54% increase  compared to the RM70.3mn recorded in 9M22. This growth was driven  by higher revenue recognition from ongoing projects. On top of that,  stronger performance was also driven by savings from the finalisation of  some project costings.

• The Co-Working division recorded a PBT of RM1.1mn in 9M23 compared  to a loss before tax of RM0.5mn in 9M22. The improvement can be largely  attributed to the higher average occupancy rates.

• QoQ: The net profit to ordinary shareholders in 3Q23 experienced a  26% decrease compared to the previous quarter. This decrease can be  attributed primarily to the lower contribution from the property division,  as the performance in 2Q23 was positively boosted by savings from the  finalisation of some project costings.

• PCB’s 3Q23 new property sales increased 26% YoY but contracted 33%  QoQ to RM292mn, bringing 9M23 sales to RM909mn (+32% YoY). The  latest unbilled sales remained stable at RM1.5bn.

Impact

• Maintain earnings forecasts.

Outlook

• Capitalising on the robust sales momentum attained in the first nine  months of 2023, PCB is strategically positioned to unveil landed residential  properties with an approximate GDV of RM246mn for 4Q23. Encouraged  by positive responses to recent launches, management is optimistic about  reaching the RM1.2bn sales target. Notably, the sales figures achieved in  9M23 already account for 76% of the set target.

• Anticipating the Malaysian economy's ongoing recovery, PCB foresees  improved performance in its Co-Working division. The group aims for a  45% capacity increase (52,000 sq ft) by year-end through active expansion  efforts. In November 2023, it expanded its Tropicana Gardens space by 37% and acquired a coworking space at Ken TTDI. Additionally, a new  space at The Five in Damansara Heights is slated to open in December  2023. With this expansion, PCB will have seven locations totalling 167,000  sq ft in the Klang Valley by the end of 2023.

Valuation

• We maintain our Buy recommendation on PCB with an unchanged TP of RM1.17/share, based on a CY24 P/Bk multiple of 0.5x.

Source: TA Research - 27 Nov 2023