Paramount to launch more properties this year after stellar 1Q sales

Chester Tay
Friday, 19 May 2017 12:36:35 PM

KUALA LUMPUR (May 19): Paramount Corp Bhd is looking at launching RM750 million worth of properties this year, from the initial target of RM600 million, following an impressive sales success in the first quarter of this year (1Q17).

“Our sales target for the year is RM500 million, but in 1Q17 alone we recorded about RM244 million in sales. However, we are not going to revise our target. We prefer to under-promise and over-deliver,” its group chief executive officer Jeffrey Chew Sun Teong told reporters after its annual general meeting yesterday.

He said demand for the group’s new properties has been “healthy”, particularly for its Utropolis Batu Kawan development in mainland Penang.

“Quite a fair bit of the [RM244 million] sales came from our Batu Kawan project. [This is because] some of our buyers find it convenient to live there as the place has faster access to the second bridge,” he said.

With an estimated gross development value of RM1.8 billion, Utropolis Batu Kawan is located 1km away from the Second Penang Bridge.

The project is divided into four phases and estimated to be completed by 2026. It features residential, commercial, retail and hotel components, as well as a new flagship campus for KDU Penang University College, which is owned and operated by Paramount’s education division.

“In 1Q17, we launched about RM350 million worth of projects, leaving another RM400 million to go for the remainder of the year,” Chew said.

“Our project launches will be confined [to] the Klang Valley and the northern region of Peninsular Malaysia. We still see a lot of growth opportunities in these markets,” he added.

Chew also said Paramount is not aggressively expanding its land bank at the moment as the group adopts an asset-light business model.

“We will still look into it when the opportunity arises. But we still prefer to undertake joint ventures with landowners so that we don’t have to commit too much [capital] and hold onto the land for too long,” he said.

Paramount’s property business contributes 70% of the group’s revenue, while the remaining is derived from its education business.

Chew said the group’s primary and secondary education or K-12 segment is expected to remain “very profitable” this year. The tertiary education segment, however, will continue to face intense competition.

“The price war in tertiary education is still ongoing, but we will [continue to] compete as we want to offer the entire array of education services to our customers,” he said.

Chew said the remaining three quarters of 2017 will see Paramount consolidating earnings from its newly acquired REAL Education Group Sdn Bhd. Paramount on April 11 completed the acquisition of a 66% stake in REAL Education for RM183 million.

“We are the largest K-12 player in the market, with more than 6,500 students. We can leverage on that kind of scale and expand further. We are thinking of expanding our footprint in the Asean region, but we have not finalised anything yet,” he added.

Chew also pointed out that the group remains on track to dispose of one of its education property assets to a third-party real estate investment trust (REIT). “The REIT operator still requires some approvals from the authority, but we hope to get it done by this year,” he said.

This article first appeared in The Edge Financial Daily, on May 19, 2017.

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