Paramount sets higher sales target for 2016 despite slowdown

KUALA LUMPUR (Feb 26): Paramount Corp Bhd, which saw its full-year 2015 net profit climb 8.3% on higher revenue on Wednesday, is doubling its property launches this year to RM770 million from RM313 million in 2015, unperturbed by a slowdown in the property market.

The property developer has also set a higher sales target of RM480 million for 2016, after surpassing last year’s RM400 million sales target to hit RM432 million, said its group chief executive officer Jeffrey Chew Sun Teong (pictured).

“Out of the RM770 million properties that we intend to launch this year, 30% will comprise commercial units, landed residential (34%) and integrated high-rise condominiums (36%),” he told a news conference to announce the group’s results for the financial year ended Dec 31, 2015 (FY15) yesterday.

“While other property developers are facing sales contraction, ours are still growing. One reason is that we are a smaller player at the moment and so, we still have room to grow to a certain size without being affected by a slowing economy,” said Chew.

Chew also said Paramount’s confidence of achieving higher sales in 2016 amid a slower property market is premised on the group’s product mix and the synergy from its education arm.

“We have a mixed range of products that suit every customer. Our products range from RM300,000 to RM3 million [per unit], and have a good geographical spread in the Klang Valley, Penang and Sungai Petani (Kedah),” he added.

Chew attributed the surpassing of 2015’s sales target to the introduction of sales incentives for its salespersons and higher usage of real estate agents as third-party sales force.

“These helped our sales quite significantly, and we got quite a number of Malaysian buyers, who are working in the Middle East and Hong Kong. They felt that now is a good time to take advantage of the weaker ringgit,” he said.

Meanwhile, Paramount expects its loss-making education arm to turn earnings before interest, taxes, depreciation and amortisation positive in FY16, and become profitable by FY18.

“We are still making losses because of the depreciation charge for our new campus [at Utropolis, Glenmarie], but we are trying to achieve 20% growth in student numbers for the next three years. So, by 2018, we think the education business will start contributing to the group,” said Chew.

However, he cautioned on the uncertainties that could affect its goals, such as the intense competition in the private education industry due to the opening of several new schools and market preference shifting to medium- to lower-priced institutions amid a slowing economy.

Interested in property investments in Sungai Petani after reading this article? Click here to check out the properties there.

This article first appeared in The Edge Financial Daily, on Feb 26, 2016. Subscribe to The Edge Financial Daily here.