Limited earnings growth for Paramount in 2013

KUALA LUMPUR: Paramount Corp Bhd (PCB) will not be expecting much growth in earnings amid a slowdown in the company’s property launches this year, said executive deputy chairman and group CEO Datuk Teo Chiang Quan.

“We are trying our best to have more property launches this year, but they have been held back because the division has been experiencing slow approvals for its projects,” Teo told reporters after the company AGM.

He added that on a positive note, the group is looking at better earnings growth in 2014 following the completion of several development projects by PCB.

“The more significant benefit of our efforts can be seen at our Glenmarie Utropolis project, which was launched in May. Close to 90% of phase one of the serviced apartments have been sold and we are seeing strong interest in the SoHo units and retail centre.”

Utropolis is a 21.7-acre (8.8ha) integrated development, which will be home to KDU University College’s flagship campus in 2015. “Our plan for property development is to move into integrated developments ... We have plans for property launches in Cyberjaya, Sungai Petani and Glenmarie, and on a 30-acre tract near Hicom, Shah Alam,” Teo said.

The group’s property division contributes up to 75% of its turnover while the rest is from its education division. PCB has residential and commercial development land worth an estimated RM7 billion in gross development value.

PCB’s education division is expecting to complete its RM500 million university metropolis, Paramount Utropolis, in Glenmarie, Shah Alam, by end-2014. Classes are expected to commence by January 2015.

The group had issued perpetual bonds and a sukuk ijarah programme worth RM200 million and RM350 million respectively to increase its landbank and fund its development projects, namely its new Utropolis campus, which would cost about RM220 million.

Datin Teh Geok Lian, who manages the KDU Education Group, said additional proceeds from the sukuk programme would be utilised on a possible phase two of Utropolis. “The additional funds would be made available if the campus goes into full capacity faster than expected.”

In January, PCB proposed a long-term incentive plan (LTIP) for its employees, executive directors and CEO. Shareholders approved the plan for employees, but the scheme for executive directors and CEO was withdrawn at the eleventh hour before the EGM in March.

Teo said the withdrawal by the board was because of the abrupt resignation of PCB’s previous CEO, Chan Say Yeong, in April.
Under the LTIP, PCB aimed to make its staff the “owners” of the company by rewarding them with shares of up to 10% of the issued and paid-up share capital of the group.

Teo has assumed the role of acting CEO since Chan’s resignation and the group is looking for a new CEO. “We are in the process of finding a new candidate ... we have worked with some search firms to bring in the necessary candidates for us to assess and evaluate ... we have not shortlisted anyone as it is a long process,” said Teo.

He added that there were no concerns raised by shareholders on Chan’s resignation and it was business as usual for the group. “The group has been structured into two divisions and each division is being taken care of by capable people [Teh and Datuk Ricque Liew], in a way business continues to be functioning well,” said Teo.

Liew, who manages the group’s property and construction division, said the group’s five-year strategy and three-year implementation are in place and currently under execution. “There is nothing stopping us from new launches and projects,” he said.

This article first appeared in The Edge Financial Daily, on June 11, 2013.