Paramount's 3Q earnings up 6.1% on higher revenue

KUALA LUMPUR (Nov 19): Property developer Paramount Corp Bhd's net profit rose 6.1% to RM15.53 million in its third quarter ended Sept 30, 2015 (3QFY15) from RM14.64 million in the same quarter last year, on higher contribution from both its property and education division.

For the same reason, its revenue rose by 22.72% to RM147.7 million from RM120.4 million a year ago, its Bursa Malaysia filing showed today; no dividend was declared for the period.

Cumulative nine-month (9MFY15) profit grew a marginal 0.8% to RM52.8 million from RM52.4 million in 9MFY14; 9MFY15's revenue, however, rose by 21.5% to RM428 million from RM352.4 million previously.

Segmentally, its property division's revenue grew 27% to RM111.4 million from RM88 million in 3QFY14 due to higher sales and higher progressive billings registered on the Utropolis in Glenmarie, Shah Alam, and Sekitar26 Business in Shah Alam developments.

Consequently, its profit before tax (PBT) for the division rose 16% to RM18.6 million from 3QFY14's RM16 million.

Revenue for its education division, which comprises primary, secondary and tertiary education, grew 15% to RM36.3 from RM31.7 million a year ago.

However, PBT for this division slid 11% to RM5.5 million from RM6.2 million in 3QFY14, due to KDU University College incurring higher losses stemming from the onset of depreciation charges, and interest costs on its new campus in Utropolis, Glenmarie, this year.

Looking forward, Paramount expects the property market to remain subdued due to the prevailing cautious spending sentiment and tighter lending policies.

It noted, however, that despite the challenging market conditions, Paramount Property's developments have largely performed well, with new launches enjoying take-up rates of between 50% and 70%.

"Paramount Property has recorded new sales of 374 units of properties with a sales value of RM306.37 million in 9M2015 from its ongoing development projects, with locked in sales of RM400 million as at Sept 30, 2015," said its note to Bursa.

On its education division, the group finds that the primary and secondary school and tertiary segments continue to face intense competition amidst the current economic slowdown leading customers to take a more cautious approach.

"The primary and secondary schools with its strong value proposition are, however, operating at close to full capacity and will continue to drive the performance of the division to register strong revenue and profits, while the college in Penang continues to deliver consistent performance.

"This will mitigate the expected losses of KDU University College stemming from the onset of the depreciation charges and interest costs on the new campus in Utropolis, Glenmarie, which opened in January, 2015," it said.

As at 3.23pm, Paramount's shares were trading at RM1.61, up 0.63% or one sen, for a market capitalisation of RM675.6 million. -- theedgemarkets.com

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