KUALA LUMPUR (Aug 24): Paramount Corp Bhd, which saw its net profit more than doubling in its second quarter thanks to a land disposal gain, plans to continue monetising its land bank and conduct strategic divestments to unlock value and improve its bottom line.
This is also in line with the group's asset-light strategy, according to group chief executive officer Jeffrey Chew.
The group's net profit in the second quarter ended June 30, 2018 (2QFY18) jumped to RM42.30 million from RM18.08 million in the year-ago quarter, after Paramount sold a 9.4-acre industrial land in Kota Damansara. The disposal contributed a revenue of RM92.1 million and a profit before tax (PBT) of RM43.2 million to the group.
Without the land disposal, Paramount said PBT would be lower than 2QFY17, as many projects had been handed over since 2QFY17.
"[There are considerations to sell land in] Cyberjaya, Klang, as well as in Bukit Mertajam [Penang]. If we can sell at the right price then we will. We are still looking for buyers for different locations. Additionally, we are also on the lookout for more land," he said.
The group's remaining undeveloped land bank stood at 721.9 acres as at June 30, 2018.
He said the group specifically intends to divest assets in its education segment in the near future, given increased competition amidst a price-sensitive environment.
"We are in discussions with banks to look for potential divestments, but we have not yet put anything in black and white yet. As soon as it becomes substantive, we will make the announcement accordingly," he said at an analyst and media briefing earlier.
Paramount's education portfolio currently accounts for 30% of its revenue, while the remainder comes from property development.
The group is also confident of meeting its full-year sales target of RM1 billion, as it sees sentiment in the property market continuing to pick up, said Chew.
For the first half of the year, the group has secured RM598 million in sales. Its optimism on reaching the full-year target is backed by the group's new property launches worth RM1.2 billion for the year.
On the introduction of the sales and services tax (SST), Chew said the new tax regime would definitely reduce the production costs of developers by "1% to 2%".
"It will not drop significantly. But with 1% to 2%, we may be able to see a better priced structure, [which means] better quality products to the customer. It will depend on the market," he said.
Paramount shares settled 3 sen or 1.6% higher at RM1.91 today, giving it a market capitalisation of about RM818 million. In the past one year, the stock has climbed about 15%.