•    PARAMON is positioned to benefit from a 332.2 acre undeveloped landbank (GDV RM3.3bn) across Central and Northern regions, supporting multi-year revenue visibility and resilience.
•    Dividend visibility remains strong, with payouts consistently above the 20% policy threshold (7 sen), underpinned by stable earnings.
•    Core earnings growth will be driven by (i) Recognition of RM1.6bn in unbilled sales, sustaining earnings visibility until FY28F, (ii) Targeted annual launches of RM1bn, with revenue recognised over 3–5 years, (iii) Strategic expansion in the northern and central region through new land acquisitions, with an estimated GDV of c.RM2.6bn.
•    We initiate coverage on PARAMON with a BUY recommendation and a target price of RM1.46 derived from a 50% discount to RNAV of RM1.8bn, incorporating a three-star ESG rating.  

Key Investment Highlights
Solid Dividend Visibility. PARAMON has delivered dividend payouts consistently above its 20% policy threshold. We expect dividends to be maintained at the c.7 sen per share level, allowing shareholders to participate in the Group’s earnings growth while ensuring sufficient capital is retained to fund ongoing operations and future land acquisition initiatives.

Strong Landbank Strategy to Drive Multi-Year Growth. PARAMON has set a target to replenish its landbank with RM6bn in new acquisitions over FY25–FY26. As at 30 Sept 2025, the Group maintains an undeveloped landholding of 332.2 acres, which carries a projected GDV of RM3.3bn. To date, the Group has successfully replenished RM2.6bn GDV worth of landbank through various acquisitions. Together with the Group’s launched developments of RM1.7bn available for sale, the total potential GDV for the Group amounts to RM5.0bn at the end of 3QFY25.

ROE Improvement Goals. The Group is targeting to improve its ROE to 10% by 2030 (FY24: 7.2%). This is expected to be driven by: (i) higher mix of landed projects of 30% and compressing the development cycle from land acquisition to cash settlement of projects, (ii) recurring income targeted for 30% by 2030 via co-working and hospitality, and (iii) monetisation of non-core assets to recycle capital into higher-yield recurring assets.

Strong development outlook with RM1bn GDV annual launches. The group is committed to sustaining c.RM1bn in annual project launches, underpinning multi-year revenue visibility. A strategic pivot toward landed properties enhances margins and accelerates cash conversion, supporting healthier ROE and capital efficiency.

Strong Positioning in Core Markets with Diversified Regional Exposure. PARAMON’s landbank is strategically diversified across the Central and Northern regions, reducing concentration risk and providing resilience across market cycles. Recently, PARAMON acquired land in Lunas, Kedah for a new township development. Based on our checks, industrial activity in Kulim, Kedah is accelerating, supported by strong manufacturing expansion and ongoing supply-chain relocation. PARAMON is positioning itself to capture spillover demand from Penang, underpinned by rising employment, population inflows, and improving infrastructure links within the northern economic corridor.

Valuation & Recommendation. We initiate coverage on Paramount Corporation Berhad with a BUY recommendation and a target price of RM1.46 based on a 50% discount to RNAV of RM1.8bn, incorporating a three-star ESG rating.  

Business Overview
Business Model. PARAMON operates a balanced, multi-engine business model centred on property development, supported by selective recurring income streams. Its core business focuses on property development across the Central and Northern regions, providing both scale and geographical risk diversification. In addition to its property development activities, PARAMON operates co-working spaces alongside its other investments that generates recurring income. This integrated model provides both steady cash flow visibility and long-term development-driven growth.

The Property segment remains the group’s core earnings driver, contributing 93% of total revenue in 2024, while the Coworking segment accounted for 2% and Investment & Others contributed 5%. (Figure 2)

Diverse Investments Portfolio. In addition to its core businesses, the Group has several significant investments. This includes a 49.0% stake in Navarang Charoennakhon Company Limited (a property developer in Thailand), a 21.5% stake in EWI Capital Berhad (formally known as Eco World International Berhad) and a recent acquired 28.0% stake in Envictus International Holdings Limited (listed on the main board of SGX). Envictus is principally involved in the F&B industry in Malaysia, with an established portfolio of businesses and brands operating under three key business divisions. Under its Food Services Division, as at 31 Dec 2025, Envictus operates 104 Texas Chicken restaurants and 50 San Francisco Coffee outlets in Malaysia. Its Trading and Frozen Food Division comprises Pok Brothers, a leading frozen food and premium food wholesaler for several major restaurants, while the Dairies Division is involved in the sale and distribution of the SuJohan brand of creamer.

Ongoing Projects. PARAMON currently has 8 ongoing projects and 3 recently completed developments. We estimate that approximately RM3.6bn in revenue will be progressively recognised from these projects, providing earnings visibility up to FY29F.

Sales and Unbilled Sales. Reflecting the strength of its core property segment, PARAMON recorded RM774.0m in sales and RM1.6bn in unbilled sales as of 3QFY25. Of the total sales, 65.9% came from the Central region, while the Northern region contributed 34.1% (Figure 14). Unbilled sales were similarly concentrated, with 82.8% in the Central region versus 17.2% in the Northern region. The trends in sales and unbilled sales are illustrated below (Figure 15). The FY25 launch target of RM1.0bn, with RM0.7bn launched up to 9M2025 and RM0.3bn scheduled for 4QFY25.

Landbank. The group’s undeveloped landbank totals 332.2 acres, carrying a GDV of RM3.3bn (Figure 16).

Future pipeline. The Group recently acquired four land parcels (Figure 17), two each in the Northern and Central regions, at an average land to GDV ratio of 13.1%. We view these acquisitions as attractively priced, especially when benchmarked against the Group’s historical land purchases, which typically ranged between 18% and 20% of GDV. The lower entry cost should support healthier development margins with parcels slated for launches from CY2026 onwards. Together with the Group’s launched developments of RM1.7bn available for sale, this provides medium to long term revenue visibility for the Group.

Batu Kawan, Penang. First launched in 2016, Utropolis Batu Kawan (UBK) is an integrated town development strategically located within the expanding Batu Kawan industrial corridor. Its masterplan combines residential, commercial, and education components, catering to students, staff, and the growing workforce in the area. Nearby low-cost housing by SkyWorld targets a different buyer segment, focusing on affordability for first-time homeowners and industrial workers (price range: RM225k – Rm420k), and is unlikely to overlap with UBK’s lifestyle-oriented offerings (price starting from RM500k). UBK differentiates itself through products such as dual-key and flexible-layout units, appealing to families, investors, and buyers seeking rental income opportunities or multigenerational living arrangements. Including the newly acquired parcel (GDV: RM744m) together with the ongoing phase, we estimate a remaining future GDV of about RM3.3bn, underscoring UBK’s mid- to upper-market positioning with diversified offerings and lifestyle-centric amenities.

Bandar Lunas, Kulim, Kedah. Paramon’s proposed acquisition of a 296-acre freehold parcel in Bandar Lunas underscores its renewed focus on the northern region and is poised to become a key growth driver for Kedah. The land comprises four adjoining plots situated 12 km from Lunas town and 4 km north of Kulim Hi-Tech Park (KHTP). Given Kulim’s strengthening industrial profile and improving connectivity, the acquisition aligns with Paramon’s aim to expand its landbank in high-potential locations. The rising concentration of industries and workforce in KHTP is expected to fuel population growth and, in turn, support demand for quality residential and commercial offerings in Bandar Lunas. The SPA is targeted to be completed in 2026 with the planned development within the same year comprising indicatively a mix of 39% industrial, 7% commercial, and 54% residential properties.

Shah Alam, Selangor. Recently, the group proposed to acquire three contiguous parcels of leasehold land totalling approximately 48.5 acres in Mukim Bukit Raja, Selangor, from SJ Properties Sdn Bhd for RM113.5m in cash. The land, designated for residential development, is strategically located near the Guthrie Corridor Expressway and DASH interchange, enabling a quick launch of Paramount’s signature residential projects with approvals already obtained. The acquisition, valued at RM113.5m, is expected to enhance the Group’s future earnings with a projected GDV of RM579m over six years. The acquisition is expected to be completed within 12 months, aligning it with Paramount’s strategy of replenishing its landbank in high-growth areas. The land cost represents 19.6% of the total GDV, translating to RM54 psf, which is below the market value of around RM80 psf. Launches will be in FY26, with construction starting in FY27. Therefore, we expect significant contribution to only be in FY28 onwards as construction progresses.

Putrajaya. Paramount Group is expanding its portfolio through the acquisition of a 2.6 acre freehold land parcel in Putrajaya for RM40m. The transaction, executed by its wholly owned subsidiary Phoenix Blanc Sdn Bhd via a sale and purchase agreement with Cahaya Nusantara Sdn Bhd, will be financed through a combination of bank borrowings and internal funds. Planned for a CY27 launch, the site is earmarked for a high-rise residential development with an estimated GDV of RM323m. Strategically positioned within the Putrajaya Sentral masterplan, the development offers exceptional connectivity as it sits adjacent to the city’s primary integrated transportation hub, providing seamless access to the MRT Putrajaya Line, KLIA Transit, and major bus networks. Furthermore, the site benefits from direct links to the Putrajaya–Cyberjaya Expressway and Lingkaran Putrajaya. Notably, this acquisition represents a high-margin opportunity for the Group with the land cost accounting for only 12.4% of the projected GDV, a significant improvement over the Group’s traditional acquisition benchmark of 18%–20%.

Industry Overview
Property Market Overview. NAPIC data shows that residential property transactions have been steadily increasing, reflecting strong and sustained demand for housing across the country. The trend suggests that buyers remain active in the market, supported by factors such as population growth, urbanisation, and expansion of employment hubs. This continued activity highlights the resilience of the residential property sector and its importance in Malaysia’s property market (Figure 18).

Economic Strength. Batu Kawan’s economic momentum is closely tied to its role as Penang’s industrial hub, supported by steady FDI inflows and the expansion of multinational manufacturers. The growth of industrial activity has accelerated investment, production capacity, and job creation with the ultimate aim of lifting household incomes and strengthening purchasing power among skilled professionals. In 2023, Penang recorded RM71.9bn in approved investments, with RM63.4bn attributable to manufacturing. This strong manufacturing investment continues to support demand for residential and commercial developments in Batu Kawan. Penang’s GDP sectoral trends over the years are presented in Figure 19. The upcoming Batu Kawan Industrial Park 2 is expected to further expand the employment base, supporting longer-term housing demand (Figure 20).

Manufacturing sector. Penang, known as the “Silicon Valley of the East,” is anchored by a strong Electrical & Electronics (E&E) industry. Key hubs include Bayan Lepas and Perai FIZ, which host over 300 MNCs, while newer clusters such as Batu Kawan Industrial Park, Penang Science Park, and Digital Penang further support growth. In 2024, the state secured RM17.3bn in approved manufacturing investments across 182 projects, generating nearly 16,254 jobs and reinforcing Penang’s role as a global trading hub.

Key Investment Highlights
Solid Dividend Visibility. Paramount continues to demonstrate a strong commitment to shareholder returns, consistently delivering dividend payouts that exceed its established 20% policy threshold. Looking ahead, the Group expects to sustain dividend levels of c.7 sen per share, underpinned by stable earnings performance. This balanced capital allocation strategy allows shareholders to benefit directly from the Group's growth while ensuring that sufficient capital is retained to support core operations and fuel future land acquisition initiatives.

Strong Landbanking Strategy to Drive Multi-Year Growth. Paramount has set a target to replenish its landbank with RM6bn in new acquisitions over FY25–FY26. At present, the Group maintains an undeveloped landholding of 332.2 acres, which carries a projected GDV of RM3.3bn. To date, the Group has successfully replenished RM2.6bn GDV worth of landbank through various acquisitions. Together with launched developments of RM1.7bn available for sale, the total potential GDV for the Group amounts to RM5.0bn.

ROE Improvement Goals. With ROE of 10% aimed by 2030 (FY24: 7.2%), it is expected to be driven by: (i) higher mix of landed projects of 30% and compressing the development cycle from land acquisition to cash settlement of projects, (ii) recurring income targeted for 30% by 2030 via co-working and hospitality, and (iii) monetisation of non-core assets to recycle capital into higher-yield recurring assets.

Robust development outlook with RM1bn annual launches. The group is committed to sustaining c.RM1bn in annual project launches, underpinning multi-year revenue visibility. A strategic pivot toward landed properties enhances margins and accelerates cash conversion, supporting healthier ROE and capital efficiency.

Favourable positioning with diversified regional exposure. PARAMON’s landbank is strategically diversified across the Central and Northern regions, reducing concentration risk and providing resilience across market cycles. Recently, PARAMON acquired land in Lunas, Kedah for a new township development. Based on our checks, industrial activity in Kulim, Kedah is accelerating, supported by strong manufacturing expansion and ongoing supply-chain relocation. PARAMON is positioning itself to capture spillover demand from Penang, underpinned by rising employment, population inflows, and improving infrastructure links within the northern economic corridor.

Financial Highlights
Strong unbilled sales. In 9MFY25, PARAMON recorded a 27.0% YoY increase in CNP to RM62.1m (from RM48.9m), driven by a 2.1% rise in revenue as all segments improved. The Group’s unbilled sales of RM1.6bn are expected to sustain earnings visibility until FY29F, supported by a yearly targeted launch of RM1.0bn.

Earnings Outlook. We project core net profit growth of -2.9%/+27.5%/+11.4% in FY25F/FY26F/FY27F, respectively. Growth will be driven by the progressive recognition of unbilled sales of RM1.6bn, new land acquisition with an estimated GDV of c.RM2.6bn. Net gearing is expected to remain stable at c.0.5x, in line with the industry average of 0.4x–0.8x.

Dividend. PARAMON’s formal dividend policy stipulates a payout of 20% of net profit. Dividends are typically distributed on a biannual basis, with the group historically paying above the policy level. We project dividends of 7 sen per share for FY26F-FY28F, translating to an attractive dividend yield of 6.7% based on current share price. This strategy allows shareholders to participate in the Group’s earnings growth while ensuring sufficient capital is retained to fund ongoing operations and future land acquisition initiatives. (Figure 21).

Sensitivity Analysis. Given that operating profit is influenced by both project value and cost efficiency, we conducted a sensitivity analysis to assess the impact of changes in GDV launches for FY25F and operating profit margin on our base-case FY25F operating profit of RM158.0m, which assumes a GDV of launches of RM1.0bn and a 16% margin. Our findings indicate that at the RM1.0bn launches level, every 2% fluctuation in operating margin triggers a ±12.0% swing in FY25F net profit. Conversely, maintaining a steady 16.0% operating margin shows that every RM200m change new launches shifts earnings by ±3.0%. These results highlight the substantial disproportionate impact of cost management and efficiency on the Group's bottom line compared to pure sales volume.

Valuation & Recommendation
Initiation Coverage. We initiate coverage on PARAMON with a BUY recommendation and a target price of RM1.46 based on 50% discount to RNAV and three-star ESG rating. We apply a 50% discount to our RNAV to derive the target price, reflecting (i) long gestation period required to monetise undeveloped landbank, (ii) sensitivity to property cycles and (iii) uncertainty over the timing and quantum of value realization of its non-core assets to shareholders.

We favour PARAMON for its: (i) long term ROE target of 10% reflecting the Group’s investor focus strategy, (ii) strong unbilled sales of RM1.6bn with launched & completed available development worth RM1.7bn available for sale, (iii) sustained earnings visibility supported by a low-cost, strategically located undeveloped landbank with potential GDV of c.RM3.3bn (332.2 acres), and (iv) diversified business segments, including hospitality and co-working spaces, providing multiple streams of recurring income.

We performed a DuPont analysis on PARAMON’s trailing ROE for FY24 to assess the key drivers of ROE, decomposing it into net profit margin, asset turnover and equity multiplier.

ROE = Net profit margin x Asset turnover x Equity Multiplier
 

A 9.8% net margin indicates that the Group retains about 10 cents for every RM1 of revenue after all expenses, highlighting its ability to translate sales to actual profit. Its asset turnover of 34.4% indicates efficient revenue generation from assets. Financial leverage is moderate at 1.94x, with approximately 52% of assets funded by shareholders’ equity and 48% by borrowings, suggesting prudent use of debt without overreliance on external financing.
 

Investment Risk
Failure to Monetise Non-Core Assets. Paramount’s current non-core assets is estimated at RM986m, comprising of (i) two education campuses valued at RM386m, (ii) Atwater Towers at RM300m, (iii) Glenmarie Hotel and Mall at RM200m, and (iv) investments in EWI Capital Berhad at RM100m. Delays or inability to monetise these assets could limit the Group’s capital recycling, constrain ROE improvement and impact shareholder returns.

Affordability Concerns Amid Premium Positioning. PARAMON’s northern0region projects are priced at a premium, in a market with generally lower purchasing power compared to the Central region.

Rising Construction Costs: Higher raw material prices (cement, sand) and stricter enforcement of heavy vehicle load limits may raise logistics expenses, putting long-term upward pressure on project pricing and margins, potentially reducing affordability for buyers