Paramount Corporation Bhd - Earnings Miss
Mon, 16-Feb-2026 08:28 am
by Tan Wai Wern • Apex Research

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PARAMON (1724)

Target Price (RM)

1.40

Recommendation

Buy

 

  • Paramount’s 4QFY25 CNP came in at RM47.3m (-72.5% YoY, -59.4% QoQ), bringing 12MFY25 CNP to RM72.3m (-16.1% YoY), which accounts for 87.1% of our full-year forecast and 75.0% of consensus estimates.

  • The Group declared a second interim DPS of 4.5 sen, bringing YTD DPS to 7.5 sen.

  • Following slower-than-expected launches last year, we moderated the projected sales for the Group’s new launches. As a result, our earnings forecasts are revised by -4.7%/+7.5% to RM100.3m/RM126.8m for FY26F/FY27F.

  • Maintain BUY recommendation with reduced target price of RM1.40 (from RM1.46), derived from a 50% discount to RNAV, incorporating a three-star ESG rating.

 

Results below expectations. Excluding a net gain of RM47.3m from the disposal of investment properties, 4QFY25 core net profit (CNP) came in at RM10.3m, bringing 12MF25 CNP to RM72.3m. The result missed expectations, accounting for 87.1% of our forecast and 75.0% consensus estimate. The shortfall stemmed from lower-than-expected FY25 property sales of RM1.0bn (-26% YoY). The softer sales outcome was attributed to the Group’s reduced launch activity, with FY25 launches totalling RM808m against an initial target of RM1.0bn. Consequently, unbilled sales declined by 80m YoY to RM1.5bn at the end-FY25.

 

YoY. 4QFY25 CNP plunged 72.5% YoY, weighed by weaker contributions from both the Property and Coworking segments. Operating profit in the Property segment fell 42.9%, primarily due to lower-than-expected property sales amid a slowdown in new property launches. Meanwhile, the Coworking segment underperformed as reduced design-and-build revenue from Scalable Malaysia resulted in a loss before tax of 0.4m, reversing from a profit before tax of RM0.6m in the same period last year. Excluding the non-recurring dividend income of RM25.9m from EWI in 4QFY24 and the RM49.8m gain from investment property disposals in 4QFY25, the Investment & Others segment swung from a profit before tax of RM3.3m to a loss of RM3.8m.

 

QoQ. CNP was down by 59.4% QoQ due to lower contributions from the Property segment where PBT fell 35.7% to RM23.6m (from RM41.4m). New property launches of RM92m in GDV fell short of our initial forecast of RM384m, representing a shortfall of RM292m.

 

Dividend. The Group declared a second interim DPS of 4.5 sen (4QFY24: 1.5 sen), bringing YTD DPS to 7.5 sen (FY24: 7.5 sen). We believe this higher-than-expected DPS was supported by its net gain in disposal of investment properties this quarter.

 

Outlook. The Group’s outlook remains positive, underpinned by a robust pipeline of upcoming property launches and rising earnings contributions from its newly acquired associate, Envictus International Holdings Limited (EIHL). Earnings visibility is supported by ongoing construction progress and healthy sales take-up. Unbilled sales remain at a healthy level of RM1.5bn, which is expected to be progressively recognised through FY28 as projects advance. As at 31 December 2025, the Group maintains an undeveloped landbank of 321.6 acres, with 44.9% located in the Central region and 55.1% in the Northern region. Including launched developments currently available for sale, the Group’s total potential GDV stands at RM4.8bn, comprising 58.9% Central and 41.1% Northern exposure. A series of upcoming launches, including Greenwoods, Paramount Embun Hills and Bukit Banyan, is expected to underpin the Group’s targeted property launches of RM1.1bn in FY26.

 

EIHL is expected to remain resilient, supported by steady top-line growth of 2.7% YoY. Growth was primarily driven by a strong performance in the Dairies division, where revenue increased 34.3% to RM43.5m, followed by the Trading and Frozen Food divisions, which grew 13.3% to RM42.1m. In contrast, revenue from the Food Services division declined 8.8% YoY to RM112.6m, largely reflecting seasonal softness in consumer spending. As at end-CY25, the Group operated a total of 104 Texas Chicken Malaysia outlets (CY24: 98) and 50 San Francisco Coffee outlets (CY24: 53). Looking ahead, EIHL plans to open 15 new Texas Chicken outlets by September 2026, while continuing to rationalise its San Francisco Coffee footprint through a shift towards kiosk-based formats to reduce operating overheads.

 

Earnings Revision. Following slower-than-expected launches last year, we moderated the projected sales for the Group’s new launches. As a result, our earnings forecasts are revised by -4.7%/+7.5% to RM100.3m/RM126.8m for FY26F/FY27F.

 

Valuation. We maintain our BUY call with a reduced TP of RM1.40 (from RM1.46), based on a 50% discount to our RNAV of RM1.7bn.

 

Risk. Failure to monetise non-core assets, affordability concerns amid premium positioning and rising construction costs.

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