Paramount’s 1QFY26 CNP came in at RM13.7m (-5.6% YoY; +33.4% QoQ), which accounts for 13.6% of ours and 13.7% of consensus estimates. We deem the results to be in-line as the Group’s earnings are weighted toward 2HFY due to concentrated launch activities.
We expect the Group’s performance to remain resilient, supported by its robust unbilled sales of RM1.5bn, sizable undeveloped landbank of 617.2 acres and available for sales launched developments equivalent to RM1.4bn.
Maintain a BUY recommendation with unchanged target price of RM1.46, derived from a 50% discount to RNAV, incorporating a three-star ESG rating.
Results met expectations. Excluding exceptional items comprising gains on derivatives and net forex losses amounting to RM0.7m, PAR reported a 1QFY26 core net profit (CNP) of RM13.7m (-5.6% YoY; +33.4% QoQ). We deem the results to be broadly in line with expectations, despite accounting for only 13.6% of our and 13.7% of consensus estimates, as the Group’s earnings are typically weighted toward the second half of the financial year. The softer performance during the quarter was mainly attributable to a lower number of ongoing projects, the absence of new property launches and slower revenue recognition from projects in the early construction stages.
YoY. PAR’s 1QFY26 CNP declined -5.6%, weighed by weaker contributions from Property and Coworking divisions. The Property segment recorded a -26.8% decline in profit before tax (PBT), primarily due to slower revenue recognition from developments in the early construction stages. Consequently, property sales fell -33.9% YoY to RM152.0m as a result of the Group’s prudent launch approach. Meanwhile, the Coworking segment registered a wider loss before tax (LBT) of RM0.8m (+62.4% YoY) due to the absence of design-and-build contributions from Scalable Malaysia, coupled with higher fixed operating costs from two newly opened coworking spaces.
QoQ. CNP rose +33.4%, due to the absence of a RM47.3m net gain from the disposal of investment properties recognised in 4QFY25. Excluding this one-off item, underlying earnings momentum remained softer, as the Property segment recorded a -4.2% decline in PBT which was led by a -85.3% plunge in property sales. In addition, the Group’s share of joint venture results declined sharply by -68.2% to RM1.3m, mainly from softer contributions from Envictus International Holdings Limited (EIHL). The weaker performance was primarily attributable to its Food Services division, where PAT fell -35.8% to RM5.5m due to cautious consumer spending.
Outlook. We remain positive on PAR’s outlook, supported by its robust pipeline of upcoming launches, ongoing construction progress and healthy sales visibility. The Group’s unbilled sales remain healthy at RM1.5bn and are expected to be progressively recognised through FY28 as developments advance. In addition, the Group maintains a sizeable undeveloped landbank of 617.2 acres, with 23.4% located in the Central region and the remaining 76.6% in the Northern region, providing a strong foundation for long-term development activities. Earnings visibility is further supported by an inventory of launched developments with an aggregate GDV of RM1.4bn currently available for sale. Looking ahead, management is targeting RM1.1bn in property launches for FY26, with the bulk of launches scheduled for 2HFY26. Key upcoming projects include the first phase of a newly acquired development land in Kulim, a landed residential project in Shah Alam and two blocks of high-end serviced apartments within the U-Thant enclave. Meanwhile, EIHL (Sept FYE) is expected to remain resilient, supported by steady top-line growth of +3.5% YoY to RM382.8m in 1HFY26. The expansion of Texas Chicken Malaysia also remains on track, with six new outlets opened year-to-date, keeping the Group on course to achieve its FY26 target of opening 15 new outlets (FY25:101).
Earnings Revision. We make no changes to our earnings forecast at this juncture, while our GDV launch estimates for FY26 remains at RM1.1bn.
Valuation. We maintain our BUY recommendation with an unchanged TP of RM1.46. This is based on a 50% discount to our estimated RNAV of RM1.8bn.
Risk. Failure to monetise non-core assets, exposure to the cyclicality of the property sector and rising construction costs.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.952620 | 3.984418 |
| EUR | 4.602737 | 4.607520 |
| CNY | 0.583458 | 0.584086 |
| HKD | 0.504699 | 0.508269 |
| SGD | 3.089871 | 3.111658 |