Paramount Corporation Bhd slid into the red with a net loss of RM3.7 mil in the second quarter ended June 30, 2020 (2QFY20) from a net profit of RM28.47 mil a year ago as it was not spared from the effects of the Covid-19 pandemic.
Its revenue fell to RM64.2 mil in the quarter just ended from RM216.94 mil a year ago.
It reported a record-high net profit of RM463.3 mil in 1HFY20 due to the one-off gain of RM460.6 mil from the disposal of its controlling stakes in the pre-tertiary education business in the first quarter.
In 1H2020, Paramount’s property division achieved a revenue of RM182 mil, which was RM155.5 mil lower than the corresponding period in 2019. The main revenue contributors for the period were Bukit Banyan in Sungai Petani, Greenwoods Salak Perdana in Sepang and Utropolis Batu Kawan in Penang.
“The Movement Control Order (MCO) had significantly disrupted both our construction activities and sales, the two key drivers of the Group’s revenue,” Paramount Group CEO Jeffrey Chew said.
“Construction was almost at a standstill for two and a half months in 1H2020. Without progress at work sites, no revenue could be recognised.
“Fortunately, our 1Q2020 profits together with our cost rationalisation efforts allowed us to remain profitable for 1H2020,” he said.
He added that Paramount’s construction sites are fully operational currently, having resumed work progressively since May.
“Although our digital marketing and promotional activities attracted strong interest during the MCO period, converting this into sales took longer because legal documents could not be executed during the MCO, and customers needed more time to procure financing. This had affected property sales. In addition, property launches had to be deferred during this period.
“Despite these setbacks, we managed to achieve 1H2020 property sales of RM193 mil, which was 62% of the corresponding period last year. Interestingly, our July bookings were the second highest in five years for Paramount, and our team will be working hard to convert these into sales,” he said.
He said Paramount’s unbilled sales of RM873 mil as at 30 June 2020 provided some visibility of its cashflow in the near term, but the pace of conversion into billings would depend on the construction progress of its projects.
Chew said while the property market will be weighed down by uncertainties tied to Covid-19, he believed low interest rates, the reintroduced home ownership campaign (HOC) and Paramount’s Priority campaign would support the company’s sales performance in the second half of the year.
“Property launches for the second half of FY2020 is estimated at a gross development value (GDV) of RM640 mil and will comprise entirely of residential properties, including new phases of existing projects,” said Chew. This represents an increase of 121% to the RM290 mil launched in 1H2020.
“We are investing in new land bank at strategic locations with strong growth potential and scaling up our property development activities for long-term sustainable income. In July 2020, we entered into sales & purchase agreements (SPA) to acquire 137.1 acres of land in Sungai Petani to expand our Bukit Banyan development. The second transaction was for 4.54 acres of land with buildings, located at the ‘Embassy Row’ off Jalan Ampang, Kuala Lumpur for redevelopment. These purchases are expected to be completed by end 2020,” said Chew.