Paramount Corporation Berhad

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research Report by TA

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA
Buy - TP RM1.68

"Sales Target on Track"

We maintain our Buy recommendation on PCB with an unchanged TP of RM1.68/share, based on a CY25 P/Bk multiple of 0.7x.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA
BUY – TP RM1.68

"Property Sales Picked up Substantially in 2Q24”

We maintain our Buy recommendation on PCB with an unchanged TP of
RM1.68/share, based on an CY25 P/Bk multiple of 0.7x

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

$SAB / 5134 (SOUTHERN ACIDS (M) BERHAD): Awaiting Value Realization

1. Background
The company's business segments are divided into three areas: oleochemical manufacturing, milling and cultivation, and healthcare services.

2. Free Float
Company directors own half of the total issued shares, followed by Lembaga Tabung Haji with 11.3%, and the remaining 38.4% are publicly owned.

3. Financial Performance
The company's performance has been unstable, with revenue growth observed from FY20 to FY22, followed by a decline in FY23 and FY24. Notably, the company's total assets have grown, reaching RM1.02 billion in FY24. Despite an increase in cash and borrowings, the company remains net cash positive. In FY24, the company had a net asset per share of RM5.69 and a net cash per share of RM2.71, meaning 81.6% of the current market capitalization is in cash.

4. Valuation (Assets)
Considering the net cash per share of RM2.71, the value of shares in $PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD) (approximately RM0.22 as the third-largest shareholder), and the land and building valuation (RM1.56), the total is RM4.49. This represents a 31.3% discount to the current share price.

5. Valuation (Assets + Earnings)
In the first method, only the company's assets were calculated. Adding the EPS of RM0.1 achieved in FY24 (the lowest in 8 years) and assuming the company continues to achieve this in subsequent fiscal years, the value per share would be RM4.59, which is a 34.2% discount.

6. Key Highlight
The recorded land value is lower than the market value. The company owns 260.82 hectares in Thangamallay Estate, recorded at RM139.87 million (equivalent to RM4.98 psf). However, 10 years ago, $GAMUDA / 5398 (GAMUDA BERHAD) purchased land 6.5 km away for RM35 psf, which was leasehold, whereas Thangamallay Estate land is freehold. This suggests the recorded land value is below market value.

7. Prime Location of Thangamallay Estate
Thangamallay Estate is located 2.6 km from TECHBOND, 4.7 km from $UNIQUE / 0257 (UNIQUE FIRE HOLDINGS BERHAD), 3.5 km from $TROP / 5401 (TROPICANA CORPORATION BERHAD), 4 km from IJM's Rimbayu, and 6.5 km from Gamuda Kota Kemuning.

8. Revaluation with Estimated Land Value for Thangamallay Estate
Using Gamuda's purchase price from 10 years ago as a benchmark, Thangamallay Estate's land could add an estimated RM6.15 per share. This would bring the company's value to RM10.64 per share (assets) and RM10.74 per share (assets + EPS), resulting in a 212.9% and 215.9% discount, respectively. However, it's important to note that the current land value might be lower than Gamuda's purchase price, making this a rough estimate.

9. Research Reports by RHB Investment Bank
RHB Investment Bank's 2018 research report indicated that SAB was undervalued in terms of assets, though the timing for value unlocking remained unclear. In 2019, RHB followed up, citing the sluggish property market as a key obstacle for the company to unlock its value.

10. Conclusion
SAB is a cash and asset-rich company generating free cash flow, with undervalued land recorded in its books. However, it could be a value trap due to uncertain value unlocking timelines, low dividend payouts, and declining growth, as seen in FY24. To unlock its land value, SAB could consider developing the land itself or partnering with Paramount, given SAB's significant shareholding in Paramount and the close relationship between the two companies. The flourishing property market presents a timely opportunity for such actions. If the company does not act, the timeline for unlocking value will remain uncertain, potentially keeping the share price stagnant for an extended period.

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)

General Meetings: Outcome of Meeting

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA
Buy – TP of MYR 1.68

“Maintaining RM1.4bn Sales Target ”

Paramount Corporation Bhd’s (PCB) 1Q24 net profit to ordinary equity holders of RM7.7mn came in below expectations, accounting for 9.4% of both our and the consensus’ full-year forecasts. The negative variance was largely due to slower-than-expected progress billings.

Analyst(s):
Thiam Chiann Wen
cwthiam@ta.com.my

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

KUALA LUMPUR: ​​MARC Ratings has assigned a "Gold" impact assessment to Paramount Corporation Bhd’s sustainability-kinked financing framework. 

© New Straits Times Press (M) Bhd

OTHERSISSUANCE OF AN UNRATED ISLAMIC MEDIUM TERM NOTES (SUKUK WAKALAH) PROGRAMME OF UP TO RM1.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR (SUKUK WAKALAH PROGRAMME)

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA
Buy – TP RM1.71

“Acquiring 21.5% Stake in EcoWorld International"

We value PCB at RM1.71/share (previously RM1.47/share), based on a higher CY25 P/Bk target multiple of 0.7x from the previous 0.6x, reflecting potential value enhancement from its investment in EWI. We anticipate a positive reaction in PCB's share price to the acquisition and maintain a Buy recommendation on the stock.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

KUALA LUMPUR: Paramount Corporation Bhd has acquired a 21.54 per cent equity stake in Eco World International Bhd at 33 sen per share from GLL EWI (HK) Ltd, for RM170.6 million to accelerate its overseas expansion plan

© New Straits Times Press (M) Bhd

KUALA LUMPUR: Paramount Corporation Bhd has acquired a 21.54 per cent equity stake in Eco World International Bhd at 33 sen per share from GLL EWI (HK) Ltd, for RM170.6 million.

© New Straits Times Press (M) Bhd

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : NON RELATED PARTY TRANSACTIONSPARAMOUNT CORPORATION BERHAD ("PARAMOUNT" OR THE "COMPANY")

ACQUISITION OF 21.54% EQUITY INTEREST IN ECO WORLD INTERNATIONAL BERHAD ("EWI") ("ACQUISITION")

$PRTASCO / 5070 (PROTASCO BERHAD) seems to be selling their education arm to a HK-based company.
As of now, details are very scarce. What price and how much earnest deposit was paid is not disclosed by the announcements. The Company's corporate structure is quite complicated, to put it nicely, with no easy way to dig out the details of the carrying value of IUKL in the company's books.

However, picking through the statements we know that the education segment has a revenue of RM 25mil with operating loss of RM 8.4mil; with segmental assets of RM 53.7mil and liabilities of RM 48.4mil last year.

What kind of price could they agree to sell this for? For now, I am unable to draw any figures.

However, if we want to be prepared to analyze this corporate action and be quick when more details are released, then historical case studies should give some idea on the kind of premiums and valuations this disposal could have.

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD) had done a disposal on their education arm back in 2019-2022 as well.

Currently, Protasco is valued at roughly RM 130mil market cap, with net asset per share of roughly RM 0.6. I have not done any further reading on this action.

General Meetings: Notice of Meeting

Annual Report & CG Report - 2023

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD) price setup looks interesting but for the price to breakout further safely, theoretically should have another series of accumulation base. The coming resistance is a major resistance that have being tested since 2010.

PENANG DEVELOPMENT CORPORATION UNVEILS RM5 BILLION STRATEGIC PLAN

PDC CEO, Datuk Aziz Bakar, said they have 15 projects under its 2024–2028 strategic plan that will cost an estimated RM5 billion.
- Start increasing their land bank now to be developed into industrial lands (est. deplete by 2030).
• To attract more investors, so that when they come, the infrastructure is ready for them.

1. Acquisition of land
(a) RM3 billion = To acquire the 3,000 acres of land in North, Central, and South Seberang Perai.

2. Land reclamation to increase their land bank.
(a) PDC is creating a complete ecosystem to support the industrial sector, which includes a distribution hub for logistics and workers’ quarters.
(b) They have launched 4 workers’ quarters projects in the Bandar Cassia area – 1 developed by PDC, 3 more by private sector (can house >30,000 workers in the area)
- One, in Penang Science Park North, is expected to be completed this August.
- Another two, in Penang Science Park South and Batu Kawan Industrial Park 3 (BKIP3), are still pending planning approvals.
- The fourth, located in Bandar Cassia, has been awarded to a developer to design and build before handing over to PDC.

3. Development of Industrial Lands
- The industrial lands PDC developed will be based on the “infra ready concept”, especially in BKIP3 and Batu Kawan Technology Park (BCTP).
(a) An 80-acre land near the Penang International Airport will be developed into a logistics and distribution park.
(b) A logistic hub will be developed on a 24.6-acre land in the Batu Kawan Industrial Park in Bandar Cassia.

4. Other Projects
- The PDC strategic plan is focused on land innovation, asset innovation, business sustainability and smart professional (LABS).
(a) Developing a linear waterfront for mixed development on 200 acres of land, will be reclaimed in Bayan Lepas at a cost of RM760 million.
(b) Develop a Medi-City project in Bandar Cassia, together with interested investors, to create an integrated medical hub at a cost of RM12 billion.

5. Potential Beneficiaries
- $PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD) , developer who owns 83 acres in Penang.
- $RAPID / 7765 (RAPID SYNERGY BERHAD) , Seberang Perai Selatan, 21.35 acres
- $SCIENTX / 4731 (SCIENTEX BERHAD) , Seberang Perai Utara, 343.20 acres
- $SPSETIA / 8664 (S P SETIA BERHAD) , Seberang Perai Utara, 1691 acres
- $TAMBUN / 5191 (TAMBUN INDAH LAND BERHAD) , Seberang Perai Selatan and Tengah, 420 acres


Sources:
https://cutt.ly/Xw4uEVcg
https://cutt.ly/gw4uEBtY

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA
Buy – TP of RM1.47

“Looking Forward to Another Record Year”

To recap, PCB launched new properties with a total GDV of RM886mn in FY23, reflecting a 27% decrease from FY22 and a 41% reduction from the initially planned RM1.5bn launches.

Analyst(s):
Thiam Chiann Wen
cwthiam@ta.com.my

$PARAMON / 1724 (PARAMOUNT CORPORATION BERHAD)
Research by TA
Buy – TP of RM1.17

“Optimistic about FY24 Outlook”

PCB has set a sales target of RM1.4bn for FY24, underpinned by seven projects (including new phases of existing projects) with an estimated gross development value of RM2.4bn.

PCB anticipates improved performance in its Co-Working division amid the ongoing recovery of the Malaysian economy. In 4Q23, Co-labs Coworking expanded its presence at Ken TTDI in Taman Tun Dr Ismail, Kuala Lumpur, and opened a new space at The Five in Damansara Heights, Kuala Lumpur, in Jan-24. Aside from this, it also expanded its Tropicana Gardens space in 4Q23. With this expansion, PCB currently has seven locations totalling 167,000 sq ft in the Klang Valley.

Analyst(s):
Thiam Chiann Wen
cwthiam@ta.com.my

PARAMON - Notice of Book Closure

Second Interim Dividend

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

Change in Risk Committee - MR ONG KENG SIEW

Change in Risk Committee - MISS FOONG PIK YEE

Changes in Director's Interest (Section 219 of CA 2016) - MR BENJAMIN TEO JONG HIAN

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - MR BENJAMIN TEO JONG HIAN