KUALA LUMPUR (Sept 6): Paramount Corp Bhd said it expects to report stronger earnings for the second half ending Dec 31, 2023 (2HFY2023), driven by new launches and ongoing efforts to improve its return on assets.

The group, which recorded property sales of RM617 million in 1HFY2023, has planned property launches worth RM700 million in gross development value for 2HFY2023, on the back of stronger product offerings and recovering demand for home buying.

“Our earnings recognition and future cash flow will be backed by our unbilled sales of RM1.5 billion for the rest of the year,” said Paramount group chief executive officer Jeffrey Chew Sun Teong at a briefing on the group's 1HFY2023 financial results on Wednesday.

The Klang Valley make up 76% of unbilled sales, with the remaining 24% coming from Kedah and Penang.

Projects in the pipeline include The Ashwood, a high-rise residential property in Kuala Lumpur with 312 condominium units and duplexes, and 12 units of low-rise villas, on 3.59 acres (1.45 hectares) of freehold land.

Other projects located in the central region of Peninsular Malaysia include the Greenwoods Amaria, Salak Perdana. In the northern region of Sungai Petani, the property player is set to launch the Bukit Banyan landed residential, and affordable landed homes.

Chew added that for 1HFY2023, the group’s unsold inventory level was low at RM56 million, a drop of 3% compared to the preceding quarter.

For 1HFY2023, Paramount's net profit jumped by more than 2.5 times to RM35.69 million, against RM14.13 million for the same period a year ago, driven by improvements recorded by the core business of property development.

Revenue stood at RM436.11 million, against RM370.48 million for 1HFY2022, with strong contributions from property projects in Penang, Kedah and Selangor.

The co-working division's revenue was 44% higher year-on-year at RM6.2 million for 1HFY2023, mainly attributed to higher revenue from all Co-labs Coworking spaces and Scalable Malaysia.

Chew said the overall property sector's outlook remains muted, as the inflationary environment and higher interest rates had affected buyer sentiment.

He said buyers' expectations with regard to affordable housing products had also not been met with suitable property launches by developers, further dragging the industry’s outlook.

Citing the National Property Information Centre report, Chew said overhang and unsold under construction units in prime locations such as Kuala Lumpur, Selangor, Pulau Pinang, Johor and Kedah had improved in numbers, but these markets still need the right priced products.

“There is a temporary supply issue. When we look at the upcoming projects in the Klang Valley, it (the number) has dropped. The delivery of products is also slowing down. We do not see there will be a tremendous recovery of the market in the next five years. We are cautious,” he added.

Chew said rising labour cost and raw material prices are also a cause for concern among property developers when they plan ahead of any future launches.

“If the economic recovery is strong, there is better hope. But we believe this is a supply issue. We do not think there will be an aggressive recovery,” he said.

Paramount shares closed 1.5 sen or 1.57% higher at 97 sen on Wednesday, valuing the group at RM604.04 million.