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PETALING JAYA (May 13): Paramount Corp Bhd (KL:PARAMON) will continue to invest and grow its land bank in Malaysia to sustain its growth, while looking for opportunities to expand overseas.
Group chief executive officer and director Jeffrey Chew Sun Teong said even at a high single-digit growth target for the Malaysian market, Paramount would need to buy more land in order to launch new projects.
As for the group's overseas investments, he said although they are in the form of a joint venture, the group would recognise the profit and loss, which would contribute to its property development income.
“We still want to get high single-digit revenue growth from the Malaysian market, and we hope the overseas market will bring the overall revenue growth to double digits,” Chew told Bernama after an investor relations and media presentation on the group’s acquisition of 21.54% equity interest in Eco World International Bhd (KL:EWINT)(EWI) here on Monday.
EWI’s primary business involves real estate development in the UK and Australia.
During the presentation, Chew said out of the RM170.61 million paid for the stake acquisition, it is believed that up to RM108 million would potentially come back to Paramount in the form of dividends in 2024 and 2025.
In its announcement of the acquisition last Friday, Paramount noted that EWI had, in the company’s circular dated Feb 23, 2024, targeted to distribute dividends of up to RM504 million, representing 21 sen per share, in 2024 and 2025, subject to certain conditions.
“So we are putting RM62 million net in terms of investment for this. And the bank (RHB Bank) will finance 80% of this acquisition.
“Basically, we are only putting in RM12 million equity for this deal. So, we expect a high internal rate of return over the coming years, because our equity placement is only RM12 million,” said Chew.
He further said that while it was a good-value and fairly conservative buy, one of the risks of the acquisition is that Paramount would not have a controlling stake and involvement in EWI’s operations.
However, he said it takes comfort in the governance as EWI is governed by the rules for Malaysian listed companies.
“But being a substantial shareholder of EWI, we as a company would be able to vote,” he added.
Moving forward, Chew said, the acquisition of the EWI stake would accelerate Paramount’s plans to diversify with the target of 30% of its property income coming from overseas in the next five years.
“So in five years’ time, we will slow down a bit in Malaysia, because we have been running too fast, but the market is not too big.
“We want a certain size and to beef up our game as a Malaysian developer with projects outside of the country as well,” said Chew.
Currently, Paramount’s overseas business constitutes less than 10% of its income. In Bangkok, Thailand, it has invested RM24.6 million in both debt and equity for the development of Na Reva Charoennakhon, a 29-storey condominium project, in 2020.
Chew added that while Paramount continues to look out for opportunities in other countries, it is also exploring other businesses, such as in the digital space, as it believes technology is a way forward as well.
The company has allocated about RM100 million for this, and has invested about RM40 million to RM50 million into start-ups since 2020.
“We have invested in three start-ups so far, and are still looking for a promising start-up that has the potential to become the next unicorn, be it in financial technology, e-commerce or new business in technology,” Chew added.