Paramount acquires land in Penang for RM58mil

The Star

3 days ago

PETALING JAYA: Paramount Corp Bhd is acquiring an 18.97 acre piece of freehold land in Bandar Cassia, Penang, from Penang Development Corp for RM57.841mil.
In a statement, the company said the acquisition marks a key addition to its land bank to drive sustainable growth in the northern region.
The company said the acquisition is expected to generate a gross development value (GDV) of RM744mil, adding on to its remaining land bank of 358.9 acres and remaining GDV of RM5.497mil.
'The proposed acquisition will be funded through a combination of internally generated funds and bank borrowings,' it said.
The newly acquired land is situated in the city centre of Bandar Cassia in Penang, within a 600m radius of Utropolis Batu Kawan development, Paramount Property's award-winning development.
The proposed development for the site comprises serviced apartments, semi-detached townhouses and shop offices.
Construction is slated to commence in 2027 with completion by 2033. Once fully completed, the development will provide housing options as well as create a vibrant commercial environment that enhances liveability and economic growth in the state.
Separately, TA Research said it is feeling more confident in the strategic rationale and valuation of Paramount's plans to acquire a 28% stake in Singapore Exchange-listed Envictus International Holdings Ltd following a briefing on the deal.
'Management addressed key concerns candidly, including earnings quality, post-acquisition integration, and capital impact,' the research house said.
It added that there was now more clarity on Envictus's turnaround trajectory, while the attractive entry valuation and Paramount's disciplined stance on not pursuing further food and beverage (F&B) acquisitions strengthened its conviction in the long-term value of the transaction.
'The proposed acquisition enhances Paramount's growth profile by providing exposure to a resilient, cash-generative F&B business at a compelling entry multiple,' the research house said.
The company announced a proposed deal involves Paramount's wholly owned Venice Concepts Sdn Bhd acquiring the stake in Envictus from JAG Capital Holdings Sdn Bhd, in which Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani owns a 96% stake. JAG Capital Holdings currently holds a 29.6% in Envictus.
Property developer Paramount is looking to buy the operator of Texas Chicken and San Francisco Coffee in Malaysia for RM126.32mil in cash, as it aims to expand its footprint in the F&B sector.
However, TA Research cautioned that the main risks to the deal include the potential that the anticipated benefits may not fully materialise or that returns may not sufficiently offset the investment cost.
'As Envictus is listed in Singapore, any future changes to foreign investment regulations could impact Paramount's rights or ability to repatriate profits, although no such restrictions currently exist.
'Additionally, with only a 28% stake, Paramount will not have operational control over Envictus, but plans to mitigate this by nominating board representatives to safeguard its interests,' the research house said.
Paramount signalled a cautious tone, flagging a softer property market in the second half of the year due to external trade uncertainties, cost pressures from fuel-subsidy rationalisation and expansion of the sales and service tax (SST).
'With only RM600mil in sales achieved against its RM1.5bil full-year target, there's a possibility of downward revision. That said, we believe there is still room for a rise in sales in the second half, especially once there is greater clarity on SST and tariff developments,' the research house said.
TA Research maintained its FY25 to FY27 earnings forecasts for Paramount and its target price of RM1.48 based next year's price to book multiple of 0.6 times.
'The stock remains deeply undervalued, trading at just 6.4 times 2026 price-earnings and 0.4 times price to book, significantly below the sector average of 13.9 times price-earnings and 0.8 times price to book.
'With a superior over 7% dividend yield, significantly outperforming the sector average of 3.7%, we see limited downside risk to its share price,' the research house said.