Paramount Corp reviewing plans to manage growing cash pile, decision by mid-2025, says group CEO
The shift could free up cash as fewer funds are being channelled back to its property development activities, Chew said.
KUALA LUMPUR (March 4): Paramount Corp Bhd (KL:PARAMON) is in the midst of reviewing its dividend strategy, including raising payouts, and will make a decision by mid-2025, its top executive said on Tuesday.
The property developer is pivoting towards “sustainable, quality growth” going forward after years of aggressive revenue and earnings growth, group chief executive officer Jeffrey Chew Sun Teong said during Tuesday’s results briefing.
The shift could free up cash as fewer funds would be channelled back to property development activities, Chew said.
To deal with the growing cash pile, Paramount’s board of directors is deliberating four options — pay higher dividends, reduce gearing, acquire land, or invest in something else. “As to what we are gonna do, that’s something I cannot tell you, because we have not decided,” Chew said.
Paramount had RM1.6 billion in unbilled sales at the end of 2024, and it is still growing. “The cash flow will come in because we are trying to grow a little bit slower compared to what we have seen in the past,” he added.
Cash stood at RM216.09 million as at end-December 2024. Borrowings stood at RM990.3 million versus total equity of RM1.48 billion — giving a gross gearing ratio of 0.67 times.
The company currently has a policy of paying out at least 20% of its net profit as dividends. However, Chew noted the company had always paid out dividends exceeding the 20% payout mark, averaging nearly 50% payout per annum.
“We will still have the dividend policy, but we will review our dividend strategy. I won’t use the term dividend policy. We will review our dividend strategy going forward, so that ultimately, the shareholders can enjoy total shareholder returns,” he said.
Paramount’s substantial shareholders comprise deputy group CEO and executive director Benjamin Teo Jong Hian with a 28.8% stake, and Banting Hock Hin Estate Co Sdn Bhd with 15.5%.
For the financial year ended Dec 31, 2024 (FY2024), Paramount paid out 7.5 sen per share in dividends, equivalent to about 46% of its net profit that year, which rose 23.67% to RM102.45 million from RM82.84 million in FY2023; revenue rose 2.76% to RM1.04 billion from RM1.01 billion. The group recorded gross property sales of RM1.39 billion in FY2024.
Focus on better returns from developments
On Paramount’s shift to “sustainable, quality growth”, Chew underlined the property developer’s intent to extract better returns on assets on its developments.
“We are trying to find land that we can buy at a price that we can get a good, decent margin, instead of buying everything that’s on the ground,” he said.
He said the shift was because the group foresaw potential issues concerning quality deterioration and cost overruns if it pursued further scaling up of ongoing projects under its portfolio.
As at end-2024, the property developer had 10 ongoing projects — The Atera, The Ashwood, Greenwoods Salak Perdana, Sejati Residences, Arinna Kumening Utama, Sejati Lakeside 2, Berkeley Uptown, Utropolis Batu Kawan, Bukit Banyan and Paramount Palmera.
“Should we go and have more projects like 15 or 20, I am telling you we discovered it’s not a good idea, because honestly at 10 projects, we are struggling to manage the projects from a cost, progress and quality perspective,” Chew said.
“That’s the reason why we felt that as an organisation, we can run about 10 to 12 projects, but if you ask us to run 20 projects, it’s not going to work — you are going to see quality deteriorating and cost overruns, because you are depending on [the same management] infrastructure,” he added.
On the residential property market’s outlook, Chew expects it to be good, with room for supply to catch up to demand.
Based on data from the National Property Information Centre, Chew said there has been a contraction in the supply of residential and serviced apartment units since 2019, as demand expanded.
“I still strongly believe that supply and demand are still not equal yet. To us, we are seeing the market, as residential at this point is still good,” he added.
At the time of writing on Tuesday, Paramount shares were two sen or 1.87% lower at RM1.05, valuing the company at RM653.91 million.
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Source: EdgeProp.my
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