Kenanga Research has cut its FY26 and FY27 earnings forecasts for Paramount Corporation Berhad by 14% and 12%, respectively, after first-half results fell short of expectations amid slower property launches and weaker sales.
Despite the earnings downgrade, the research house maintained its Outperform recommendation and target price of RM1.47, citing Paramount’s attractive prospective dividend yield, asset monetisation initiatives and improving contributions from associates.
Paramount recorded a net profit of RM43.4 million for 1HFY26, representing just 36% of Kenanga’s full-year forecast and 43% of consensus estimates.
The weaker-than-expected performance was attributed primarily to slower project launches and lower property sales.
Revenue declined 4% year-on-year, while property sales achieved during the first half amounted to RM413 million in gross development value (GDV), 21% lower than the corresponding period last year.
Despite the softer topline, net profit increased 20% year-on-year.
Kenanga attributed the improvement to higher contributions from Mercure Kuala Lumpur Glenmarie and earnings from associate Envictus International Holdings, which Paramount acquired an interest in during August 2025.
The property development business also benefited from a more favourable product mix, with stronger contributions from higher-margin products.
These included an industrial lot sold from Paramount’s recently acquired land in Bandar Lunas, Kedah.
On a quarter-on-quarter basis, the group’s performance improved substantially from the seasonally weaker first quarter. Revenue surged 82%, while core net profit more than doubled with a 101% increase.
Pipeline For Second Half
Paramount is preparing a sizeable RM1.6 billion property launch pipeline for 2HFY26, exceeding its typical annual launch range of RM1 billion to RM1.5 billion.
The pipeline will be driven largely by a high-end residential development in the U-Thant area of Kuala Lumpur.
Kenanga said the project could further strengthen Paramount’s presence in the premium residential market following the strong reception for The Ashwood along Jalan Ampang, which carries a GDV of approximately RM1.1 billion.
The group is maintaining its FY26 property sales target of RM1.2 billion, despite achieving RM413 million during the first six months.
This means Paramount would need to secure about RM787 million of sales in 2HFY26 to meet its full-year target.
Kenanga cautioned, however, that the target has become more challenging given the moderation in demand growth experienced during the first half.
Texas Chicken Network Expands
Contributions from Paramount’s associate Envictus are also expected to provide additional support to earnings.
Envictus has continued expanding its Texas Chicken network in Malaysia, increasing its outlet count to 107 as of April 2026 from 104 in January.
Kenanga expects improving associate contributions to support Paramount’s near-term earnings alongside the group’s property operations and asset monetisation initiatives.
Nevertheless, reflecting the challenging property demand conditions seen during 1HFY26, the research house reduced its FY26 earnings forecast by 14% and FY27 forecast by 12%.
Dividend Yield Supports Investment Case
Kenanga maintained its RM1.47 target price based on an unchanged 50% discount to Paramount’s revised net asset value (RNAV), in line with the average discount applied across its property sector coverage.
The research house noted that Paramount’s property launch pipeline remains relatively stable, although it is more modest compared with competitors that typically launch between RM3 billion and RM4 billion of projects annually.
Paramount’s dividend payout ratio of about 40% is also slightly below Kenanga’s property coverage average of approximately 45%.
However, at current share price levels, Kenanga estimates that Paramount offers one of the highest prospective dividend yields among the stocks it covers, at between 7% and 8%.
The yield is supported by ongoing asset monetisation and improving contributions from associates, helping underpin Kenanga’s Outperform recommendation despite the reduction in earnings forecasts.
Key downside risks include weaker demand for residential properties across different price segments, significant changes in mortgage rates, elevated inflation and changes to project timelines and deliverables.
