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Tuesday, April 7, 2009

Paragon pushes ahead despite property slip

Carpet maker Paragon Union Bhd may have slipped on a property deal but it is still keen to invest in the business further.

The company, which makes carpets for cars, hotels and offices, had tasted success when it sold all its houses under the Paragon Heights project in Bukit Jalil, Selangor.

Its latest plan to take over a property developer for RM18 million fell through when the seller failed to meet the terms of the deal, first announced in August last year.

"When there is opportunity, we will evaluate," executive director Tan Hong Kien told reporters after a shareholders' meeting in Kuala Lumpur yesterday.

Paragon signed a deal to buy Dominon Park Sdn Bhd, which has rights to develop a piece of land in Gombak, Kuala Lumpur.

The deal was terminated on March 10 when the seller, Prestamewah Development Sdn Bhd failed to give the complete documents.

Paragon is now suing Prestamewah to recover the RM18 million.

Paragon makes most of its money from its carpet business. However, higher costs led to its 2008 net profit falling to RM135,000, which is a tenth of what it made in 2007.

Tan said the company seeks new export markets to grow as overseas sales make up 15 per cent of revenue. It now exports to South Korea, Australia, India, Singapore, Brunei and Thailand.

"Locally, the commercial sector is a very big market for us such as hotels and offices. We also supply carpets to royal palaces," Tan said after the company's 45-minute extraordinary general meeting in KL yesterday.

In Malaysia, commercial properties make up about 60 per cent of Paragon's carpet sales, while the rest is from the automotive sector.

It supplies carpet to carmakers like Perodua, Mercedes, Honda and Nissan.

Shares of Paragon closed 15.4 per cent or 6 sen lower, to 33 sen yesterday.

By Business Times (by Hamisah Hamid)

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