ADHESIVE/LABELLING player-turned-face mask maker, Komarkcorp Bhd, has assured its investors that the rights issue exercise the company has embarked upon is well-intended to fund its second production plant in Meru, Klang amid soaring demand for its fashionable face masks.
Such expansion plan will enable Komarkcorp to achieve an annual maximum capacity of 1.22 billion units of three-ply face masks and 312 million units of respiratory face masks, thus positioning the company as Southeast Asia’s largest face mask manufacturer.
“There is no catch whatsoever as our 60,000 sq ft Meru facility will commence operation by end-January 2022 to complement our existing Balakong plant (build-up of 150,000 sq ft) which boasts 30 production lines and annual capacity of 360 million pieces of masks,” Komarkcorp’s executive director Roy Ho Yew Kee told FocusM.
“We are targetting to install another 70 production lines in our Meru plant thus enabling Komarkcorp to have 100 production lines altogether by end-2022. For a start, the Meru plant which will be fully operational by January 2022 will have 20 production lines.”
Despite being a new entrant in Malaysia’s overcrowded personal protective equipment (PPE) playground, Komarkcorp has developed its own niche as an original equipment manufacturer (OEM) of fashionable face masks which are not subject to government-set ceiling prices unlike similar medical grade products.
After two successful rounds of private placement to fund its face mask venture, Komarkcorp hopes to raise RM65.4 mil from a rights issue exercise based on the illustrative price of 8 sen per rights shares to fund its expansion plan and to fulfil the group’s ambition to be one of the largest face mask manufacturers in Southeast Asia.
Komarkcorp’s rights issue exercise has been approved by the company’s shareholders during an extraordinary general meeting (EGM) held on Dec 10.
Moving forward, Ho expects the production of face masks to supersede the company’s legacy labelling business by a ratio of 70:30 judging by the trend of the quarterly numbers.
“Despite the new business taking on bigger responsibility for the group, the flow on effect has also impacted the legacy printing business positively. Designer and fashion masks require food-grade ink to be non-toxic as opposed to imported prints from unverifiable sources,” envisages Ho.
“Moreover, our mask business will eventually create three revenue streams for the group, namely the mask production, printing of designs on the mask itself and manufacturing of the plastic wrapping to replace paper boxes, that are big and is very expensive to transport in,”
Buoyed by its booming face mask sales, Komarkcorp returned to the black in its 2Q FY4/2022 ended Oct 31, 2021 – breaking a five-year streak of losses since FY2017 – albeit with a meagre net profit of RM107,000 (2Q FY4/2021: net loss of RM960,000).
What is encouraging nevertheless is that the company posted a 120% jump in revenue to RM18.16 mil during the period under review (2Q FY4/2021: RM8.26 mil) boosted by higher revenue from both its label and packaging division as well as the new mask division.
“The demand for mask is expected to be greater as the world grapples with rampaging COVID-19 virus, and especially with the newly discovered Omicron variant posing higher infection risk according to experts,” projected Ho.
“While our order book remains encouraging and robust and is filled until March 2022, we anticipate more orders to come in from our customers in conjunction with the upcoming festive period from Chinese New Year until Hari Raya.”
At 10.51 am, Komarkcorp was untraded at 9.5 sen, giving the company a market capitalisation of RM 55 mil. – Dec 21, 2021
