PETALING JAYA: Not many businesses can credit an economic-bashing pandemic as the main reason that could seal their financial rupture from pre-Covid days.
For Komarkcorp Bhd, this would certainly be an achievement it wants to bask in as it banks on its new venture to pull the group out of the red.
The printing and labelling specialist took a bold step into the mask manufacturing business in June last year through the incorporation of a wholly-owned subsidiary, Komark Mask (M) Sdn Bhd.
What started off with only three mask production lines in its Balakong factory-cum-headquarters has since been expanded to almost 30 lines and the group is now hunting for a new factory building to house 70 more lines.
If the expansion plan proceeds smoothly and if orders remain at current levels, Komarkcorp is optimistic that it would return to the black by the end of 2022.
The group, whose financial year end falls in April, has been bleeding for the past five financial years.
It posted a net loss of RM15.50mil for its latest financial year ended April 30, 2021.
Revenue from manufacturing masks came in at RM2.43mil, of which RM1.81mil was generated in the three-month period from February to April.
Group executive director Roy Ho said the real numbers for the mask business will be reflected in Komarkcorp’s first quarter figures for its current financial year, or from May to July.
It is expected to be at least 50% higher quarter-on-quarter (q-o-q), following which the group is targeting double the figure in the second quarter.
Komark Mask’s order book has been filled for the next two months.
Optimally, Ho said they should be hitting about RM8mil to RM10mil per quarter from manufacturing masks in terms of revenue, only from the Balakong factory, which produces a mixture of 3-ply earloop masks, 3-ply headloop masks for hijab-wearing consumers and KN95 masks.
They are also about to receive several machines to produce KF94 masks.
How all these started was during the peak of lockdowns last year that disrupted the global supply chains, which forced Komarkcorp back to the drawing board where it ultimately decided that it needed to pivot.
The group was still reeling from the effects of the trade tensions between the United States and China and the intensifying competition in the label printing industry when Covid-19 struck.
“We needed a get out of jail card quickly and a lower cost of entry so we decided to buy three machines initially to test the market.
“We needed to strike when the iron was hot because our revenue has been steadily declining year-on-year (y-o-y) as MNCs leave our shores to go to greener pastures for their manufacturing activities so, our label business started to drop,” said Ho.
The low entry cost into the business of making disposable masks made it an attractive proposal, considering the high demand for the product but the group was already brainstorming a step ahead, by leveraging on their existing expertise to give their masks a unique selling proposition (USP).
Ho said the encouraging part was Komarkcorp’s ability to implement its own USP by wrapping each mask in plastic, which went down well with consumers, most of whom appreciated the extra effort for hygiene.
“You will note that there were not many face masks sold that were individually wrapped although there are a lot more now than there were last year.
“I would like to think that it is because of us. We were the first to have the single wraps in the packaging of our masks,” he said.
It was not long after that that Komarkcorp stumbled upon another niche market - fashion and specially designed masks.
This was where the group’s printing expertise came to good use, giving Komarkcorp the competitive edge to open its doors to original equipment manufacturer (OEM) businesses where clients wanted specifically designed masks.
These two niches allow the group’s businesses to be interlinked because as the mask making revenue goes up, the labelling and packaging segments also get to enjoy the spillover.
This became so popular that the OEM business makes up 97% of the group’s mask manufacturing business.
Clients include MNCs, automotive companies, hotels, fashion designers, celebrities and other businesses.
“They come to us to produce their own masks, designs and logos. That has suddenly become a boom in the market.
“We’re getting various enquiries and we’re finding it hard to accommodate orders coming through the door, including for the export market to Indonesia and Brunei,” said Ho, adding that they were now in a situation where they had to expand.
In the next four weeks, the group will be finalising which factory building will house its additional 70 production lines, which will be for a mixture of 3-ply masks, KN95 masks and KF94 masks.
“Our intention is to go to 100 lines as soon as possible. We have been experiencing a lot of enquiries which we can’t fulfil, because of labour and clashing orders,” said Ho, adding that they would be able to produce 100 million pieces of face masks per month, operating 24-hours a day.
At a capacity of 100 production lines, it would be sufficient for Komark Mask to service local demand and some exports to neighbouring countries. It aspires to be a major face mask player in Southeast Asia.
Despite the strong demand for masks currently, Ho said Komarkcorp is cognisant that the demand will plateau in the distant future.
Citing SARS in 2003, where there was an immediate boom and then tapering off, he said citizens of Asian countries continued to use masks to protect themselves after the experience.
“The difference now is, Covid is a global phenomenon.
“We have an R&D team which is quite active in pursuing new products.
“We are expanding our machines and know-hows to stay ahead of the curve and we are also looking at vertical and horizontal integrations and how we can interact with all these skill sets and products to create other businesses that will benefit the company moving forward,” said Ho.