KUALA LUMPUR (Oct 11): Komarkcorp Bhd is shifting its focus towards Southeast Asia, aiming to expand its operations in countries in the region as the group faces increasing competition in the China market.

Komarkcorp group executive chairman David Goh said the group had recently lost a big client in China amid the stiff competition, with the group now targeting to expand its operations in Indonesia, the Philippines and Vietnam.

For the financial year ended July 31, 2016 (FY16), China sales made up about half the group's revenue for the year, while the balance is made up by its ASEAN operations.

"In FY16, we saw a 35% decline for our sales in China as we lost one big client there due to the increasingly stiff competition. However, our ASEAN operations saw a 16% rise in revenue contribution.

"We are expecting the ASEAN segment [to] be driving growth in the company going forward," he told reporters today after Komarkcorp's annual general meeting (AGM) today.

The group had recently completed the disposal of its wholly-owned subsidiary Komark Investment Holdings Ltd, along with Shanghai Komark Labels & Labelling Co Ltd and Guangzhou Komark Labels & Labelling Co Ltd to Lagora HK Ltd for a total consideration of RM48 million.

Goh said RM10 million of the proceeds from the disposal will be used to purchase three units of additional machinery for its operations in Malaysia. Komarkcorp will subsequently shift two units of its existing machinery in Malaysia to its operations in Indonesia and the Philippines.

He added the new machinery will result in up to 50% increase in production efficiency and lower wastage by 3%.

Meanwhile, the group also has bigger plans for the Philippines as it intends to set up a plant in the country in the first half of 2017.

"Currently we are exporting to the Philippines. We are planning to set up a plant there to strengthen our presence in the country," he said, adding that this will result in savings as well due to lower transportation costs.

Goh said the factory would cost about RM10 million, which will be funded by the group's internal funds.

At 12.35pm, Komarkcorp was unchanged at 40.5 sen, giving it a market capitalisation of RM50.48 million.