• Business profile: KOMARK is principally engaged in manufacturing of selfadhesive labels and stickers and trading of related products. The self-adhesive labels and stickers manufactured are paper-based and film based, catering to global group of energy & petrochemical companies, personal care, food & confectionary, beverages, pharmaceutical and health care sectors.
• In 3QFY4/15, the company made a small net profit of RM0.808m, after 3 consecutive cumulative loss-making quarters amounted to RM4.2m. Improved results in the latest quarter pared cumulative net loss to RM0.488 for 9MFY4/15.
• Diversified markets. Apart from Malaysia, the group has operating subsidiaries in China, Thailand, Singapore, and Indonesia. About 70% of its products are exported, with China being its largest market. Other markets include Thailand, Indonesia, Philippines, Singapore, Sri Lanka and India. The diversified markets put KOMARK in a position to mitigate any impact of economic slowdown.
• KOMARK’s par value reduction and fund raising exercises completed. KOMARK’s propos ed 75sen par value reduction to 25sen was completed in Dec 14, its proposed 1 right @ RM0.30 (40.63m) and 1 free warrant (40.63m) for every two KOMARK shares were subsequently listed on 29 Jan.
• Bottoming up. Bas ed on weekly chart, KOMARK’s prices have been trending within the LT uptrend channel since the RM0.205 low in Sep 2011. Since staging a downtrend line breakout in mid-March 2015, share prices have been steadily trending higher.
• We believe the 60% correction from 3-year high of RM0.935 (31 May 2013) to a low of RM0.375 (30 Dec 14) could be at the tail end after reclaiming above the resistance-turned-support level at RM0.53.
• As technicals are on the mend coupled with the double bottom formation and rising volume (yes terday’s volume was 123% higher agains t 3M average of 330k shares and 56% higher than 6M average of 239k shares), more upside is possible. A decisive breakout above immediate resistance of RM0.615 (weekly upper Bollinger band) will lift prices higher towards RM0.65 (76.4% FR) and our LT price objective of RM0.685.
• Supports are near RM0.575 (20-d SMA) and RM0.545(200-d SMA). Cut loss at RM0.53.

Source: Hong Leong Investment Bank Research - 15 Apr 2015