Asia File Corp Bhd
ASIA File will fit the profile for investors seeking steady earnings growth and strong balance sheet.
One of the largest stationery manufacturers in Malaysia, its products range from that made from paperboard to plastic and metals.
The company is a beneficiary of a weaker ringgit. Asia File exports nearly 90% of its products, with Europe accounting for the largest market share (76%). For FYMar2014, export to Europe increased by 21.6% to RM277.8 million.
With a workforce of over 700 employees, the Group has manufacturing facilities in Penang and Germany totalling approximately 182,832 square meters (1.9 mil square feet).
Revenue grew by an annual compounded rate of 8% in the last four years to RM365.8 mil in FY14. This uptrend continued in 1HFY15, which saw an 18% jump in revenue over the previous corresponding period. However, profits declined by 16% over the same period, caused by the unfavourable pound/euro movements against the ringgit.
Positively, Asia File managed to maintain a double-digit net margin at 15% in 2QFY15, which is commendable and just slightly below its historical margin range of between 13% and 21% in the past four years.
Asia File has a strong balance sheet with net cash of RM50m, or 42sen per share as at end-September. Dividend payout has been consistent at around 40-55% of profits. Its trailing 12-month dividend yield totalled 3.3%.
Elsewhere, the company’s proposed 3-for-5 bonus issue — announced 14th October 2014 — should help improve the stock’s trading liquidity. The three largest shareholders currently control a combined 76.3% of total shares issued.
The Edge Research rates Asia File’s valuation at 2.4 out of 3. Its shares are trading at a price-to-book of 1.7 times but price-to-earnings multiple of only 13.6 times relative to earnings growth of over 31% in the past 12 months.
This article first appeared in The Edge Financial Daily, on December 15, 2014.