Asia File Corporation Bhd’s (Asia File) 2QFY24 results are broadly in-line with Malacca Securities forecasts as GBP and EUR has regained momentum, which may contribute to better 2HFY24 results.
In 2QFY24, Asia File registered core earnings of RM6.9 million, down by 57.0% QoQ and 11.5% YoY respectively, bringing the sum of 1HFY24 core earnings to RM22.9 million.
“Despite the core earnings only accounted to 45% of our estimates, 75% of consensus estimates,” the research house said in Stock Digest today (Dec 1).
Malacca Securities keeps its forecasts earnings at RM50.6 million, RM52.4 million and RM54.6 million over FY24-26f as the core earnings came in broadly within its expectations.
It maintains its BUY call with TP of RM2.60, derived by ascribing a P/E of 10.0x to FY24f EPS of 26.0 sen.
“We also like the group’s net cash position of RM294.8 million (74% of the current market cap of RM400.0m) as at 1HFY24.”
The research house said despite the challenging global and domestic business environment with the heightened inflationary pressure coupled with the elevated interest rate environment, it expect both the filing and consumer and food ware segments to recover at the back of consumer spending during the festive season.
“This is also following the promising demand in 2HFY24. Also, we expect sales from both the segments will continue to generate positive cash flow for the group,” it said.
Meanwhile, quarter-on-quarter (QoQ), the group’s revenue has improved 4.5% QoQ to RM79 million attributed to the increased in both the filing and Consumer and Food ware divisions 4.0% and 7.6% QoQ to RM68.1 million and RM10.9 million, respectively.
“However, the core PATMI dropped significantly by 57.0% from RM16.0m as it was impacted negatively by foreign exchange loss of RM4 million. Additionally, no dividend was announced in the quarter under review.”
Recommendation risks include the supply chain disruptions, which may translate to higher operating costs, foreign exchange risks as its export proceeds are mainly denominated in GBP and EUR, while import is predominantly pried in USD as well as any depreciation of GBP/MYR or EUR/MYR could exert pressure to the group’s margin.
