Malacca Securities has maintained its SELL call for Asia File Corporation Bhd with the target price (TP) unchanged at RM1.48.
On Dec 24, the stock of Asia File settled at RM1.66. (Stock updates from Bursa Malaysia)
Analysts noted that the overall foregin exchange (forex) trend has shifted from strengthening to weakening for the ringgit since the end of September 2024, moving from around RM4.10 per dollar to the current range of around RM4.47 per dollar, and could benefit Asia File as an exporter.
As at 9:00am Dec 26, the ringgit to US dollar exchange rate stood at RM4.467 to a dollar. (Source: Bank Negara Malaysia)
As reported, the majority of the forex losses are still unrealised by the company. If the rates reverse, these forex losses will be reversed out.
The company’s filing division continues to decline, likely affected by the digitalisation. Demand may continue to drop until it reaches an equilibrium position. However, the company has indicated that there are no new players entering the industry, which limits supply-side pressure for now.
Meanwhile, the consumer ware division is expected to gain momentum due to heightened hygiene awareness and the shift toward takeaway and delivery services, and new product introduction and new market penetration through e-commerce expansion.
Malacca Securities expects the ongoing global digitalisation efforts to dampen the earnings in the filing division. However, the consumer ware division should continue to grow.
To recap, Asia File recorded quarterly loss of RM10.555 million in the second quarter ended 30 September 2024 for financial year 2024/25, compared to core profit of RM6.928 million in the corresponding quarter in FY2023/24. (FY2024/25: Financial year ending 31 March 2025; FY2023/24: Financial year ended 31 March 2024)
For the quarter under review, Asia File recorded a softer-than-expected revenue and higher-than-expected forex losses, according to Malacca Securities in its Stock Digest dated Dec 26.
The stationery supplier recorded quarterly revenue of RM68.511 million in Q2FY2024/25, which reflected a contraction of 13.32% year-on-year (YoY) from RM79.036 million in the corresponding quarter of the previous financial year. The six-month revenue for the period ended 30 September 2024 reduced by 5.82% YoY to RM145.679 million, from RM154.685 million recorded in the previous financial year.
