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Tuesday, May 31, 2016

Asiafle: Sacrificing Sales For Margin!

Results Update

For QE31/3/2016, Asiafle's net profit dropped by 8% q-o-q to RM16.9 million on the back of a 1%-decline in revenue to RM97 million. Compared to the same quarter last year, net profit rose 31% while revenue was down 3%.

Revenue dropped slightly q-o-q as the company has become more selective in its marketing approach by focusing on sales which yield better margins. The lower sales plus forex loss of RM 0.3 million resulted in lower sequential profit.


Table: Asiafle's last 8 quarterly results


Chart 1: Asiafle's past 33 quarterly results
 
Valuation

Asiafle (at RM4.19 as at 2.35pm) is now trading at an attractive PER of 10.4 times (based on last 4 quarters' EPS of 40.13 sen). The stock pays a decent dividend yield of 3.8%.

Technical Outlook

From the monthly chart below, we can see that Asiafle has embarked on its second upleg since 2013. Its first upleg was from 1998 until 2009. In between, the stock had a mild downtrend from 2010 to 2012.


Chart 2: Asiafle's monthly chart as at May 31, 2016  (Source: Shareinvestor.com)

The present upleg may take the form of an upward channel, like the earlier upleg from 1998 to 2009. The share price is now in an intermediate downtrend which may terminate at around RM3.70-4.00.

 

Chart 3: Asiafle's weekly chart as at May 31, 2016  (Source: Shareinvestor.com)
 
Conclusion

Based on good financial performance, fairly attractive valuation & positive long-term technical outlook, Asiafle could be a good stock for long-term investment. Good entry level is at RM3.70-4.00.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Asiafle.

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