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Tuesday, October 17, 2017

Asiafle: A Good Stock For Long-term Investment (UPDATED)

Results Update

For QE30/6/2017, Asiafle's net profit dropped by 12% q-o-q to RM14.2 million on the back of an unchanged revenue of RM91 million. Compared to the same quarter last year, net profit rose marginally by 1% while revenue was also unchanged.

Profit before tax dropped 9.4% q-o-q mainly due to a much lower share of profit of associate (June 2017: RM0.94 million cf. Mar 2017: RM 3.64 million) which was partially offset by improvement in investing results (June 2017: RM 2.0 million cf. Mar 2017: RM 1.4 million) and higher foreign exchange gain (June 2017: RM 1.4 million cf. Mar 2017: RM 368,000). (Note: Asiafle's QE30/6/2017 was announced on 29 August.)


Table: Asiafle's last 8 quarterly results


Graph: Asiafle's past 48 quarterly results
 
Financial Position

Asiafle's financial position is deemed satisfactory as at 30/6/2017, with current ratio at 5.0x and gearing ratio at 0.15x. It was sitting on a net cash balance of RM43 million.

New Business Venture

Asiafle’s existing core business is filing and stationery business. Asiafle is poised to add a second core business when its new venture into paper & plastic disposable food ware takes off in end 2017. Its new business will be based in a 3,200 sq m facility located in Simpang Ampat. For more on this new business, go here.

Valuation

Asiafle (closed at RM3.05 yesterday) is now trading at an attractive PER of 10.5 times (based on last 4 quarters' EPS of 29.08 sen). The stock pays a decent dividend yield of 5.2%. Based on attractive DY and fair PER, Asiafle is deemed to be an attractively priced.

Technical Outlook

From the monthly chart below, we can see that Asiafle is now testing its long-term uptrend line at RM3.00.


Chart 1: Asiafle's monthly chart as at Oct 16, 2017 (Source: Malaysiastock. biz)


Chart 2: Asiafle's weekly chart as at Oct 16, 2017 (Source: Malaysiastock. biz)

Conclusion

Based on satisfactory financial performance & position, fairly attractive valuation & positive long-term technical outlook, Asiafle could be a good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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