Summary

• Ended FY24 within expectations. In 4QFY24, ASIAFLE recorded core PATMI of RM15.4m (+12.1% QoQ, +65.0% YoY), bringing the core PATMI to RM52.1m (+64.6% YoY) for FY24. The core PATMI came in within expectations, accounting to 102.8% of our forecast (consensus forecast stood at RM39.4m).

• Dividend. Final dividend of 3.5 sen per share was declared.

• QoQ. The revenue for the quarter added 6.7% contributed by the revenue contribution from filing (+5.0% QoQ) and consumer ware (+14.9%) divisions. In turn, operating profit rose 58% QoQ and 87% QoQ, respectively. Meanwhile, the share of profit from the associate was lower at RM0.47m, declined from RM1.68m in 3Q24. For the quarter, core PATMI margin improved to 21.4% (vs. 20.4% in 3Q24).

• YoY. Despite the drop in revenue by -7.9% due to softer demand from the filing division, declined -12.6%, but was offset by the consumer ware divisions, which increased by 18.8%. The core PATMI jumped 64.6%, thanks to (i) better operating profit in the consumer ware division and (ii) higher share of profit from associate at RM0.47m vs a loss of RM3.94m in 4Q23.

• YTD. Overall, the group’s revenue decreased -7.3% to RM294.2m as weaker demand was observed in both the filing and consumer ware segments due to the impact of impact of digitalisation and softer demand for food ware packaging post- Covid pandemic, respectively.

• Outlook. In view of the gradual recovery in its consumer ware products in 2H24, we believe it may provide decent upside on the earnings going forward. Also, the Group will be putting more effort by launching new products and deepen its product penetration on various e-commerce platforms in both the local and overseas markets and may provide upside towards its margins.

Valuation & Recommendation

• Forecast. Unchanged.

• Maintained BUY with TP of RM2.70. We maintained the Buy recommendation on ASIAFLE, with a higher target price of RM2.70 as we roll over to FY25f earnings. The target price is derived by ascribing a P/E of 10.0x to FY25f EPS of 27.0 sen. Also, we like the group’s net cash position of RM316.9m (74.1% of the current market cap of RM427.75m) as at FY24. Given the strong dividend track records, we do not rule out windfall dividends to reward the shareholders moving forward.

• Recommendation risks include the (i) supply chain disruptions, which may translate to higher operating costs and (ii) forex risks as its export proceeds are mainly denominated in GBP and EUR, while import is predominantly priced in USD. Any depreciation of GBP/MYR or EUR/MYR could exert pressure to the group’s margin.

Source: Mplus Research - 4 Jun 2024