Asia File is a file manufacturer with its factory located in Penang, Malaysia. Manufacturing all kinds of file including plastic, paperboard and metal based, Asia File also covers other daily stationary needs. Battling in a competition fierce stationary manufacturer industry, Asia File stands out among others in terms of its distribution networks of 650 retailers and office suppliers such as Popular and MPH bookstores. Asia File has also find itself several advantages by possessing a strong branding for its product lines using the ABBA logo which is well known for its long lasting use and quality. As there are not much research works needed for office daily needs, the company barely need to utilize any excessive resource on developing cutting edge products. Furthermore, the use of file is still widely adapted despite electronic evolution. There are tonnes of paper works to be organized and filed each day. Therefore, we can still expect that the future earnings of Asia File will climb steadily. 

As the barriers of entry for stationary industry is low enough, almost anyone can set up a company and manufacture all kind of stationaries. There are lots of competition coming from overseas especially China where the products are very cheap. At the same time, as the major market of Asia File is aimed towards Europe, over 60% of revenue highly depends on the Europe continent. As economic volatility is rather high at some of the Europe countries, it is a high risk to derive major profit from such places. However, the company will still benefit from the recovery of the global economy for now.

Cash flow generated by operating activities is facing huge fluctuations throughout the ten years. Moreover, the cash flow is at the same level as ten years before despite of inflationary pressure. On the other hand, the company's cash management is good based on the cash flow 2008 where it finances the purchase of its subsidiary valued 61 million by issuing treasury shares and loan worth 40 million. It is shown that the company cash rich position is retained although there are acquisitions along the company expansion. Furthermore, Asia File is also performing well in terms of profitability as net profit to sales is up to 12% although ROE and ROA is not showing satisfactory standard. Bluechip or not? Evaluate the facts and make up your decision!

Stock: ASIAFLE Code: 7129 Company: ASIA FILE CORPORATION BHD