ASIAFLE (7129) - Asia File Corporation - 3:5 bonus issue completed
Target RM4.22 (Stock Rating: HOLD)
Asia File’s share price went ex-bonus on 18 Feb so our ex-bonus target price is RM4.22, based on an unchanged 2016 10.8x P/E, a 10% discount to the sector’s 12x target P/E. The 10% discount is to reflect the stock’s tight liquidity. While the company’s fundamentals remain unchanged, a larger issued-share base should help boost the stock’s trading liquidity. We maintain our EPS forecasts and our Hold call. We prefer QL Resources for exposure in the consumer sector.
What Happened
Asia File’s share price went ex-bonus issue on 18 Feb. The 3:5 basis bonus should boost its issued-share base from 112.8m to 180.5m shares. Accordingly, our target price has been adjusted to RM4.22. The last time Asia File proposed a bonus issue was in 2007, also a 3:5 basis.
What We Think
Fundamentally, nothing has changed. However, the bonus issue has increased its issued-share base and this should help the stock’s trading liquidity, which is currently less than US$0.1m on average daily. In addition, the lower ex-bonus share price should be more attractive to retail investors.
What You Should Do
Europe is still Asia File’s largest market and market conditions remain challenging in that region. The stock remains a Hold and we prefer QL Resources for exposure in the consumer sector.
Source: CIMB Daybreak - 25 February 2015
Target RM4.22 (Stock Rating: HOLD)
Asia File’s share price went ex-bonus on 18 Feb so our ex-bonus target price is RM4.22, based on an unchanged 2016 10.8x P/E, a 10% discount to the sector’s 12x target P/E. The 10% discount is to reflect the stock’s tight liquidity. While the company’s fundamentals remain unchanged, a larger issued-share base should help boost the stock’s trading liquidity. We maintain our EPS forecasts and our Hold call. We prefer QL Resources for exposure in the consumer sector.
What Happened
Asia File’s share price went ex-bonus issue on 18 Feb. The 3:5 basis bonus should boost its issued-share base from 112.8m to 180.5m shares. Accordingly, our target price has been adjusted to RM4.22. The last time Asia File proposed a bonus issue was in 2007, also a 3:5 basis.
What We Think
Fundamentally, nothing has changed. However, the bonus issue has increased its issued-share base and this should help the stock’s trading liquidity, which is currently less than US$0.1m on average daily. In addition, the lower ex-bonus share price should be more attractive to retail investors.
What You Should Do
Europe is still Asia File’s largest market and market conditions remain challenging in that region. The stock remains a Hold and we prefer QL Resources for exposure in the consumer sector.
Source: CIMB Daybreak - 25 February 2015
