Asia File Corporation Berhad (ASIAFLE) started off since 1980s and is now evolved into a leading file manufacturer with Europe being its core market, followed by Malaysia, leveraging on its manufacturing facilities in Malaysia and Europe as well as a series of reputable brand names and patented products. Its consumer ware division has grown from RM0.3m to RM48.6m in less than 5 years is eyeing for new products launch and overseas expansion. We initiate coverage on ASIAFLE with a HOLD call and fair value of RM1.86, based on 10.0x P/E pegged to its forward FY23f EPS of 18.6 sen.

We gather that the aforementioned contract is the second largest single contract secured by KGB after bagging approximately RM420.0m of works at East Malaysia back in 2021. We believe that the aforementioned contract is expected to generate mid-to-high single digit EBITDA margins, which is line with historical average for historical UHP segment’s works.

As Covid-19 becomes endemic, all the countries that LHI operates in have seen revenue growth in 6M22 as compared to 6M21 due to improved demand amid resumption of economic activities. Nevertheless, high feed costs and the attempts by governments to manage food inflation via price control scheme may continue to create uncertainties for the group’s performance moving forward.

As at end-2QFY22, OCK owns and manages over 4,800 telco sites (3,000 sites in Vietnam, 1,200 sites in Myanmar and 600 sites in Malaysia) that will provide stream of recurring income over the long term. We note that towerco expansion is largely on track with OCK aims to register more than 5,000 telco sites (targeting 3,200 sites in Vietnam, 1,300 sites in Myanmar and 800 sites in Malaysia) by end-2022.

With the quicker-than-expected change of tide in demand, material prices, both FeSi and SiMn are expected remain unexciting over the foreseeable future (below USD2,000/MT and USD1,300/MT respectively). We believe uncertainties persisted surrounding the global inflationary pressure may continue to sap demand.

We continue to favour OSK, on the back of (i) prudent new property development launches to avoid an overhang of unsold stocks scenario, (ii) stable loan portfolio and (iii) dividend income from strategic investment in RHB. We reckon that demand for affordable housing remains on the fore with the group’s future launches continue to place great emphasis through competitive pricing.

We expect the construction industry to remain beset by the rising costs of labour and raw materials. The price index per unit of steel & metal section increased 15.8% YoY in July 2022, according to the building and structural work, department of statistics Malaysia.

As of 1QFY23, AME is equipped with an outstanding construction orderbook of RM318.7m to sustain earnings visibility over the next 2 years. Meanwhile, unbilled property sales of RM120.4m (up from RM91.3m in 4QFY22) will sustain the property development segment earnings for 2 years. After delivering new property sales of RM168.4m in FY22, we expect stronger performance to come by for FY23f at RM250.0m (1QFY23 new property sales at RM65.8m).