AsiaFile ... Oct10

Cash-rich Asia File Corp Bhd is on a lookout for acquisitions in the US to make inroads into the American market. However, the Penang-based stationery and file maker has decided to hold back its expansion in Europe. It is working with another Malaysian company in a similar business on future expansions in the continent.

Asia File wanted to boost the contribution from the US in a move to diversify its earnings base which currently relies heavily on the European market.

Asia File hoped that the US operations could contribute as well as Europe in the future. Europe currently contributes about 40% of Asia File’s group turnover, the UK 20% and the US 15%. The home market generates about 14% of its turnover while the rest is from Japan, South Africa, South America, Australia and New Zealand.

With cash reserves of more than RM70 million, the company has a war chest to acquire companies for expansion.

In 2007, Asia File bought Germany-based Plastoreg for RM66.36 million cash. The company has recently expanded its German operations by acquiring new manufacturing and distribution facilities for RM8.33 million.

With Plastoreg under its umbrella in the past few years, Asia File has become the world’s largest OEM producer of dividers and indices. This has helped the company make headway with major stationery suppliers in the US and Europe over the past one to two years.

The company has a presence in 80 countries with sales offices in Germany, the UK, the US, the Middle East and Singapore.

Asia File already has its order books secured from its customer base in major markets for FY2011 ending March 31.

For 1QFY2011 ended June, Asia File posted a net profit of RM15.7 million or RM13.74 per share on slightly higher revenue of RM66.6 million versus RM62.2 million a year ago.

Asia File had done better in 2QFY2011 compared with a year ago.

There were no plans to expand its facility in Penang although it had additional land to increase its manufacturing space by 100,000 sq ft.

Meanwhile, it is optimistic of a positive outcome from the court hearing to set aside a Writ of Summons involving a RM4.6 million land deal in Seberang Perai, where the plaintiff Kalidason Ramoo is seeking losses and damages amounting to RM217.7 million.

Asia File had submitted a tender to a receiver for Evergreen Import and Exports Sdn Bhd for the purchase of the land, and had paid a 10% deposit after succeeding in its tender bid on July 20, 2009.

In January 2010, Asia File received a letter from the plantiff, claiming losses and damages and since the sale and purchase agreement was between Asia File and the receiver, it ignored the legal notice.

Asia File was served with a writ of seizure and sale by the plaintiff’s solicitors on July 23 2010 and succeeded in obtaining a stay of order from the Taiping High Court and on Sept 8 2010, succeeded in striking out the writ of seizure and sale and set aside the judgment in default of appearance.