Sell: Al-Salam REIT on Menara Komtar shortfall, Asia File on limited upside

FILING and stationery items manufacturer Asia File Corporation Bhd and Johor-based Al-Salam Real Estate Investment Trust (REIT) have been downgraded to ‘Sell’ in two separate calls today after declaring their latest quarterly financial results.

In a research note, Maybank Investment Bank Bhd noted that Al-Salam REIT’s 3Q24 earnings were below its expectations mainly due to non-renewal of a tenant at Menara Komtar.

It has downgraded the counter to a ‘Sell’ from ‘Hold’, with a 52-week target price (TP) of 36 sen, down from the previous target of 41 sen.

“ALSREIT’s gross gearing remained high at 0.49x as at end-Sep. Management is assessing options including placements and disposal of underperforming assets to fund growth,” according to the report.

Al-Salam REIT primarily invests and manages a real estate portfolio which consists of office, retail and F&B assets. Its major shareholders are Johor Corporation (52.5%), Tabung Amanah Warisan Negeri Johor (16.6%) and Kumpulan Waqaf An Nur Bhd (10.0%).

In another report, MIDF Research has downgraded Asia File to ‘Sell’ with a revised TP of RM1.44, down from RM2.05, reflecting what it noted was limited upside potential and heightened earnings risks.

It noted that Asia File chalked in 2QFY25 revenue of RM68.5 million, down 11.2% QoQ, and core PATANCI of RM4.5 million which brought 1HFY25 core PATANCI to RM14.8 million, coming below its estimates, accounting for 36% of full-year estimates.

“The underperformance was primarily due to higher-than-expected input costs and increased associate losses. No dividend was declared for the quarter,” it said in a note released today.

Looking ahead, MIDF Research said it remained cautious about the near-term demand outlook for AF’s filing products and consumer & foodware products amid the ongoing global economic slowdown.

“However, the group’s commitment to launching new products and expanding its online platforms could provide some relief,” it said. — TMR

RELATED ARTICLES