Asia File - no end to ASB's selling?

Asia File has registered a big drop in FY17 profit, from FY16's Rm76.5 mil to FY17 Rm55.9 mil ( about 30% lower) and its share price dropped approximately 40% from more than Rm5 at beginning of 2016 to around Rm3 now. I believe the fall mainly due to its not so promising prospect in document filing products where the company specialises, it is made worst when its second largest shareholder ASB is leading the disposal now.


Further check shown that a few institutional investors have reduced their shareholdings according to 30 largest shareholders listing as at 20 Jun 16 and 19 Jun 17.. They are ASB -its 2nd largest shareholder reduced from 24.1% to 22.9%(sold about 1.7 mil shares), EPF (sold 1.3 mil shares) and Kumpulan Wang Persaraaan (sold about 800k shares).


ASB had further reduced it to 21.56%(42 mil) per latest announcement as at 9 Oct 17. Asia File has total 195 mil no of shares and 30 largest shareholders already owned 89% of the company, hence its shares are quite tightly held. It took ASB 15 months to divest 2.4% and the share price has fallen from 4.2 to 3.07 now (almost 30%)

Being a substantial shareholder made it harder for ASB to sell at "good" price as it needs to announce to the whole world when it buys or sells shares. Since everyone knows it is selling down heavily,  buyer is not in the hurry to buy or accumulate unless its financial performance shows a strong rebound. But even then, that may just provide a better exit price for ASB. 


While I like Asia File for its strong cashflow and dividend, the existing business of filing products may be facing an industry wide contraction. The management response to that challenge, it is venturing out into disposable food wares and tries to maximise return on its cash reserve by investing in auto callable equity linked investment related to 3 China stocks (though nothing wrong with trying to get more return, personally, I always prefer company to focus on core business and leave the other income with more stable and less complicated source) to enhance its profit.The aggressive selling by ASB though presents a golden opportunity for potential investors but I am still waiting for ASB to launch a mega sale, if the price is low enough, Asia File could be a good dividend stock.