Like its PA, it is closing the gap reflecting its strong demand. Same too when the investment community looking into deeply undervalued tech + renewable energy company
Relatively high trade receivables is a risk, otherwise looks impressive. No aging schedule for receivables is a main weakness in reporting system. London biscuits write off 300m under receivership.
WITH A strong net cash position of RM24.5 mil, ARB Bhd (previously Aturmaju Resources Bhd) is all geared up to extend its footprint in the information technology (IT) segment through merger & acquisition (M&A) of business and technology.
Backed by a record net profit of RM19.7 mil in its recently concluded FY2020, the group is also eyeing to capitalise on the surge in demand for cloud-based computing following the COVID-19 pandemic, according to executive director Datuk Seri Larry Liew Kok Leong.
“I think we are in a good position to expand our business beyond the boundary,” he envisaged.
“Over the last three years, we have solidified our position in the IT (information technology) business in Malaysia, especially in the field of enterprise resource planning (ERP) and Internet of Things (IoT) solutions as COVID-19 accelerated user demand for cloud-based computing needs.”
Liew further noted that there is a rising demand from international clients as digitialisation efforts and cost-optimisation for the long-term is seen from the solutions offered.
In order to meet the growing demand, ARB intends to collaborate with its local partners and look into potential M&A to expand its geographical presence and access various new sectors by taking advantage of cross-border business opportunities in 2021.
On the domestic front, ARB will continue to work closely with government-linked companies (GLCs), multinational corporations and public-listed companies to grow its ERP and IoT business segments.
Based on the statistics by Frost & Sullivan, the Malaysian IoT market is expected to grow at a compound annual growth rate (CAGR) of 24.7% from US$2.2 bil in 2019 to reach US$10.3 bil by 2026.
Meanwhile, the Malaysian ERP market is projected to grow from US$120 mil to reach US$255 million in 2026, growing at a CAGR of 11.4% in the same period.
“This would provide strong organic growth potential for ARB, which has an established presence in Malaysia,” projected Liew.
Having undergone a massive transformation since 2018 from a timber business operator to an IT software and platform provider, ARB has seen a sharp turnaround over the last three financial years.
The group’s success in breaking away from its decade-long losses lies in its strategic diversification into the field of ERP and IoT solutions.
To date, ARB ranks among the lowest in terms of valuations when compared to its peers in the technology sector.
Currently, the group has one of the lowest price-to-earnings ratios in the technology sector at just 4.3 times as of March 1 as compared with other tech stocksd such as Mi Technovation Bhd (64.4 times), Inari Amerton Bhd (63.5 times) and ViTrox Corp Bhd (88.8 times).
This is partly due to the company’s explosive earnings growth over the past three years while its share price has not increased by as much.
The race between Amazon AWS, Microsoft Azure and Google Cloud to become to market leader in cloud computing had led investors to think – why are these giants are deploying so much capital into the cloud sector?
Apart from the “gentle push” of the pandemic for the world to adopt cloud computing quicker, it was also predicted that cloud system infrastructure services (IaaS) would grow by approximately 27 percent in 2021 as compared to 2020. Cloud computing has become more and more important and inevitable to become the new norm for businesses and average-joe user like you and me.
However, we should be focusing on investing in the company that are involved in cloud and is one that could generate the most return to us. Are there even any companies in Malaysia that are in the massive cloud business?
There is one major player in Malaysia. And fortunately for investors, this company is listed; and based on its ultra-low single digit PER, this company is still un-discovered by most investors!
And this one company would be ARB Berhad (ARBB). ARBB stands out as the enabler for Small & Medium Enterprises (SME) to get involved in the benefit of cloud services via their Enterprise Resources Planning (ERP) sector. ARBB had taken the initiative to absorb the upfront investment of SMEs to use cloud IaaS, by doing so, ARBB would profit from the growth of the SME and rather than a one-off profit, ARBB could create a sustainable source of earnings growth.
ARBB had achieved a record profit since its successful turnaround from a timber company where it was backed by a bottom line of MYR 19.7 Million. Alongside with a strong net cash position of MYR 24.5 Million, the group was also seeking any potential M&As in the cloud segment.
The article was also showing some interesting statistics. For example, the group is currently having the lowest PER in Technology Board in Bursa Exchange. When we compare to MI, INARI, VITROX and so forth who has the PER of 65 times, 64 times and 89 times respectively, ARBB’s current PER of 4.3 times is ridiculously cheap!
So why is ARBB not being discovered by majority of the investor? I believe this was caused by the complexity of the company’s business. Only a very small portion of investors understand cloud computing and ERP. Hence, the opportunity shines upon us to invest in this deeply undervalued company!
Luckily for us, the company’s share price had retraced from recent high due to global flattened investment sentiment mainly disrupted by the spiking of US 10 Years Bond Yield. And I believe now is the best chance for us to invest in this company!
If Serba dinamik really try to imitate tesla starlink which provided internet through satellite it will be huge boost to Internet of Thing market in Malaysia and Asean (Definitely ARBB through IoT) as the current IoT mostly implemented in a city cause it has stable internet network. Through satellite broadband, rural area also can have stable internet, this will accelerate implementation of IoT in agriculture (fishery, plantation) and consumer product in rural area (power supply, smart village)
Is it expectations too high? Expecting ARBB to keep on going up within a short period of time? Sometimes it will go up but over a very long period of time. Nobody says that it must go up in a straight line and go up everyday.
everyday i see heavy sales down...today again...down back to 0.30 ? push up on super record last week..just a play counter like those loss making counters,,,hopeless tech co
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
kakashi
2,943 posts
Posted by kakashi > 2021-03-01 23:25 | Report Abuse
Interesting. Didn't mention at all in their quarterly report. Revenue generated from ERP n IOT
very strong potential growth