It has came to my attention that
this company is being attacked on several investment forum on baseless
groundworks by people who want to depress the price and collect more; I
wonder why the platform had not taken any action to penalize these
individuals?
But nevertheless, that does not stop me sharing this undervalued stock to the public, which is ARBB (7181).
ARBB, or ARB Berhad was originially known as Aturmaju Resources Berhad. The company went through a quantum leap in the previous year by venturing into Enterprise Resources Planning ("ERP") and Internet of Things ("IoT") sector. Also, the company has successfully switched to Technology Board with the approval of Bursa.
So one might wonder, how does the company perform in financial perspective? Let's take a quick look on the recent quarterly performance:
As we can see, the company has crazy growth over the past 5 quarters, right after they ventured into ERP and IoT sector!
Of course, some might be skeptical over such stellar results, how can a company without prior experience achieve such earnings growth? That secret lies within their business model - which is the ERP - JV model.
Without going into too much detail, basically ARB will provide the capital expenditure part for the JV partner and receive a fair share of their earnings. Imagine if they capture more traditional retail / manufacturing.. what will happen to their profitability?
Being a value investor myself, we know that earnings cannot prove everything, hence I checked their cashflow movement:
Positive cash flow with crazy growth! So what about the valuation?
Currently, the market capitalization of ARBB is RM 137 Million, let's take a look at their recent earnings:
FY 2019 Q3 - RM 8.29 Million Net Profit
FY 2019 Q4 - RM 12.79 Million Net Profit
FY 2020 Q1 - RM 6.84 Million Net Profit
FY 2020 Q2 - Expected RM 7.2 Million - RM 8.0 Million Net Profit
With this in mind, the company upon releasing their QR, will hit RM 35 - 36 Million Net Profit, if we take RM 137 Million market capitalization and translate it into P/E, you will get P/E of less than 4 times.
Can you name me another company that could achieve such great profit with less than 4 times P/E??
In addition, we have not factored in the future growth prospects of ARBB! Let's take a look at what Frost & Sullivan have to say about the company, i quote:
"The Malaysian IoT market is expected to grow at a CAGR of 24.7% from US$2.2 billion in 2019 to reach US$10.3 billion USD by 2026 while the ERP market is expected to grow from US$120 million to reach US$255 million in 2026, growing at a CAGR of 11.4% in the same period."
"Both the IoT & ERP markets will exhibit double digit growth with adoption being driven from across industry verticals."
However, who am I to say that the company is being undervalued? Let's take Malaysia's well renowned investment research firm - MIDF's valuation for the company - RM 0.510! There's a huge potential upside of 60%!
Link for the report: https://www.bursamarketplace.com/mkt/tools/research/ch=research&pg=research&ac=1043984&bb=1062712
RM 0.510 for me is just merely giving the company 6 - 7 times P/E, with double digit growth for the company, and less than 5 P/E currently? People who complaining are surely collecting more!
To conclude, I urge you as an investor to make a wise decision; by not falling into the fooling hands of the pundits. ARBB is showing great growth potential, and yet to be discovered by retail investors!
But nevertheless, that does not stop me sharing this undervalued stock to the public, which is ARBB (7181).
ARBB, or ARB Berhad was originially known as Aturmaju Resources Berhad. The company went through a quantum leap in the previous year by venturing into Enterprise Resources Planning ("ERP") and Internet of Things ("IoT") sector. Also, the company has successfully switched to Technology Board with the approval of Bursa.
So one might wonder, how does the company perform in financial perspective? Let's take a quick look on the recent quarterly performance:
As we can see, the company has crazy growth over the past 5 quarters, right after they ventured into ERP and IoT sector!
Of course, some might be skeptical over such stellar results, how can a company without prior experience achieve such earnings growth? That secret lies within their business model - which is the ERP - JV model.
Without going into too much detail, basically ARB will provide the capital expenditure part for the JV partner and receive a fair share of their earnings. Imagine if they capture more traditional retail / manufacturing.. what will happen to their profitability?
Being a value investor myself, we know that earnings cannot prove everything, hence I checked their cashflow movement:
Positive cash flow with crazy growth! So what about the valuation?
Currently, the market capitalization of ARBB is RM 137 Million, let's take a look at their recent earnings:
FY 2019 Q3 - RM 8.29 Million Net Profit
FY 2019 Q4 - RM 12.79 Million Net Profit
FY 2020 Q1 - RM 6.84 Million Net Profit
FY 2020 Q2 - Expected RM 7.2 Million - RM 8.0 Million Net Profit
With this in mind, the company upon releasing their QR, will hit RM 35 - 36 Million Net Profit, if we take RM 137 Million market capitalization and translate it into P/E, you will get P/E of less than 4 times.
Can you name me another company that could achieve such great profit with less than 4 times P/E??
In addition, we have not factored in the future growth prospects of ARBB! Let's take a look at what Frost & Sullivan have to say about the company, i quote:
"The Malaysian IoT market is expected to grow at a CAGR of 24.7% from US$2.2 billion in 2019 to reach US$10.3 billion USD by 2026 while the ERP market is expected to grow from US$120 million to reach US$255 million in 2026, growing at a CAGR of 11.4% in the same period."
"Both the IoT & ERP markets will exhibit double digit growth with adoption being driven from across industry verticals."
However, who am I to say that the company is being undervalued? Let's take Malaysia's well renowned investment research firm - MIDF's valuation for the company - RM 0.510! There's a huge potential upside of 60%!
Link for the report: https://www.bursamarketplace.com/mkt/tools/research/ch=research&pg=research&ac=1043984&bb=1062712
RM 0.510 for me is just merely giving the company 6 - 7 times P/E, with double digit growth for the company, and less than 5 P/E currently? People who complaining are surely collecting more!
To conclude, I urge you as an investor to make a wise decision; by not falling into the fooling hands of the pundits. ARBB is showing great growth potential, and yet to be discovered by retail investors!
https://klse.i3investor.com/blogs/gmarb/2020-08-12-story-h1511673977-An_undervalued_stock_that_people_trying_to_depress_and_buy_more.jsp
