Highlights

Stock Analysis - BabyAce

Author: BabyAce   |   Latest post: Mon, 24 Aug 2020, 8:56 PM

 

ARBB (7181) Q2 Results - Very Bright Future Ahead TP RM0.60 - By No 1 Analyst in i3investor BabyAce - 12/8/2020

Author:   |    Publish date:


This Company is involved in ERP and IoT. IoT is the next big thing if you have read about it. If you're also in Bitcoin and alt coins, probably you have heard it long ago. Apparently ARBB is the only proven company in Malaysia for IoT while most others is in testing stage.

About the dilutive shares due to the conversion of ARBB-PA which many people complain including me, there is a positive side actually which is you need to pay RM0.20 to convert, so actually when converting RM200 will go into the bank of the Company per 1,000 shares. But still I myself don't like this, but to be fair you need to write about its positive part also.

Total ARBB-PA is 1,008,150,000 units. So if let's say really to convert all the Company will get RM201,630,000 = RM201.6mil

Let's say really everything converted what we want to know how many shares are there in the case all converted and added up with the normal shares. My calculation is 1,008,150,000 + 67,210,000 = 1,075,360,000 = 1.075 billion shares.

Currently how many shares are there from the Q2 report I got is 368,059,000. So 368,059,000/1.075billion = is 34.22% of the maximum issue size of the maximum possible 1.075billion shares.

So meaning currently as per Q2 they have 34.22% out of the maximum possilbe of 1.075billion. How you want to imagine it is up to you. I have provided the facts here.

In my opinion, if the Company can achieve RM20mil onwards of PAT/quarter, no need to worry about dilutive effect. I go check on Frontken to see the effect on its share. Otherwise every time you need to calculate just to check properly if the EPS is still desirable. Management job now is make sure they go find more contracts and clients and no need to think about dilutive effect of the shares. Another thing is that dilutive effect means your PE will be higher only. Check and see other technology company how much is their P/E. Sometimes, I don't understand why people complaining about dilutive effect when usually when you buy high PE company. The effect actually is the same. On a psychology aspect I think it's worth for me to make a study.

Since you all love to ask and complain about dilutive effect right, why you all never go calculate for glove companies one ah? LOL Try and calculate see, I'll tell you its worse than this company.

You all see below, today those who announce results one. ARBB is the best among all. Other companies loss so much and here we are complaining about dilutive share effect.

Results as follows:

Since becoming an Tech stock it has posted quite impressive results. The only thing I don't like is the dilutive share which keep increasing. This stock I have been looking for quite some time as I'm not sure if it's doing ok. Another reason of looking at it is because due to MCO, in a lot of companies, thing has already changed. Either you adopt technology or you will be out of business. Hence IT solutions like this come in handy as it accelerates the adoption. Either you follow or your company will be out of business due to the change in environment. What in general people know is Glove companies have impressive earnings in our current environment, but a bit of news about vaccine most get panic already. Why is that so? Because people know glove companies is overvalued, and as long as there is the next idiot that keep buying the shares from the previous holder, it will of course still going up. People will keep quiet and not telling people so they could sell it to the next idiot and so on, they know its overvalued, but if my cost is low of course I want to sell high to the next person. Alternatively, we can always as ourselves, what opportunities could present itself in this environment? And start thinking...You can't keep thinking the same way as before because most businesses are traditional type of business. Renewable energy? IoT? Solar power? Something that is disruptive.

News is for entertainment. Reporters and writters from theEdge, the Star, NST, or whatever lar...you really think they know what they're talking about? Sometimes a Company shares can drop without any reason. Then they will write a logic thing to justify it. Most pro is copy+paste.  All of that are rubbish my friends. They need to cari makan so have to write things that either please their advertisers, readers etc. but all is bullshit. One more thing is that sometimes you see Bursa like having mini crash because they go amplify the negative news. So its important you have more research and reading. Reading means selective reading, not reading rubbish news and materials that add no value to you. 

Prospect

Balance Sheet

Bank have RM36 mil and no borowings, cash flow from operations is positive. Please take note that probably no dividends will be available for you as the Company is in its new business thus need to reinvest in its operations. Anyway no big deal no dividends as long as got big capital appreciation.

EPS is 2.3 sen this quarter. Assuming conservative of 1.5sen per quarter thus 6 sen/year

Let's take PE of 10, 6 sen x 10 = 60 sen

And this is a tech stock, so I also don't know why PE for this Company is so low. Another point I wanted to highlight is that the volume is all time high today 12/8/2020.

When looking into a Company like tech stocks a question always need to be asked is moving forward post Covid-19 how our environment would be? Now many people stream live from Facebook everyday to promote and sell their product, some smaller Company resort to remote working place, such as positioning their staff in shared work place etc...Thing are not same anymore. Business got to change or you prepare to be replaced. Covid-19 actually eliminate weaklings and only the strong survive. I think you guys can already see this. Even if you're an SME, it is so important that you sell on Lazada and Shopee itself. You don't setup? Wait to close shop. This time around it is also a good opportuniy to venture to become an entrepreneur. Barrier of entry is low with so much opportunities. 

Balance Sheet wise and performance I don't see any issue aside from dillutive shares. Prospect remain bright.  Got money in the bank, and they disposed off previous business untill now already become full IT Company. Any other catch or not if you ask me? I don't know. I see figures is no problem, but sometimes we will also ask macam something wrong. Why suddenly so good one. Maybe from the transition of old business to new business people still don't understand it yet. Based on what the news flow, I understand they have been in the IT business of ERP and IoT for like a year already? So for me seems like you kind of see one year of performance already. This unknown variable is that decision you think and make for yourself. 

My opinion is the name of this Company is ugly. It is called Aturmaju Resources Berhad. Maybe need to change to something like Ironman, Elon Musk, or something related to it la. Name is also important one ok. You need to represent it to something that reflect ERP and IoT. On the other hand, most people are still at the pre-Covid thinking so it's not easy to digest this since it is a big change. Thus I do see a very good long term prospect for this Company. You can ask any FA gurus if ARBB is good, and all of them will tell you it is, including me.

I'm not sure why ARBB stock comments there the people like to argue between each other for no reason =.=". Another thing is I find it funny is they like to curse the substantial shareholder which is Datuk Seri Liew Kok Leong ("Fatty Liew"). I add below let you see. If you see his background he got IT background so he should know what he's doing.

He was in China for 15 years previously and had setup several businesses in information technology (IT), manufacturing, telecommunication and property development. China is the largest IoT market. 

https://futureiot.tech/gsma-china-is-worlds-largest-iot-market/#:~:text=China%20is%20the%20world's%20largest,area%20network%20(LPWAN)%20technologies.

There is an american fund holding this shares and have been increasing their stake. I believe they already met with "Faty Liew" before making the decision. Previously 18 mil shares add another 3mil shares.

Another article published today, before the announcement, however did not get the chance to pinned in blog of the stock, due to i3investor being selective in putting. Sometimes, quite a lot of article writters but got omitted by i3investor. I guess you need to write a lot for them to get published.

https://klse.i3investor.com/blogs/gmarb/2020-08-12-story-h1511673977-An_undervalued_stock_that_people_trying_to_depress_and_buy_more.jsp

I have 200,000 shares @ 0.325. I shall hold till next quarter results and see how it is. Whether is this is a pirate ship or not let me hold and update all of you in 3 months time.

Additional note to explain about dilution and its impact (Important point) - Scenario to explain

In my humble opinion high PE also equivalent to dilution, if you see it as follows. I mean when I see this stock I see the ARBB-PA, I myself also straight bias and pointed dilution. However, since the P/E is still low. I think I illustrate and see if you all can understand. Can't blame you all also because I as an informed person will also think like that. I think it is merely a psychology barrier la, so we need to understand how we actually think.

PE = Share Price / Earnings per share (EPS)

So in case of dilution right, your EPS will become small, and as a result your P/E will become high.
So actually no difference if you refer it to a high PE company in this case. Any way their P/E currently is around 4-5 only. Normal tech Company if I'm not wrong is 25-30? 

And sometimes don't think too pessimistic on a thing, sometimes things are not that bad as it seems, and sometimes when we're too optimistic, we also need to be careful. This is the best I could explain to you, as simple as possible.

Disclaimer

The research, information and financial opinions expressed in this article are purely for information and educational purpose only. We do not make any recommendation for the intention of trading purposes nor is it an advice to trade. Although best efforts are made to ensure that all information is accurate and up to date, occasionally errors and misprints may occur which are unintentional. It would help if you did not rely upon the material and information in this article. We will not be liable for any false, inaccurate, incomplete information and losses or damages suffered from your action. It would be best if you did your own research to make your personal investment decisions wisely or consult your investment advisor.

Share this
Labels: ARBB

Related Stocks

Chart Stock Name Last Change Volume 
ARBB 0.245 -0.01 (3.92%) 3,359,100 

  2 people like this.
 
uncle ykk Post removed. Why?
12/08/2020 5:26 PM
hoot9eonly Easily hit TP of RM 0.700
13/08/2020 12:19 AM
Rvalueinvesting Steady and wait till 0.70 and above Only.
Hoot9e !!!!
13/08/2020 4:39 PM
ahwong95 oi,sudah hilang ini con man´╝č
02/10/2020 9:07 PM


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View candlestick stock charts with Technical indicators
MQ Affiliate
Be rewarded by being an MQ Affiliate
 
 

248  821  476  603 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 AT 0.10+0.005 
 DGSB 0.195-0.03 
 VIVOCOM 0.05+0.005 
 AEM 0.16+0.005 
 GPACKET 0.46-0.02 
 MAHSING 0.91-0.05 
 DATAPRP 0.18-0.015 
 HWGB 0.755-0.025 
 LUSTER 0.15-0.015 
 TRIVE 0.010.00 

FEATURED POSTS

1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
PARTNERS & BROKERS