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Louis Yap Investment

Author: LouisYap   |   Latest post: Mon, 30 Mar 2020, 1:34 PM

 

Malaysia Stock Analysis Report – ARBB (7181)

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Malaysia Stock Analysis Report – ARBB (7181)

 


 

 

 

ARBB - A former wood-related business but transformed into an IT business. Currently, the IT business is the largest profit contributor.

 

Performance:
Turnover: RM33.9m YoY rose 792.7% QoQ rose 200.9%
Net profit: RM 8.3m YoY rose 4359.1% QoQ fell 3.7%

 

Main Reason:
Compared with the same quarter last year, ARBB's turnover increased by 792.7%, mainly contributing to IT business, about 99.7%. This also led to a rise in profits.

 

Compared with the previous quarter, the 2019 Q3 turnover mainly contributed to ARB Development Sdn Bhd and ARBBOIT Sdn Bhd.

 

The two subsidiaries mainly sell ERP (Enterprise Resource Planning) software, IOT, Internet and consulting services.

 

Future Prospect:
Previously ARBB was a wood-related business that was suspended during the quarter but will be relaunched again in Dec 2019.

 

For the IT department, the subsidiary ARB Development Sdn. Bhd. already has a contract and has already started in 2019 Q3. The contract is expected to be worth approximately USD 20mil. Management believes that it will attract more potential and interested customers in the future.

 

EPS:
At 2019 Q3, ARBB's profit was 3.54 cents recorded on RM 8.3m EPS. Compared to the previous quarter, ARBB earned up to RM 8.6m, but EPS recorded 6.54 cents.

 

Almost the same profit, but the EPS is so much different. The main reason is that too many "Conversation of Preference Share" caused the EPS to be diluted.

 

Although the company's earnings are good, for long-term EPS dilution, this will adversely affect the stock price. After all, more and more shares will lead to lower and lower EPS. In theory, the stock price will gradually decline.

 

To understand the further detail on the ARBB Preference Share conversion:

 

Preference Share is considering a stock for the shareholders. Usually preferred stocks have some special offers, such as dividends.

Preference stocks are not equal to ordinary shares. Therefore, EPS does not need to be included in Preference stock.

And since earnings per share (EPS) is a measure used to measure the return on ordinary stock. Therefore, stock exchange websites and software in the calculation of EPS will not be included with the Preference stock.

ARBB has released a maximum of 1,008,150,000 preferred shares on Dec 18, and shareholders were able to convert into (1) 20 Preference shares convert into 1 ordinary share or (2) conversion price of 20 cent per Preference Share.

In the past few months, shareholders have been converted Preference shares into ordinary shares at 20 cents. It has already converted 179,666,400 units, and balance of 828,483,600 units.

As of today, ARBB's shares are 246,876,400 units, assuming the remaining 828,483,600 Preference shares are converted into ordinary stock. ARBB's shares will be as high as 1,075,360,000 units.

In the latest 4 quarters, the company's profit is 26.943m, the number of shares is 246.8m, and the EPS will be 10.91 cents. Calculated at a price of 38.5 cents, PE will be 3.53

If the company can remain its performance in 3Q19 (8.3m), it will be as high as 33mil in the whole year. Based on the maximum number of shares (1,075,360,000), the EPS will be 3.09 cents, the stock price is 38.5 cents, and the PE is 12.48.

 

Louis Yap

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Web Site:

https://www.wealtharchitect2u.com/

 

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Labels: ARBB

Related Stocks

Chart Stock Name Last Change Volume 
ARBB 0.265 +0.005 (1.92%) 2,335,800 

  Mredar likes this.
 
daytraders forecast profit should be the strategy to win the market folks.
05/11/2019 11:22 PM
Smartinvestor2030 Post removed. Why?
06/11/2019 11:04 AM
charlie82 FYI
1. Q2 revenue & profit included a once-off investment holding trading amount of rm3.314 million --this masked the QTQ profit growth
2. calculation assumed all PA converted (most would be in the future) while using current earnings (totally ignoring future earnings) ---imo this is flawed
06/11/2019 1:19 PM
funnyguyz charlie82.......since you are so good, then what is your estimate revenue for ARBB? Can purchase ARBB or not?

Your comment is event worse, not indication at all for anything
Don't just giving a negative comment, but without any solid number too
06/11/2019 2:54 PM
charlie82 funnyguyz...it takes one to know one yah...i din say i'm good...
all numbers are available on the net e.g.
item 1 above is significant to QTQ big growth but wasn't highlighted;
item 2 am hoping someone can help extrapolate with future earnings
cheers
06/11/2019 3:52 PM
daytraders https://klse.i3investor.com/blogs/ARBB/233638.jsp
06/11/2019 8:46 PM
daytraders Future earnings already covered. Since the director told Q3 already implemented 20mil usd contract.
06/11/2019 8:47 PM
funnyguyz hi daytraders.....thanks for your sharing
however, may i know how you know the order book 20 mil USD will be register in Q4?

the order book value may not only for 1 Q result.....it can maybe more than 1 year to 2 years for the revenue

if that the case (order book value 20 mil USD more than 1 year), it may not be as good as mentioned on the PE 2
07/11/2019 10:21 AM
Samtuckfatt https://klse.i3investor.com/m/blog/kianweiaritcles/240904.jsp
10/12/2019 11:56 AM
Mredar Emm
30/03/2020 4:19 PM
Mredar Arbb lingering .095 - .15... Undervalue price around cc what price?
30/03/2020 4:20 PM
Mredar Can this stock reach .20 ebd yr ????
30/03/2020 4:22 PM


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