We had discussed the prospects of ERP sector for the company ARB Berhad (7181) yesterday. And if you have not seen it yet, feel free to click on the link below to check it out.

Link: https://klse.i3investor.com/blogs/gmarb/2020-09-01-story-h1512630177-An_article_excerpt_from_Frost_Sullivan_analysis_read_it_before_this_sto.jsp

Now let's get back to our main topic - IoT prospects for ARBB.

Ability to integrate solutions from a variety of vendors:

• In the Smart Home space, ARB has the capability to develop centralized control and monitoring solutions that can integrate a wide range of smart home devices and allow users to access these solutions via smartphone or desktop applications.
• In contrast, many of their competitors have exclusive arrangements with specific smart home hardware brands limiting their flexibility to design solutions according to property developers’ needs and budgets.

Capabilities in large scale engagements:

• Small scale: Less than 500 connected devices
• Medium scale: 500 – 10,000 connected devices
• Large scale: More than 10,000 connected devices
• ARB has demonstrated its ability to implement large scale IoT deployments, differentiating itself from its competitors who primarily occupy the small and medium scale space, leading it to be perceived as a top-tier IoT system integrator. This allows ARB to compete more effectively against larger players in future large scale implementation projects and secure collaborations with industry-leading players.
• For example, it signed an MoA with Hangzhou Mayam IoT Tech Co Ltd to potentially deploy 300,000 smart water meters (Phase one of the rollout) in a project worth RM 200 million, with ARB handling the installation, commissioning and testing of the water meters.
• It also inked an MoA with Shuifa IoT Tech Co Ltd to supply 300,000 Malaysian households with smart water filtration systems in a project worth RM 600 million.

Synergies between IoT and ERP portfolios: 

• ARB’s expertise in the ERP space together with its firsthand understanding of the demands that business users place on ERP systems has granted it experience regarding the suitability of dashboards, data analytics tools and data management processes. ARB carries this experience regarding effective customization over into the IoT space ensuring that the functionalities of its IoT solutions (UI, data analytics tools etc.) are in line with the business requirements of its clients.
• This focus on enhancing business outcomes distinguishes ARB from more traditional system integrators. Even established ERP vendors are in the beginning stages of augmenting their ERP offerings with IoT capabilities in this region – indicating that ARB can exploit first mover advantage with a hybrid IoT-ERP positioning.

Proven track record of expanding into adjacent verticals as in the case of Re-Energy:

• Along with its primary focus on areas like smart home and water supply management, ARB continues to expand the scope of its business via strategic partnerships and acquisitions.
• For example, it embarked on its foray into the renewable energy segment through its acquisition of C&M Renewable Energy Technology Sdn Bhd in Malaysia allowing it to leverage its capabilities in IoT related system integration and solution engineering in large-scale renewable projects in Malaysia. This acquisition not only supports ARB’s vision of supporting environmental sustainability-related activities, it also allows ARB to be in a strong position to compete in the rapidly growing green energy industry in Malaysia, which is seeking to increase the share of renewable energy sources in the country’s energy mix from 2% in 2018 to 20% in 2025.
• ARB has demonstrated the ability to expand into sectors adjacent to its current focus areas by harnessing its IoT capabilities and leveraging targeted partnerships and acquisitions – indicating the potential for future expansion and growth.

To be very honest, I cannot find another proxy in Malaysia market for ERP and IoT sector apart from ARBB. I'm not sure why the share price of ARBB is dropping despite good profit growth and ultra bright prospects! However, it is my chance to accumulate ARBB shares and I currently hold quite substantial amount of the company's shares.

This article's purpose is not to ask you to buy ARBB shares. What my ultimate purpose is to increase the knowledge of public investors in the ERP and IoT sector (Will be sharing IoT's analysis soon), so that you would discover the true value of ARBB.