Had the panic selling over for ARB Berhad?

Investors must have already, by now, noticed that there is a knee-jerk reaction triggered sell down on ARB Berhad. One question we all in mind would be – had the panic selling ended, and can we buy in now?

Based on the technical chart, most investors would first notice the “waterfall” pattern from the announcement of rights issue. For seasoned investors, they would have already know the drop would happen, and under the accumulation graph, it has been proven that there is indeed some buying interest during the bottom.

But for today, I prefer not to spoon feed to buy, or not to buy. But instead, here are some key pointers for you to refer in tandem of your investment decision.

ERP, IoT Business Model

I noticed that some investors are still stuck in the era where ARB Berhad was Aturmaju, which was a timber company back then. The new ARBB is mainly involved in ERP and IoT business, which is very much needed in the current tech-driven economy. For example, the industrial 4.0 would replace businesses with low automation and low efficiency with better ones. As for ARBB, their technical know-how on the ERP business could help SME players to better utilize their facilities. And for the IoT part, I’m sure most of you had seen the integration of smart devices in higher end properties, and this is exactly how ARBB could benefit from both of the sector.

Proven Track Record

I love to talk about numbers. ARBB, despite how the market’s opinion, had been delivery impressive results since their turnaround from timber to ERP and IoT business model.

I think this pretty much explained much about their financial performance. You can see they are still doing well despite in MCO phase 1, 2, 3.

Attractive Valuation

When we are pitched on any other technology related counter, most likely we are talking about 40, 50 or even 60 times of PER. But for ARBB, the current valuation of the company without any major one-off profit is less than 2 times. Do you know what does this mean?

If you were to purchase the shares of ARBB at the current level, this means that the company could generate profit and made up to your initial costs of investment in less than 2 years. Even sunset industries couldn’t give such an attractive valuation. And if you look at the historical financial performance of the company, the drop had gotten to a ridicule level.

So, based on the factors we discussed above, I hope that you reached a conclusion whether to buy ARBB at the current level or wait for some miracle to happen.

All the best on your trading!