Which companies on Bursa have high cash and low debt KUALA LUMPUR: The second extension of the movement control order to contain the Covid-19 outbreak — now totalling six weeks until April 28 — means that economic activities will remain subdued for at least another 14 days. The pandemic, which has infected nearly two million and killed over 100,000 worldwide, presents the worst start possible for the recession expected ahead. As the infection curve has yet to near its peak, it is anyone’s guess on the depth of the economic downturn. Against this backdrop, survival is the prominent concern now. Investors’ attention is drawn to companies’ balance sheets instead of growth prospects, which is widely expected to be minimal in the best-case scenario, as business volume dwindles and operating cash flow shrink. Asia Analytica data shows that of some 880 listed companies (after excluding the 40 banks, insurers and investment trusts), 597 companies listed on Bursa Malaysia have cash that is less than their short-term liabilities. Companies in many different sectors are underlined here, from furniture companies to retailers, automotive-related firms, and a wide range of manufacturers and trading companies. Meanwhile, 223 listed companies have an interest cover ratio of below one times, meaning their earnings before interests and tax cannot cover interest expenses for a full year. The market capitalisation of most of these companies are below RM2 billion. Some 321 companies were already in the red last year. Of the 599 profitable ones, around 45.6% of them saw profit decline in the period. Again, most on the list are small-cap firms, according to Asia Analytica data. It is also worth noting that the economic downturn would be a tough test on companies’ sales quality. Companies with a high portion of credit sale with mounting receivables could be at risk amid the potential cash trap. A random check shows that 75 listed companies or 8.2% have net gearing of over 100%. Sectors with the most companies in this category are logistics, construction, oil and gas, building materials and property development. Others with net gearing of above 80% include power companies, telecommunications companies and building materials companies. Power producers’ liabilities are usually backed up by the steady cash flow from power purchase agreements. On the flip side, notable sectors with low net gearing average include Internet and gas utility companies, and technology solution providers. Of 79 generic companies with market capitalisation of above RM2 billion (ex-banks, real-estate investment trusts and insurers) only 22 have a cash ratio of above one times and net gearing of below 50%, led by Petronas Chemicals Group Bhd, Petronas Gas Bhd and IOI Corp Bhd. As reflected by the price-to-book valuations, preference is given for companies with high cash, low debt, steady recurring income and high-quality clients, such as tech companies, and broadband providers. There are also lesser-known small-cap companies that are cash-rich with sturdy past operations. As a fund manager pointed out that a downturn is a brewing pot for merger and acquisition activities, as smaller, cash-rich companies with good assets or business prospects usually become undervalued after the market selldown. The first quarter’s (1Q20) financial result will show how much cash was exhausted amid the two-week shutdown in the second half of March, while prospects of the entire half of 2Q20 being under movement restriction are still visible.
GOOD NEWS GUYS! GOOD NEWS GUYS! GOOD NEWS GUYS! GOOD NEWS GUYS!
ARBB YEAR END TP RM 1.00--ARBB YEAR END TP RM 1.00--ARBB YEAR END TP RM 1.00
LET ME WRITE A SIMPLE SUMMARY ON WHY WE SHOULD BUY ARBB 7181 SHARES!
1.) Executive Summary ARB Berhad, provides enterprise resource planning, Internet of Things (IoT), and re-energy solutions in Malaysia.
2.) Market Performance GOOD-- (7 Day Return 19.1%) ( MY IT 4.8%) (MY Market 0.6%)
3.) Valuation Is ARB Berhad undervalued compared to its fair value and its price relative to the market? 2.44xPrice to Earnings (PE) ratio
a.) Price To Earnings Ratio PASS-- PE vs Industry: ARBB is good value based on its PE Ratio (2.5x) compared to the IT industry average (20.3x).
PASS-- PE vs Market: ARBB is good value based on its PE Ratio (2.5x) compared to the MY market (12.9x).
b.) Price to Book Ratio PASS-- PB vs Industry: ARBB is good value based on its PB Ratio (0.8x) compared to the MY IT industry average (1.1x).
4.) Future Growth ARB Berhad forecast to perform in the next 1 to 3 years based on estimates from analysts. PASS-- 83% Forecasted Software industry annual growth in earnings
5.) Past Performance PASS- Until 31 dec 2019 Revenue rm102.644mil / year Earnings rm33.205mil / year Profit margin 32.3% Growing Profit Margin:ARBB's current net profit margins (32.3%) are higher than last year (27.7%).
.
How has ARB Berhad performed over the past 5 years? PASS--58.0% Historical annual earnings growth
a.) Past Earnings Growth Analysis PASS-- Earnings Trend: ARBB has become profitable over the past 5 years, growing earnings by 58% per year.
PASS-- Accelerating Growth: ARBB's earnings growth over the past year (684.6%) exceeds its 5-year average (58% per year).
PASS-- Earnings vs Industry: ARBB earnings growth over the past year (684.6%) exceeded the IT industry 17%.
6.) Return on Equity
PASS-- High ROE: ARBB's Return on Equity (27.5%) is considered high.
7.) Financial Health
How is ARB Berhad's financial position? PASS-- Short Term Liabilities: ARBB's short term assets (MYR75.7M) exceed its short term liabilities (MYR1.1M).
PASS-- Long Term Liabilities: ARBB's short term assets (MYR75.7M) exceed its long term liabilities (MYR6.5M).
8.) Debt to Equity History and Analysis PASS-- Debt Level: ARBB's debt to equity ratio (0.1%) is considered satisfactory.
PASS-- Reducing Debt: ARBB's debt to equity ratio has reduced from 3.5% to 0.1% over the past 5 years.
PASS-- Interest Coverage: ARBB's interest payments on its debt are well covered by EBIT (509.3x coverage).
MORE GOOD NEWS GOOD INVESTORS OF ARBB 7181 !!! ARBB (7181) has 5 main Pillars (AND THIS IS NO CRYSTAL BALL NEWS)
1. Pillar number One
ARBB (7181 ) is doing IOT and others
THE Main focus for investing in ARBB(7181)is because of RM210 million was allocated under the programmed to encourage transition of businesses to Industry 4.0 technology from 2019 till 2021.
2. ARBB (7181) is doing ERP SYSTEM and others
AFTER MCO ARBB JV COMPANY WILL BRING TONS OF CUSTOMERS RAINING IN (100% CONFIRM)......
3.ARBB (7181) is going for gov project
CONTRACT WILL BE SIGNING WITHIN 4 MONTHS........ (70%CONFIRM!)........
4.ARBB (7181) is going overseas U.S COMPANY Caravan Capital Management LLC IS INVITING ARBB PERSON IN CHARGE GOING AMERICA TO MAKE PROMOTION ABOUT ARB BERHAD! BECAUSE Caravan Capital Management LLC HAVE LOTS OF U.S BIG COMPANY RECOMMENDED TO INVEST INTO ARBB...... (100% CONFIRM)
MORE AND MORE FOREIGN COMPANY WILL SAPU ARBB SHARES (100% CONFIRM).......
5.ARBB(7181) is related to gov...........RECENTLY. WHICH GOV PARTY? DON'T ASK!!!!!! WILL NOT ANSWER!!!!!! (100%CONFIRM)
THE rest are side dishes
Year 2020 will see ARBB (7181) turn into a Red hot bull run stock of IR 4.0 INDUSTRY just like OGSE was for 2019!
before lockdown this counter at 0.62-0.67...now construction going to start work and this counter also related to Bandar Malaysia...guys u think, now at 0.520-0.525...worth it or not? and now never said IPO for new project...
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
khpwwl
3,477 posts
Posted by khpwwl > 2020-03-24 20:34 | Report Abuse
下场不想像林木生集团那样,就看 botak 如何办了?除非,不想干下去了!