not vested
Trading Buy: ARBB - 7181
(Last price: RM0.530, Potential upside +66.0%)
Company Profile
ARBB is involved in several business segments, which include timber related, Enterprise Resource Planning (ERP) and IoT equipment and may expand into re-energy solutions this year.
Trading Catalyst
After diversifying into IT solutions business in 3Q18, specialised in providing ERP solution, it has seen a huge contribution of RM8m or 52% towards FY18’s revenue and FY18’s EPS stood at 6 sen (vs. 6 sen loss in FY17).
It has recorded RM5.1m in 1Q19 on the back of higher revenue at RM12.4m contributed by the Enterprise Resource Planning (ERP) software system and the IT segment is expected to continue in contributing the major portion of the sales and profits to the Group.
With contracts being secured by ARBB worth RM6.9m in 3Q18 and RM20m in Jan-19, we believe it may contribute to decent topline and bottomline growth. In addition, ARB has entered into a MoU with Perkasa Selalu Sdn Bhd to provide IoT solutions; this will open up another business venture, which is likely to contribute positively towards ARB.
They are exploring into re-energy solutions this year and we could see that as an expansion towards their revenue and earnings moving forward.
Technical View
Resistance: RM0.610 / RM0.650 / RM0.880
Support: RM0.460 / RM0.440
Cut loss: RM0.430
Key Financial Stats
4Q18 Net profit: RM5.0m, 1Q19 Net profit: RM5.1m
Turnaround in FY18, may register record profit in FY19
Source: Bloomberg, HLIB