WITH A strong net cash position of RM24.5 mil, ARB Bhd (previously Aturmaju Resources Bhd) is all geared up to extend its footprint in the information technology (IT) segment through merger & acquisition (M&A) of business and technology.
Backed by a record net profit of RM19.7 mil in its recently concluded FY2020, the group is also eyeing to capitalise on the surge in demand for cloud-based computing following the COVID-19 pandemic, according to executive director Datuk Seri Larry Liew Kok Leong.
“I think we are in a good position to expand our business beyond the boundary,” he envisaged.
“Over the last three years, we have solidified our position in the IT (information technology) business in Malaysia, especially in the field of enterprise resource planning (ERP) and Internet of Things (IoT) solutions as COVID-19 accelerated user demand for cloud-based computing needs.”
Liew further noted that there is a rising demand from international clients as digitialisation efforts and cost-optimisation for the long-term is seen from the solutions offered.
In order to meet the growing demand, ARB intends to collaborate with its local partners and look into potential M&A to expand its geographical presence and access various new sectors by taking advantage of cross-border business opportunities in 2021.
On the domestic front, ARB will continue to work closely with government-linked companies (GLCs), multinational corporations and public-listed companies to grow its ERP and IoT business segments.
Based on the statistics by Frost & Sullivan, the Malaysian IoT market is expected to grow at a compound annual growth rate (CAGR) of 24.7% from US$2.2 bil in 2019 to reach US$10.3 bil by 2026.
Meanwhile, the Malaysian ERP market is projected to grow from US$120 mil to reach US$255 million in 2026, growing at a CAGR of 11.4% in the same period.
“This would provide strong organic growth potential for ARB, which has an established presence in Malaysia,” projected Liew.
Having undergone a massive transformation since 2018 from a timber business operator to an IT software and platform provider, ARB has seen a sharp turnaround over the last three financial years.
The group’s success in breaking away from its decade-long losses lies in its strategic diversification into the field of ERP and IoT solutions.
To date, ARB ranks among the lowest in terms of valuations when compared to its peers in the technology sector.
Currently, the group has one of the lowest price-to-earnings ratios in the technology sector at just 4.3 times as of March 1 as compared with other tech stocksd such as Mi Technovation Bhd (64.4 times), Inari Amerton Bhd (63.5 times) and ViTrox Corp Bhd (88.8 times).
This is partly due to the company’s explosive earnings growth over the past three years while its share price has not increased by as much.
At the close of the morning trading session, ARB was down 2 sen or 5.06% with 23.59 million shares traded, thus valuing the company at RM186 mil. – March 2, 2021