TAKING advantage of its strong cash position to acquire a business partner who was struggling with cash flow issues amid the COVID-19 pandemic has eventually paid dividends to Main Market-listed information technology (IT) software and platform provider ARB Bhd.
The bargain acquisition has enabled the group to post a 91.8% jump in net profit for its 2Q FY2021 ended June 30, 2021 to RM16.3 mil from RM8.5 mil in the previous year’s corresponding period.
According to a Bursa Malaysia filing today, the sharp improvement in ARB’s net profit was mainly due to the negative goodwill of RM12.7 mil recorded during the quarter under review.
“The acquired company was struggling with cash flow issues mainly due to the impact of COVID-19 pandemic. Prior to the COVID-19 pandemic, the acquired company has healthy financial projections,” recalled ARB’s executive director Datuk Seri Larry Liew Kok Leong.
“We have benefitted from the strong cash position that enables us to obtain a bargain acquisition. We are convinced that the company will recover strongly going forward as the global vaccination rollout continues and the world adjusts to the new normal. This will help to drive growth forward.”
Meanwhile, ARB saw its revenue fell by 15.5% year-on-year (yoy) to RM46.8 mil in its 2Q FY2021 from RM55.3 mil in the corresponding quarter a year ago.
For its 1H FY2021, however, the group’s net profit rose 51.3% yoy to RM23 mil (1H FY2020) from RM15.2 mil mainly due to the negative goodwill of RM12.7 mil. Its revenue during the six-month period also improved by 8.5% yoy to RM96.2 mil from RM88.7 mil in the same period a year ago.
This is attributed to increased contributions from the group’s enterprise resource planning (ERP) and Internet of Things (IoT) business segments of RM80.2 mil and RM16 mil from RM56.5 mil and RM32.2 mil respectively in 1H FY2020.
Both the ERP and IoT business segments will continue to drive ARB’s alignment, focus and growth as well as improve the efficiency for the group’s partners, according to Liew.
In the meantime, the group will continue to scout for cross-selling opportunities through its existing business networking.
“We intend to participate in these high-growth new business opportunities in Malaysia by offering our cloud solutions to prospective customers,” envisages Liew.
“Moving forward, we will continue to identify strategic acquisition targets through merger and acquisitions (M&As) to expand our geographical presence and access various new sectors by taking advantage of cross-border opportunities.”
At the close of today’s trading, ARB was up 3.5 sen or 14% to 28.5 sen with 40.36 million shares traded, thus valuing the company at RM171 mil. – Aug 16, 2021
