- Lowest valuation among the peers
- Net cash company with strong growth momentum
- To offer cloud-based solutions for business sustainability and recurring
KUALA LUMPUR, MALAYSIA - Media
OutReach - 23 February 2021 - In
the past three financial years, ARB Berhad
("ARB" or "Group") has
not only staged a very successful turnaround but has also consistently
registered substantial net profit growth. As recent as the fourth quarter of the
financial year 2020, the Group achieved a massive leap of 55% in the bottom
ARB Berhad's Executive Director Dato' Sri Larry Liew Kok Leong at a monthly business plan review meeting
The Group's success in breaking away
from its decade-long losses lies in its strategic diversification into the
field of enterprise resource planning (ERP) and Internet of Things (IoT)
To date, ARB is amongst the lowest in
terms of valuations when compared to its peers in the technology sector. The Group
had also managed to deliver meaningful growth to its shareholders despite facing
the negative influence of the pandemic.
ARB is in a net cash position, with cash
and cash equivalents worth RM24.5 million against zero borrowings as of 31
Looking ahead into 2021 and beyond,
ARB's upward growth momentum is poised to continue, underpinned by the immense
potential in digitalisation among businesses and the Industry 4.0 agenda.
After posting its record-high net profit
in the financial year of 2020 (FY20), the Group is confident of achieving a more
robust performance in the current FY21.
ARB's Executive Director Dato' Sri Larry
Liew Kok Leong said that the Group aims to expand its geographical presence and
access various new industry sectors by taking advantage of cross-border
business opportunities in 2021.
"In line with our regional expansion
plan, we intend to collaborate with local partners to extend our footprint in
our information technology (IT) Segment in other countries through the acquisition
of business and technologies," he said.
A key growth strategy for 2021 would be
ARB's move in providing more cloud-based product offerings, which would be
achieved through the execution of partner-ecosystem in growing industries.
At the domestic front, Dato' Sri Liew
said ARB plans to work closely with government-linked companies, multinational
corporations and public listed companies as envisaged under its 2021 business
"Our cloud solutions have proved to
improve management efficiency and accelerate a business' digitalisation
initiatives. At the same time, the solutions would also help to achieve cost-effectiveness,"
according to Dato' Sri Liew.
Moving forward, the Group also intends
to expand into new horizontal markets such as providing cloud-based solutions to
facilitate the new norm of business needs.
"As part of the growth strategy driven
both organically and through strategic acquisitions, we are delivering
innovative solutions in new categories, including Big Data analysis, e-commerce
solutions, IoT platform for 5G and data cybersecurity, and expect to continue grow
these businesses in the future," said Dato' Sri Liew.
He added further that the Group will
accelerate rolling out IoT platform-based smart home solutions that have been
gaining traction, especially among households in the urban area.
ARB's IoT platform would be able to
integrate a wide range of electrical appliances, allowing multi-connection and
readiness of artificial intelligence learning features for the ease of use of home
According to Dato' Sri Liew, ARB's
growth prospects are intact as it is well-positioned in two promising operating
segments, namely, ERP and IoT. Our ERP and IoT segments will drive alignment,
focus and growth while sharpening our partners' focus. In addition, we
are excited to see our IoT solutions business return to growth by serving more
enterprises, further building on our annualised recurring revenue.
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 billion in 2019 to reach US$10.3
billion by 2026.
Meanwhile, the Malaysian ERP market is
projected to grow from US$120 million to reach US$255 million in 2026, growing
at a CAGR of 11.4% in the same period.
"ARB's unique cloud-based ERP business
model reduces the Group's dependence on external technology vendors and allows
it to capture a bigger share of the value pool generated from the collaborations.
Dato' Sri Liew expects the ERP segment
to remain as the main revenue contributor for ARB in FY21, with continued
recurring income potential.
The ERP segment is expected to deliver
65% of total turnover, while the remaining will be contributed by the IoT
business. Both segments are expected to be in line with the global initiative
in advancing into the new era of Industry 4.0.
"We create value by providing a
tailor-made solution for our JV partners, designed to generate an immediate
impact on sales and profits. At the same time, it also improves our business as
we allow our JV partners to cross-sell their products and upsell packages to
end customers, hence creating a synergistic relationship," he added.
"The Group will continue to look for
opportunities that might open up amidst the crisis, observe the market situation and adapt to what
is needed in the current market to ensure the sustainable growth to the Group,"
Dato' Sri Liew said.
In FY20, the Group's net profit grew by
nearly 25% year-on-year (y-o-y) to RM43.46 million, on the back of a 114% surge
in revenue to RM219.45 million. It staged a turnaround in FY18 with a net
profit of 4.23 million and continued to grow its bottom line to RM32.8 million
for FY19. The Group has continually achieved its steady three-year earnings
growth in revenue and net profit since 2018.
With 2021 set to be a year of recovery,
underpinned by an improvement in business sentiment, ARB's outlook appears to
ARB would be a key beneficiary of an
increase in capital expenditure among businesses to digitalise their internal
Currently, the Group has one of the
lowest price-to-earnings ratios in the technology sector at just 4.6 times as
of 22 February 2021 as compares with other technology industry players such as
Mi Technovation Bhd (64.4 times), Inari Amerton Bhd (63.5 times) and ViTrox
Corp Bhd (88.8 times).