• Lowest valuation among the peers
• Net cash company with strong growth momentum
• To offer cloud-based solutions for business sustainability and recurring income

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 line.

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) solutions.

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 December 2020.

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 plan.

"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 occupants.

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 be positive.

ARB would be a key beneficiary of an increase in capital expenditure among businesses to digitalise their internal operations.

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).

About ARB Berhad

ARB Berhad ("ARB" or "Company") is incorporated in Malaysia under the ACT in October 1997 and was listed on the Main Market of Bursa Malaysia Securities Berhad in February 2004.

The Company is primarily an IT software and platform provider company.

It's business operates predominantly in two (2) business areas:

1. Enterprise Resource Planning ("ERP") -- designing and reselling of customised ERP solutions

2. Internet of Things ("IoT") -- integrated solutions in the systems, engineering, procurement, commissioning, and management of IoT systems

Its expertise lies in empowering businesses through digital transformation and technology integration