ARB active, rises 9% on emergence of US-based Caravan Capital as new substantial shareholder

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KUALA LUMPUR (April 29): Interest in shares of Main Market-listed ARB Bhd spiked after a US-based investment firm had yesterday emerged as the company’s new substantial shareholder.

At 9.40am, the counter was up 2.5 sen or 9.09% at 30 sen, giving it a market capitalisation of RM88.14 million. Some 37.85 million shares were traded, exceeding its 200-day average volume of 8.61 million shares, making it the fifth most actively traded counter at the time of writing.

Over the past year, the counter has fallen by 43.4% from 53 sen. But since falling to a low of 10.5 sen on March 19, the stock has rebounded 185.71% within a six-week period.

In a filing to Bursa Malaysia yesterday, ARB said US-based investment management firm Caravan Capital Management LLC has emerged as a substantial shareholder after acquiring a 6.3% stake in the information technology (IT) software and platform provider.

Caravan Capital acquired the stake comprising 18.5 million shares on the open market last Friday.

The shares are held through MIRI Strategic Emerging Markets Fund LP (11.26 million shares or a 3.89% stake) and Kenneth Rainin Foundation (7.07 million shares or a 2.41% stake).

For the full year ended Dec 31, 2019 (FY19), ARB’s net profit soared 8.2 times to RM34.77 million, from RM4.23 million in the previous year, while revenue jumped 6.7 times to RM102.64 million, from RM15.26 million.

The higher earnings are attributable to higher revenue from the IT division, in which ARB believes will continue growing and contribute profit to the group.

The major revenue contributors were wholly-owned subsidiaries ARB Development Sdn Bhd and ARBIOT Sdn Bhd, which are both principally involved in the business of reselling customised enterprise resource planning (ERP) software system, and Internet of Things, Internet and Multimedia development, and consultancy services

Apart from its IT-related businesses, ARB is also involved in the manufacturing of wood products. However, the group's timber segment temporarily ceased operations in the third quarter of FY19, ahead of an expected resumption in December 2019.

Under its segmental breakdown analysis for FY19, the manufacturing in wood products did not generate any revenue for the year and saw a net loss of RM1.64 million.

Read also: US-based Caravan Capital buys 6.3% stake in ARB