{"id":203,"date":"2017-03-17T04:45:31","date_gmt":"2017-03-17T04:45:31","guid":{"rendered":"http:\/\/bluegemresearch.co.za\/?p=203"},"modified":"2017-03-17T04:45:31","modified_gmt":"2017-03-17T04:45:31","slug":"arb-holdings-h117-results-quietly-growing","status":"publish","type":"post","link":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=203","title":{"rendered":"ARB Holdings \u2013 H1:17 Results \u2013 Quietly Growing"},"content":{"rendered":"<p><em>Share Code: ARH \u2013 Market Cap: R1.5bn \u2013 PE: 10.6x \u2013 DY: 3.0%<\/em><\/p>\n<p><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2017\/03\/ARB-Holdings_H1_17_Results-Note.pdf\" target=\"_blank\">Download the full ARB Holdings_H1:17_Results Note<\/a><\/p>\n<p><strong>H1:17 \u2013 Steady Does It\u2026<\/strong><\/p>\n<ul>\n<li>ARB Holding&#8217;s revenue rose by 3% to R1.27bn (H1:16 \u2013 R1.23bn) with Lighting leading the growth while soft municipal spend dampening Electrical\u2019s contribution during the period.<\/li>\n<li>HEPS rose 1% to 28.07cps (H1:16 \u2013 27.79cps) while cash flow generation remained good and the balance sheet ungeared with R175m of net cash on hand.<\/li>\n<li>Although in the ARB\u2019s results are a bit below our expectations, the Group continues to steadfastly execute their strategy of geographic, product and customer expansion with cabling dropping from &gt;50% of the Group\u2019s turnover seven years ago to c.37% of it in these results.<\/li>\n<\/ul>\n<p><strong>Our Thoughts: Stagnation in the Base, Upside in the Future<\/strong><\/p>\n<ul>\n<li>While we may be premature in this call, we believe that we are currently in the trough in both South Africa (2016\/17) and in ARB\u2019s market (FY 17E and, perhaps, FY 18E).<\/li>\n<li>SA\u2019s Leading Indicator and as well as many global indicators everywhere are, at worst, not falling anymore and, at best, starting to rise.<\/li>\n<li>That said, we do not expect a sudden recovery and would not be surprised if this trough stretched out (i.e. flat growth) into 2018.<\/li>\n<\/ul>\n<p><strong>Forecast, Valuation &amp; Implied Return: Attractive Valuation<\/strong><\/p>\n<ul>\n<li>We lift our fair value for ARH to 664ps (previously: 650cps) on an implied Price Earnings (PE) of 11.1x. This PE does not appear unreasonable against either ARH\u2019s own history or the various comparatives in the market.<\/li>\n<li>Rolling this fair value forward at our CoE we arrive at a 12m TP of 779cps (previous 12m TP: 762cps), which places the share on a comfortable Exit PE of 11.4x.<br \/>\nThis 12m TP also implies a reasonably attractive return of c.23%.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2017\/03\/ARB-Holdings_H1_17_Results-Note.pdf\" target=\"_blank\">Download the full ARB Holdings_H1:17_Results Note<\/a><\/p>\n<p><em>See our\u00a0<a title=\"Methodology\" href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?page_id=9\" target=\"_blank\">methodology<\/a>\u00a0here and note our disclaimer\u00a0<a title=\"Disclaimer\" href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?page_id=17\" target=\"_blank\">here<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: ARH \u2013 Market Cap: R1.5bn \u2013 PE: 10.6x \u2013 DY: 3.0% Download the full ARB Holdings_H1:17_Results Note H1:17 \u2013 Steady Does It\u2026 ARB Holding&#8217;s revenue rose by 3% to R1.27bn (H1:16 \u2013 R1.23bn) with Lighting leading the growth while soft municipal spend dampening Electrical\u2019s contribution during the period. HEPS rose 1% to 28.07cps [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[71,52,51,53,72,75,73,74,76,26,30,16],"class_list":["post-203","post","type-post","status-publish","format-standard","hentry","category-arb-holdings-arh","tag-analyst-coverage","tag-arb","tag-arb-holdings","tag-arh","tag-blue-gem","tag-electrical","tag-h117","tag-infrastructure","tag-investment-case","tag-keith-mclachlan","tag-small-caps","tag-south-africa"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=203"}],"version-history":[{"count":1,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/203\/revisions"}],"predecessor-version":[{"id":205,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/203\/revisions\/205"}],"wp:attachment":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}