{"id":234,"date":"2020-03-05T06:09:58","date_gmt":"2020-03-05T06:09:58","guid":{"rendered":"http:\/\/bluegemresearch.co.za\/?p=234"},"modified":"2020-03-05T06:09:59","modified_gmt":"2020-03-05T06:09:59","slug":"arb-holdings-h120-lean-efficient","status":"publish","type":"post","link":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=234","title":{"rendered":"ARB Holdings &#8211; H1:20 &#8211; Lean &#038; Efficient"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: ARH \u2013 Market Cap: R0.9bn \u2013 PE: 5.9x \u2013 DY: 6.3%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2020\/03\/ARB-Holdings_H1_20_Results-Note.pdf\">ARB Holdings &#8211; H1:20 Results Note<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2020\/03\/ARB-Holdings_H1_20_Results-Note.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>H1:20 \u2013 Great\ncost-control despite headwinds<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>While ARB missed out topline expectations,\nmanagement\u2019s extraction of efficiencies across the Group saw a resilient profit\nperformance.<\/li><li>The disappointments were all in sales, as\nEskom\/contractor volumes remained weak in the Electrical Division and\nretailer\/consumer markets stagnated.<\/li><li>The victories were all won in costs as the Radiant\nacquisition begins to bed-down, an underperforming Electrical store was closed\nand the Lord\u2019s View DC began operations.<\/li><li>Slight \u201cpre-Chinese New Year\u201d overstocking across the\nGroup negatively impacted on cash flows but should serve the Group well given\nthe current Covid-19 (i.e. \u201cCoronavirus\u201d) disruption to global supply chains\nand the coming likely stock shortages across global and domestic markets.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Our\nThoughts: H2 to remain tough, but long-term positive<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The Group remains ungeared, has positive cost-savings\nthat should annualize nicely going forward and is well-positioned to weather\nthe current macro-headwinds and capture any growth that may appear going\nforward.<\/li><li>Unfortunately, H2 in South Africa and with growing\nglobal risks is likely to remain a tight trading environment and one with a lot\nof forecast risk (either upside or downside).<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation &amp; Implied Return: Still underrated<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Our fair value for ARH is 562cps (previously: 576cps)\non an implied Price Earnings (PE) of 8.3x, indicating that the stock is c.39%\nundervalued at its current share price.<\/li><li>Rolling our fair value forward at our CoE, we arrive\nat a 12m TP of 659cps (previous 12m TP: 670cps) on an Exit PE of 13.2x.<\/li><li>Key risks to the Group are unchanged from our <a href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=146\">Initiation of Coverage<\/a>.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2020\/03\/ARB-Holdings_H1_20_Results-Note.pdf\">ARB Holdings &#8211; H1:20 Results Note<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2020\/03\/ARB-Holdings_H1_20_Results-Note.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: ARH \u2013 Market Cap: R0.9bn \u2013 PE: 5.9x \u2013 DY: 6.3% H1:20 \u2013 Great cost-control despite headwinds While ARB missed out topline expectations, management\u2019s extraction of efficiencies across the Group saw a resilient profit performance. The disappointments were all in sales, as Eskom\/contractor volumes remained weak in the Electrical Division and retailer\/consumer markets [&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":[52,51,75,94,12,95,20,93,48],"class_list":["post-234","post","type-post","status-publish","format-standard","hentry","category-arb-holdings-arh","tag-arb","tag-arb-holdings","tag-electrical","tag-industrial","tag-jse-research","tag-market","tag-small-cap","tag-stock","tag-valuation"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/234","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=234"}],"version-history":[{"count":1,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/234\/revisions"}],"predecessor-version":[{"id":236,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/234\/revisions\/236"}],"wp:attachment":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=234"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=234"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=234"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}