{"id":253,"date":"2021-02-17T06:55:38","date_gmt":"2021-02-17T06:55:38","guid":{"rendered":"http:\/\/bluegemresearch.co.za\/?p=253"},"modified":"2021-02-17T06:55:40","modified_gmt":"2021-02-17T06:55:40","slug":"arb-holdings-h121-emerged-stronger","status":"publish","type":"post","link":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=253","title":{"rendered":"ARB Holdings \u2013 H1:21 \u2013 Emerged Stronger"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: ARH \u2013 Market Cap: R1.0bn \u2013 PE: 6.4x \u2013 DY: 0.0%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/02\/ARB-Holdings_H1_21_Results-Note.pdf\">ARB Holdings &#8211; H1:21 Results Note<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/02\/ARB-Holdings_H1_21_Results-Note.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>H1:21 \u2013 Strong Beat<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>ARB Holdings published an <em>excellent<\/em> H1:21 result showing good revenue growth and particularly strong profit growth from key cost-savings measures annualizing across the period.<\/li><li>Revenue rose +5% y\/y, Operating Profit shot up +59% y\/y (thoroughly beating our expectations), &amp; HEPS grew +26% to 41.1cps (H1:20 \u2013 32.6cps).<\/li><li>For a Group that typically generates strong cash flows, cash generation was particularly strong over this period and the Group\u2019s balance sheet remains very much ungeared.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Our Thoughts: <em>Emerged<\/em> Stronger<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Management has built a superb Group over the years and, over the current pandemic, reacted swiftly in reigning back expenditure. Following from our <a href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=238\">previous results note<\/a>, we believe that H1:21 has demonstrated that the Group has emerged stronger with more market share than at the beginning of this period. In the long-term, this can only be a good thing.<\/li><li>We expect dividends to resume with the full-year results and have maintained our revenue expectations while adjusting our margin assumptions to reflect the fantastic gains made by the Group in H1:21 annualizing even further into H2:21E.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation &amp; Implied Return: EV\/EBIDTA lining up with DCF<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>We see fair value as 631cps (previously: 464cps) on a Price Earnings (PE) of c.9.2x.<\/li><li>Interestingly, we have built a new EV\/EBITDA Model for ARB against a hand-selected peer set and this model arrives at a fair value of 624cps, thus lending weight to our DCF fair value.<\/li><li>Our implied 12m TP of 737cps (previous 12m TP: 546cps) places the share on an Exit PE of 12.9x &amp; implies a potential return of c.71%, albeit with typical macro-risks remaining present.<\/li><li>While \u201ccheap\u201d is not a defining characteristic of the current domestic small cap market, the combination of it with the high-quality of ARB\u2019s track record and prospects makes it unique.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Refer to our original <a href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=146\">Initiation of Coverage<\/a> for more background.<\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/02\/ARB-Holdings_H1_21_Results-Note.pdf\">ARB Holdings &#8211; H1:21 Results Note<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/02\/ARB-Holdings_H1_21_Results-Note.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: ARH \u2013 Market Cap: R1.0bn \u2013 PE: 6.4x \u2013 DY: 0.0% H1:21 \u2013 Strong Beat ARB Holdings published an excellent H1:21 result showing good revenue growth and particularly strong profit growth from key cost-savings measures annualizing across the period. Revenue rose +5% y\/y, Operating Profit shot up +59% y\/y (thoroughly beating our expectations), [&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":[52,51,75,55,15,20],"class_list":["post-253","post","type-post","status-publish","format-standard","hentry","category-arb-holdings-arh","tag-arb","tag-arb-holdings","tag-electrical","tag-eurolux","tag-jse","tag-small-cap"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/253","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=253"}],"version-history":[{"count":1,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/253\/revisions"}],"predecessor-version":[{"id":256,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/253\/revisions\/256"}],"wp:attachment":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}