ARB

0.19%

$41.42 arb corporation limited.

Should I sell ARB?, page-5

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MarsC

4,296 Posts.

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22/01/16

08:41

Post #: 16846816
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Originally posted by neoteric ↑

Thanks for the analysis Mars, interesting to read about your method and justification.

Personally I value ARB stock at $11.50 based on 2016 earnings growth of 8%. I use the method of a multiple of equity per share factoring return on equity and earnings retention ratio. However a share price well in excess of this valuation in no way offers a temptation to sell because I am of the opinion that the company is at the beginning of a resumption of solid earnings growth. I've been fortunate to hold for over 15 years and always try to imagine what the business will look like in 5 year's time.

We've seen the company make substantial investment in their productive capacity, particularly in Rayong, and various Aus State warehouses in recent years. The marketing push is on in earnest in the large US market, I've noticed price reductions on products on the US website attributed to 'efficiencies at the Kisyth plant', and a substantial program of many promotional events. Exports have doubled from $40m in 2005/6 in a period of a strong $A, and a domestic focus. I expect the next doubling to take less than half that time particularly when we explicitly hear "export sales are a primary focus...".

Domestically I envisage the continued opening of stores to complement a solid outlook in the year's ahead, underwritten by a number of recent utility releases that ARB are busy making accessories for. The OEM market will likely remain tough, but overall the loyal band of customers in Aus who trust the ARB engineered psroduct (for good reason) will ensure that in 5 years the local business will be larger.

As you mentioned Mars, businesses of this quality are extremely hard to find, and well worth holding on to tenanciously IMO.

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Neoteric

I strongly sympathise with your comments. Odds are, I will probably never sell. My post was in the spirit of "asking myself the hard questions", and also an acknowledgement that, ultimately, any asset, now matter how high in quality, does not have infinite value.

Do you have an opinion of the "resonance" of the brand in OS markets? Ultimately, how this compares to competitors will determine how likely they are to achieve rapid, profitable expansion OS.

Cheers, Mars

ARB Price at posting: $15.23 Sentiment: Hold Disclosure: Held
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(20min delay)
Last $41.42		Change -0.080(0.19%)		Mkt cap ! $3.437B

Open	High	Low	Value	Volume
$40.92	$41.68	$40.82	$5.592M	135.1K

Buyers (Bids)

No.	Vol.	Price($)
1	441	$41.30

Sellers (Offers)

Price($)	Vol.	No.
$41.44	386	1

View Market Depth

No.	Vol.	Price($)
1	145	40.950
1	124	40.460
1	650	40.100
3	275	40.000
2	351	39.800

Price($)	Vol.	No.
42.000	130	1
42.100	1786	1
42.650	420	1
44.500	112	1
44.580	22	1

Last trade - 16.10pm 01/11/2024 (20 minute delay)

ARB (ASX) Chart

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