ARB 4x4 Accessories
Beyond the Ticker
ARB 4x4 Accessories ASX: ARB
Please read disclaimer at the end of the document
Introduction
ARB is an industry leader that focuses on 4x4 accessories. They have had a fantastic run during the pandemic with their share price increasing 84.24% in the past year.
1.0 Conclusion
ARB’s amazing rally this year has positioned the company up over 70% YTD whilst increasing their most recent dividend payout. The vehicle accessory giant has performed extremely well and capitalized on restrictions forcing residents to explore their own land via car. This has been the major catalyst for the surge in share price. I believe this really will continue as long as international flights are restricted. I am long ARB in the short to medium term. - Che
ARB has proven themselves to be an adaptive company by increasing revenue throughout the pandemic. What has impressed me the most is the growth in the export market. Although the board doesn’t have experience in the traditional sense they are well equip to manage this company and have been doing so successfully for many years. I expect ARB to continue to grow but not at the pace we have seen in the last year. I am long ARB in the 5 - 10 year horizon. - Thomas
2.0 Financial Statement Breakdown
2.1 Majority shareholders
2.2 Directors and Executives
Roger G Brown - Chairman
Roger is the brother of the company founder Tony Brown. Roger has been apart of the executive team at ARB since 1987. In his time with ARB he has held a number of different leadership positions.
Andrew H Brown - Managing Director
Andrew is a brother of Roger and the founder Tony. Like his brother he has been involved in the executive team at ARB since 1987.
Adrian R Fitzpatrick - Independent Non-executive Director
Adrian has sat on the board since 2016. Prior to 2016 Adrian was a partner of Pitch partners. Adrian has also sat on the boards of AussieBroadband and RXP Services Ltd.
John R Forsyth - Non Executive Director
John has been a director since 1987 and throughout his time at ARB has held a few different positions.
Robert D Fraser - Independent Non Executive Director
Robert has been with ARB since 2004 and prior to that he was Director of Taylor Collison Limited and Non Executive director of F.F.I Holdings Limited.
Karen L Phin - Independent Non Executive Director
Karen has been a Director for ARB since 2019. Prior to that Karen was a Non Executive Director of Omni Bridgeway Ltd and Magellan Financial Group Limited.
Andrew P Scott - Independent Non Executive Director
Andrew has been a director since 2006 and has a wide range of 4WD Industry experience.
Board Rating - 70 /100
3.0 Operations
ARB makes the majority of their revenue through sales of products. Sales were up 33.9% for the 2021 Financial Year. Sales Revenue has been consistently growing over the last 10 Years, with an exceptional FY21 due to the pandemic driving consumers to explore their backyard instead of traveling overseas. Please see below.
Encouragingly the strongest growth in sales came from exports up 50.2% for the year. ARB is working hard to boost their international presence.
4.0 Exposures
ARB’s biggest exposure is supply chain disruptions due to the COVID pandemic. Another Exposure they face is the rising production costs due to base material price rises.
ARB’s sales are also linked to car sales. If purchasing these shares It is good to monitor new car sales especially off road vehicles. Currently Car companies can not make cars quick enough so there is no concern for ARB.
5.0 Technical Analysis
ARB shares have had an incredible couple of months and are up over 80% YTD. This comes at no surprise due to COVID-19 restrictions making it impossible for overseas travel which has resulted in a huge increase in demand to travel within the state via car. With international travel off the cards, many have decided to spend their savings on new upgrades for their 4x4 and in turn, ARB has benefited directly.
Point A, B & C
Point A, B & C show where ARB’s price action failed to break above and was considered resistance. Up until Point I, price action failed to break through a total of 3 times before volume picked up in late August and forced price action above resistance.
Point D, E, F & G
Point D, E, F & G illustrates the support due to multiple bounces from the ascending line. As price action rallied higher without trending below the line, this will still be considered long term support if ARB shares crash in the future.
Point H
Point H resembles a gap. Ideally, this area should be filled before another major leg up in share price as TA traders pay close attention to these setups.
Point I
Point I shows where ARB shares are currently situated. Recently a breakout has occurred over resistance (red line). Increased volume enabled price action to surge through. Ideally a long trader would want the red line (now support) to be tested for validity before rallying higher. If price action does not bounce from this point, a sharp decline will most likely occur.
6.0 Competitors
7.0 Recent Market Sensitive Information
Market Update – 14th June 2021
On June 14th , 2021 ARB informed the market of sales growth and profit range along with their short term outlooks. All of which were positive as was seen in the response by investors with ARB shares finishing up the day +3.16%. Management noted that sales revenue was up 33.9%, profit before tax was in the range of $145m-$150m and that they maintained a positive short-term outlook based on its consistently strong order book.
Acquisition of Auto Styling Truckman Group Limited – 4th March 2021
Management announced the Acquisition of manufacturer and distributor of utility accessories in the UK. They then went on to say that the acquisition meets their aim of expanding international distribution and aligns with the company’s product strategy. The Acquisition was completed for a total of $21.9m GBP and is being funded by ARB’s existing cash resources. The market responded positively to this announcement finishing the day up 3%.
Market Update - 12th Jan 2020
Management announces a half yearly growth in sales revenue of 21.6%, totaling $284m as well as profit being within the range of $70m to $72m. ARB also provided comfort to shareholders by adding that they wish to “maintain a positive short-term outlook based on a strong customer order book and another record sales month in December.” The market responded very well to the news finishing the day up 5.75%.
8.0 ESG
ARB received a CSR / ESG rating of 24/100. A very poor result.
8.1 Environment
ARB is attempting to decrease their impact on the environment by making their production process more efficient. ARB also highlights the fact that they are moving from traditional paper systems to digital, which seems to be the very least they could do and a given for efficiency regardless of the environment.
8.2 Social
The board is 86% male. We would love to see some more diversity here.
8.3 Governance
Please refer to 2.2.
9.0 Focus Point
The focus point for ARB is their competitive advantage and market leading position. If ARB continues to grow and capture the 4x4 market they will be able to provide solid returns for years to come.
Disclaimer
Advice in the Material is provided for the general information of readers and viewers (collectively referred to as "Readers") and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no Reader should act on the basis of any information in the Material without properly considering its applicability to their financial circumstances. If not properly qualified to do this for themselves, Readers should seek professional advice.
Investing and trading involves risk of loss. Past results are not necessarily indicative of future results.
The decision to invest or trade is for the Reader alone. We expressly disclaim all and any liability to any person, with respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance upon the whole or any part of the Material.
