ARB disposes remaining stake in Sabah timber business
KUCHING: ARB Bhd (ARB), primarily an IT software and platform provider, has entered into a conditional share sale agreement with AY Brothers Sdn Bhd (AY Brothers) for the proposed disposal of its remaining 51 per cent interest in Aturmaju (Sabah) Holding Sdn Bhd (AHSB) for a consideration of RM5.6 million.
The disposal of the entire interest in AHSB is in line with ARB’s strategic plan to transform ARB’s business position from the timber sector to the information technology (IT) sector.
Primarily involved in the manufacturing of wood products then, AHSB’s operations have been incurring losses over the past few years, which resulted in the cessation of its operations since the second quarter of 2018.
ARB had earlier disposed of a 49 per cent stake in AHSB in August 2019, also to Ay Brothers. The latter has since decided to take full control of AHSB’s business perations.
Therefore, the proposed disposal of the remaining 51 per cent stake in AHSB serves as a timely opportunity for ARB to fully divest its loss-making and non-operating timber business.
Commenting on the disposal, Datuk Sri Liew Kok Leong, the Executive Director of ARB said, “The (proposed) disposal is a testament of ARB’s strategies to transform and expand on the IT sector instead.
“The divestment will enable us to channel our strength and capabilities on activities that are aligned with our IT business, namely the Enterprise Resource Planning (ERP) and the Internet of Things (IoT), which constitutes the main driver of our earnings contribution.
“We recognise the importance of IT in the challenging society landscape as digital technology is constantly changing the needs and expectations of consumers. Hence, we believe we are on the right track as far as the developments (of the ERP and IoT segments) are concerned.
“This was well demonstrated in our financial performance in 2019, where earnings have increased by almost eight-fold since the cessation of the timber business in 2018.
“We believe that the IT business realignment will further accelerate an integrated technology roadmap and position ARB to respond more quickly to new market opportunities, improving market leadership positions and support our longterm growth strategy.”
He further added, “If an opportunity arises, we will undoubtedly evaluate potential business partnerships and/ or viable joint ventures with strategic partners, in Malaysia and Singapore.
“We are also putting conscious efforts to venture into new markets, especially the Indochina region as we see opportunities to collaborate with the domestic partners there to pursue new business opportunities in the IT market. We will direct our core competencies to nurture and build our competencies in this area.
“We are optimistic of achieving a better business and financial performance, as well as enhancing shareholders’ value in the longterm. Last but not least, the proceeds from the disposal and the elimination of expenses associated with maintaining the loss-making timber business are expected to strengthen our cashflow position.
“Hence, the group is wellpositioned to undertake viable investment opportunities, new partnerships and/or collaborations to further expand its IT segment, going forward.”
Earlier this month, ARB, via its indirect wholly owned subsidiary, Databook Pte Ltd entered into a business partnership agreement and an outsourcing partnership agreement with Asterisk Computer (Far East) Pte Ltd to support the accelerated deployment of the enterprise application software solutions in Malaysia and Singapore.