Why ARB Corporation’s (ASX:ARB) shares shot up in early-morning trade

Summary

  • Shares of ARB Corporation Ltd (ASX:ARB) traded higher nearly 6 per cent in the early trade on Tuesday, following a company update on its expectations for the first half of FY2021. 
  • ARB Corporation said it had recorded unaudited sales revenue of A$284 million for the half-year ended 31 December 2020, a 21.6 per cent growth from the same period an year ago.
  • ARB Corporation held a positive short-term outlook on a healthy customer order book and another record sales month in December 2020. 

Shares of  ARB Corporation Ltd (ASX:ARB) were trading higher nearly 6 per cent in the early trade on Tuesday, 12 January 2021, following a company update on its expectations for the first half of FY2021. 

The stock was up A$33.44, up 1.79 points, or 5.66 per cent, at 10:50 AM. The stock of the company dealing in manufacturing, distribution, and the sale of four-wheel drive motor vehicle accessories, is close to its 52-week high of A$33.83. The stock gave a return of nearly 62 per cent in 2020. In January 2021, the share was up 2 per cent.

Image Source: Shutterstock

What is fuelling the ARB share rally?

In its latest trading update, ARB Corporation said that it had recorded unaudited sales revenue of A$284 million for the half-year ended 31 December 2020, implying a 21.6 per cent growth from the corresponding period of the previous year. The profit before tax (PBT) for the first half is between A$70 million and A$72 million. The financial results for the half-year ended 31 December 2020 are expected to be released on Tuesday, 16 February 2021. 

READ MORE: ARB Corporation (ASX:ARB) riding high on pent-up demand for Four-wheel drive parts

Outlook

Even as ARB Corporation didn’t provide guidance for the remainder of the year, it said that it had held a positive short-term outlook on account of the strong customer order book and another record sales month in December 2020. 

Image Source: Shutterstock

But, the company also said that its first-half performance should not be used as an indicator for the second half. It said that no guidance could be provided since that remained too uncertain to predict about the same in the then economic scenario, affected by the coronavirus pandemic. Meanwhile, the coronavirus pandemic significantly affected the automobile and related accessories industry. 

READ MORE: How Eagers Automotive (ASX:APE) emerged as a winner in 2020?

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