$RGB / 0037 (RGB INTERNATIONAL BHD)

28 July 2024


RGB


RGB International Bhd. (RGB) presents a compelling investment opportunity at its current price levels. Trading at a forward PE ratio of 7, the stock appears significantly undervalued.


In Q1, RGB reported an EPS of 1.44 Sen, projecting to 5.76 Sen annually if sustained. Moreover, the recent RM382 million new contract secured for FY 2024 will result in substantial earnings growth, potentially surpassing the 5.76 Sen EPS estimate. Conservatively, we estimated FY 2024 EPS at 6 Sen, and with a PE ratio between 10 to 12 suggests a fair valuation range of 60 Sen to 72 Sen.


Given these indicative valuations, investing in RGB seems is a no brainer investment decision.


Share price slides down from 49 Sen to close at 41.5 Sen. Share price was allowed to slide for 3 days before the Company gave a press statement on 25 July after Market Close below. We just wonder why the delay in clarification of no impact till share price was hit. Fund managers or market makers could have collected at a dirt-cheap price.


We understand there is no negative news affecting the Company and business is intact to achieve the management business target for FY 2024. Company had released a press statement on 25 July that –


“The Board of Directors (“the Board”) of RGB International Bhd. (“RGB”) would like to reassure all stakeholders that RGB is not affected in any way by the Philippine Offshore Gaming Operators (“POGOs”) (now known as Internet Gaming Licensees) ban. The Board would like to reiterate that no slot machines were sold to POGOs. RGB's sale of slot machines in the Philippines are only to the Philippine Amusement and Gaming Corporation (“PAGCOR”)’s licensed integrated resorts, casinos and slot club operators”.

Be mindful that on 30 May the Company’s subsidiary had secured from Philippine Amusement and Gaming Corporation (“PAGCOR”) for the Procurement of Supply and Delivery of Slot Machine Equipment for Casino Filipino Branches under ITB No. DC24-03-001COR (“the Project”) with a contract value of the Project of USD81,328,272.00 (equivalent to RM382 mil based on the exchange rate of RM4.7090 as at 30 May 2024). It was briefed to fund mangers all deliveries will be fulfilled in FY 2024 commencing from Q3. About 70% to 80% deliveries will be in Q3 and balance in Q4. We estimate this contract will contribute additional net profit amounting to about 10% on the contract amount or RM38 mil for FY 2024.


Conclusion

With no negative impact on its operations and strong growth prospects fuelled by new contracts, RGB is poised for a robust performance in FY 2024. The recent price dip may have presented a buying opportunity, potentially capitalized on by savvy investors.



Disclaimer

This publication is not a buy or sell call of the company and the contents of this publication should not be considered as professional financial investment advice or buy/sell recommendations. This publication (analysis) has been written for information purposes and general guidance on matters of interest for discussion only and does not constitute professional advice or legal opinion. The information contained in this publication (analysis) should not form the basis of any decision as to a particular course of action. You should not act upon the information contained in this publication without obtaining specific professional advice. Therefore, every investment decision and its associated risks are the responsibility of the investor.

Above analysis is prepared by the author free of charge solely for educational purpose and discussion in the group consented by the author and shall not constitute an investment advice or recommendation to sell and/or buy the share(s) mentioned in this analysis. The views are based on the author’s assumptions and estimations as of this date and subject to change, for educational and informational purposes. Please consult your licensed adviser in any of your investment decision.
We, the author and/ or sharer of this publication make no representations or warranty (expressed or implied) as to the accuracy, completeness, correctness, suitability, or validity of any information contained in our analysis and do not accept or assume any liability, responsibility or duty of care for any consequences for any errors, omissions, or delay in this information or any losses and damages arising from your reliance on the information contained in this analysis or for any decision made based on it. You should read the posts and analysis and the information at your own risk and you recognise that we shall not be held liable for any losses and damages.

You should do your own research and rely on your own evaluation to assess the merits and risks of your investment. You are therefore strongly suggested to engage the services from a competent professional financial advisor or take independent financial advice before you proceed to invest. You should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers for your investment decision.