The Motley Fool

ARQ share price flat as it puts asset sales on the table

The ARQ Group Ltd (ASX: ARQ) share price is flat today despite the group announcing that it has a number of buyers interested in both its operating divisions.

The group formerly known as Melbourne IT has seen its shares tumble around 82% over the past year on the back of a huge profit downgrade not long after its former CEO sold shares on market himself.

ARQ  is now forecasting fiscal 2020 EBITDA between $16.8 million to $19.3 million, compared to a prior forecast between $27 million to $30.5 million. 

Today it announced it will “test the ground” for the sale of both its operating divisions and flagged that its SMB division continues to perform in line with expectation. It’s expected to deliver “core underlying EBITDA” between $9.7 million to $10.7 million on revenue up to $70 million over fiscal 2019. 

The Achilles heel remains the beleaguered enterprise division that ARQ is also shopping around to potential buyers.

The group is also looking to save around $2.3 million in annualised costs going forward in response to the poor operational performance and diabolical shareholder returns. 

Others in the IT services or internet connectivity space include Rhipe Ltd (ASX: RHP) and Megaport Ltd (ASX: MP1).

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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